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Polo Managing Agency
Lloyd’s
Syndicate 1254
Annual Report and Accounts for the year ended
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Contents
Directors and Administration
3
Managing
agent’s
report
5
Statement of Managing
Agent’s
Responsibilities
10
Independent
Auditor’s
Report to the Member of Syndicate 1254
11
Statement of profit or loss and other comprehensive income
15
Balance sheet
–
Assets
17
Balance sheet
(cont’d)
–
Liabilities
18
Statement of changes in
member’s
balances
19
Statement of cash flows
20
Notes to the financial statements
21
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Directors and Administration
Managing Agent
Syndicate 1254. PMA is a wholly owned subsidiary of Marco Capital Holdings (UK) Limited ("MCHL").
Directors
Directors who served at PMA during the year or up until the period the Report & Accounts were signed are as
follows:
P D Andrews - Chief Executive Officer
M J Bishop - Finance Director
J A Hummerston - Director of Underwriting (Resigned 19/02/2025)
P M Laws
–
(Resigned 26/04/2024)
C E Layton - Director of Underwriting (Appointed 03/01/2025)
R M Richardson-Bunbury - Chief Actuary
P R Smith - Managing Director
P Wooldridge - Chief Operations Officer
Non-Executive Directors
I J Bremner - Chair, Non-Executive Director
K D Curtis - Non-Executive Director
S Minshall - Non-Executive Director
M Sebold-Bender
–
Non-Executive Director
Z Szalkai - Non-Executive Director
Company secretary
P M Laws
–
Company Secretary (Appointed 26/04/2024)
Managing
agent’s
registered office
Grange Park
Bishops Cleeve
Cheltenham
Gloucestershire
United Kingdom
GL52 8YQ
Managing
agent’s
registered number
03935227
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Directors and Administration (continued)
Syndicate
Run-Off Manager
P R Smith
Bankers
Barclays Bank - London
Citibank NA - London and New York
RBC Investor & Treasury Services - Toronto
European Depositary Bank - Luxembourg
Investment Managers
Conning Asset Management Limited
Independent Auditors
Forvis Mazars LLP
Statement of actuarial opinion signing actuary
PricewaterhouseCoopers LLP
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Managing
agent’s
report
The Directors of PMA, present their report for Syndicate 1254 ("the Syndicate") for the year ended 31 December
2024.
Directors’
Interests
None of the Directors of the Managing Agent have any participation in the
Syndicate’s
premium income capacity.
Directors who served at PMA during the year or up until the period the Report & Accounts were signed are
detailed in the 'Directors and Administration' section on page 3.
Directors and Officers
Details of the Directors and Officers of the Managing Agent that were serving at the year end and up to the date
of signing of the financial statements are provided on page 3. Changes to directors and officers from the last
report were as follows:
M J Bishop - Finance Director
J A Hummerston - Director of Underwriting (Resigned 19/02/2025)
P M Laws
–
Director (Resigned 26/04/2024)
P M Laws
–
Company Secretary (Appointed 26/04/2024)
C E Layton
–
Director of Underwriting (Appointed 03/01/2025)
Syndicate Annual General Meeting
The Managing Agent does not propose to hold an annual general meeting for the member of the Syndicate.
The member is asked to note that any objections to this proposal should be submitted, in writing, to the Chief
Risk Officer within 21 days of this notice.
Related Party Transactions
The Syndicate did not enter into any related party transactions, which were not concluded under normal market
conditions. For a full listing of related party transactions please refer to the related parties section in the notes
to the accounts.
Auditors
Forvis Mazars LLP remain in office as the Syndicate's auditors.
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Managing
agent’s
report (continued)
Principal Activities
The principal activity of Syndicate 1254 is the transaction of reinsurance business in the
Lloyd’s
market by way
of reinsurance to close (“RITC”) or other legacy solution.
Marco Corporate Capital Limited is the wholly aligned corporate member for the Syndicate.
Review of the business
The result for the Syndicate in calendar year 2024 is a profit of £4.2m (2023: £8.1m).
No new business has been written in 2024, but the Syndicate remains open to new transactions should they
meet the strict underwriting criteria maintained by the capital provider and managing agent. Syndicate 1975
reinsured to close into the 2025 year of account of the Syndicate, effective 1
st
January 2025.
The 2022 underwriting year will be closed by RITC to the 2023 reporting year effective 1
st
of January 2025.
Incurred claims development is a primary performance indicator for a run-off syndicate. Claims reserves are
expected to decrease as claims are settled. Claims settled below booked reserves will generate profits for the
Syndicate and vice versa. Nevertheless, future insurance claims payments are inherently uncertain and this
needs to be understood when interpreting the Syndicate's results.
During 2024, Syndicate 1254 has experienced favourable development in its motor line of business due to
multiple factors including the Ogden discount rate change from -0.25% to 0.5%, following the UK
government’s
ruling in December 2024, and refinements in the reserving methodology and assumptions, partially offset by
reserve strengthening in the Syndicate’s general liability line of business.
The Syndicate's main currency exposure continues to be Pounds Sterling. The functional currency for the
Syndicate continues to be US Dollars.
Net operating expenses of £1.5m (2023: £0.2m) includes both gross commission (£0.3m; 2023: £0.4m) and
ceding commission (£0.0m; 2023: £1.6m), arising from premium movements in the year. In addition to ongoing
administration costs, expenses include onboarding costs for the underwriting portfolios.
Review of underwriting activities
–
Key Performance Indicators
The table below summarises the premium volumes and performance of the Syndicate for 2024.
2024
£m
2023
£m
Gross premiums written
1.3
99.4
Net premiums earned
1.3
50.4
Claims incurred
4.5
(46.2)
Operating expenses
(1.5)
(0.2)
Profit
4.2
8.1
As a legacy solutions provider, the Syndicate does not report loss ratios or combined ratios, as premium income
is directly related to claims acquired. Movements in claims incurred relate to prior underwriting year movements
on policies written in previous calendar years
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Managing
agent’s
report (continued)
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Review of the underwriting activities (continued)
The Syndicate currently invests in government bonds, investment grade corporate bonds, money market funds
and other select funds as it attempts to generate stable returns, whilst maintaining liquidity for settling claims
and maintaining capital. Oversight of investment activities is governed by the Syndicate Management
Committee (“SMC”), which reports to the Managing Agency Board.
There has been no trading in derivative contracts and hedging would only be used to mitigate risk, rather than
for speculative gain.
Investment income was negative for the year (£0.7m, 2023: £6.1m income) as the yield curve steepened during
2024, generating mark to market losses, particularly on the longer maturity GBP bonds. These are invested to
match longer term liabilities, intended to be held to maturity and therefore these movements are viewed as
temporary in nature.
Objectives for the Syndicate are set following the successful completion of a transaction or at least annually.
Objectives are monitored throughout the year by the Run-Off Manager and reported to the capital provider, to
which the Syndicate's member belongs, via steering groups and the SMC. Both the Run-Off Manager and
syndicate representatives participate in all syndicate-specific committee meetings to monitor progress.
Principal risks and uncertainties
The Managing Agent sets the Syndicate's risk appetite annually, which is approved by the Agency Board as
part of the
Syndicate’s
business planning process. The PMA Risk Committee meets at least quarterly to oversee
the risk management framework which includes a review of the risk profile as reflected in the risk register, and
monitoring 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), or that estimates of claims subsequently prove to be insufficient (reserving risk).
Underwriting and pricing for inwards legacy reinsurance contracts are the responsibility of the Marco Group.
This, together with the run-off nature of the business mean that the Syndicate is primarily exposed to:
•
the uncertainty in the reporting and quantification of claim payments in respect of losses that have
already occurred (Reserving Risk); as opposed to
•
the additional uncertainty of losses that might arise due to as yet unknown future events, as would be
the case for a traditional syndicate writing live risks (Underwriting Risk).
PMA is responsible for approving all inwards legacy reinsurance contracts, including that sufficient and effective
due diligence has been undertaken on behalf of the Syndicate before approving any transactions. The
Underwriting function is responsible for the day-to-
day operational aspects of managing the Syndicate’s
portfolio, including any reinsurance arrangements.
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Managing
agent’s
report (continued)
Review of the underwriting activities (continued)
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Insurance Credit risk
The key sources of credit risk consist of reinsurers, brokers and intermediaries.
Please see note 4 for a detailed
description.
Market risk
The Syndicate is exposed to foreign exchange movements as a result of mismatches between the currencies
in which assets and liabilities are denominated. The Managing Agent seeks to minimise these mismatches via
currency sales and purchases, except where specific acceptance is agreed at the SMC.
Financial instruments expose the syndicate to the following types of risk:
•
Price risk - This is the risk that the value of assets declines due to market factors. The Syndicate's
assets are mainly fixed interest bonds for which the price is determined by nominal interest rates and
credit spreads. The syndicate seeks to hold assets to maturity, and this mitigates the risk of short-term
price movements. However, the Syndicate is exposed to movements in interest rates on both the asset
and liability portfolios. As yields rise, asset values tend to fall, and when they decrease asset values
tend to rise. Conversely, the rate upon which the Syndicate discounts eligible long term claims liabilities
moves in the opposite direction to the asset portfolio, providing a partial natural hedge.
•
Credit risk - This is the risk that an investment counterparty defaults on payments due to the Syndicate.
This risk is reflected in the credit spreads of the bonds held by the syndicate, see price risk above. The
Syndicate mitigates this risk by holding a diversified portfolio of investment grade corporate bonds and
government securities.
Liquidity risk
This is the risk that the Syndicate 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. This risk is mitigated by holding highly marketable bonds,
such as government bonds and investment grade corporate bonds with large issues. As a legacy syndicate, the
Syndicate is not reliant on cashflows generated from trading activities to be able to pay claims and expenses.
To manage liquidity requirements, the SMC regularly reviews cash flow projections, including stress scenarios,
monitors duration and maintains cash levels consistent with the needs of the Syndicate.
Operational Risk
This is the risk that errors caused by people, processes, systems and external events lead to losses to the
Syndicate. The Managing Agent seeks to manage this risk through the use of an operational risk and control
framework, detailed procedures manual, thorough training programme and a structured programme of testing
of processes and systems by internal audit. Business continuity and disaster recovery plans are in place and
are regularly updated and tested.
Regulatory Risk
Regulatory risk is the risk of loss owing to a breach of regulatory requirements or failure to respond to regulatory
change. The Managing Agent 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, particularly in respect of US situs business. PMA's Risk and
Compliance functions manages and monitors business activity and regulatory developments to assess any
effects on the Syndicate and Managing Agent.
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Managing
agent’s
report (continued)
Review of the underwriting activities (continued)
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Capital
Lloyd's unique capital structure provides excellent financial security for policyholders:
•
All premiums received are initially held in trust.
•
Funds at Lloyd's ("FAL") provide an additional layer of capital that can be called upon to pay liabilities.
The FAL requirement is set by Lloyd's for new syndicates, until their Internal Model is approved. In
accordance with the Lloyd's approval process, the Syndicate has had approval to use its internal model
to set its capital requirements for the 2025 Year of Account.
•
At the discretion of the Council of Lloyd's, the Central Fund provides a further source of funds to settle
claims. The Central Fund effectively mutualises risk across the market.
Syndicate 1254 does not have its own security rating; however, it does benefit from
Lloyd’s
global A+ (Superior)
rating from A.M. Best, AA-
(Very Strong) rating from Standard and Poor’s, and AA
- (Very Strong) from Fitch.
Future developments
The Syndicate will continue to transact insurance business as suitable opportunities are identified. If
opportunities arise to write new classes of business, these will be investigated at the appropriate time.
Syndicate 1975 reinsured to close into the 2025 year of account of the Syndicate, effective 1
st
January 2025.
Environmental matters
The Syndicate underwrites previously insured risks and is unable to take environmental matters into account
when settling valid claims. However, the Syndicate has discretion to consider environment, social and
governance issues ("ESG") when investing its assets and the types of portfolios underwritten in the future. The
Syndicate's appointed investment manager, considers ESG criteria, as instructed by PMA, when selecting
investments, and monitors against agreed appetites.
Disclosure of information to auditors
In the case of each of the persons who are directors of the Managing Agent at the time the report is approved:
•
So far as the director is aware, there is no relevant audit information, being information needed by the
Syndicate’s auditor in connection with the auditor’s report, of which the auditor is unaware; and
•
Having made enquiries of fellow directors of the agency and the
Syndicate’s
auditor, 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 Syndicate’s auditor is aware of that information.
Approved by order of the Board of Polo Managing Agency Limited and signed on its behalf:
M J Bishop
Finance Director
4
th
March 2025
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Statement of Managing
Agent’s
Responsibilities
The Managing Agent is responsible for preparing the Syndicate annual report and financial statements in
accordance with applicable law and regulations.
The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 (‘the 2008
Regulations’)
require the Managing Agent to prepare syndicate annual accounts for each financial year. Under
that law the Managing Agent has elected to prepare the financial statements in accordance with United Kingdom
Accounting Standards, including FRS 102
“The
Financial Reporting Standard applicable in the UK and Republic
of
Ireland”
, FRS 103
“Insurance
Contracts”
(United Kingdom Generally Accepted Accounting Practice) and the
Lloyd’s Syndicate Accounts Instructions Version 2.0 as modified by the Frequently Asked Questions Version
1.1 issued by
Lloyd’s.
Under company law the managing agent must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state of affairs of the Syndicate and of the profit or
loss of the Syndicate for that period.
In preparing Syndicate annual accounts, the managing agent is required to:
1.
select suitable accounting policies which are applied consistently, subject to changes arising on the
adoption of new accounting standards in the year;
2.
make judgements and estimates that are reasonable and prudent;
3.
state whether applicable accounting standards have been followed, subject to any material departures
disclosed and explained in the financial statements; and
4.
prepare the annual accounts on the basis that the Syndicate will continue to write future business and
administer claims, using the going concern basis of accounting, where appropriate.
5.
ensure the preparation and review of the iXBRL tagging has been applied to the Syndicate Accounts in
accordance with the instructions issued by
Lloyd’s,
including designing, implementing and maintaining
systems, processes and internal controls to result in tagging that is free from material non-compliance
with the instructions issued by Lloyd’s, whether due to fraud or error.
The Managing Agent is responsible for keeping proper accounting records which disclose with reasonable
accuracy at any time the financial position of the Syndicate and enable it to ensure that the Syndicate annual
accounts comply with the 2008 Regulations. It is also responsible for safeguarding the assets of the Syndicate
and hence for taking reasonable steps for prevention and detection of fraud and other irregularities.
Legislation in the UK governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
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Independent
Auditor’s
Report to the Member of
Syndicate 1254
Opinion
We have audited the syndicate annual accounts of Syndicate 1254 (the “syndicate”) for the year ended 31
December 2024 which comprise the Statement of profit or loss and other comprehensive income, Balance
sheet, Statement of changes in
members’
balances, Statement of cash flows and notes to the syndicate annual
accounts, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United
Kingdom Accounting Standards, including The Syndicate accounts instructions Version V2.1 as modified by the
Frequently Asked Questions Version V1.0 issued by Lloyd’s (the “Lloyd’s Syndicate Accounts Instructions”,
FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” and FRS 103
“Insurance Contracts” (United Kingdom Generally Accepted Accounting Practice).
In our opinion the syndicate annual accounts:
•
give a true and fair view of the state of the syndicate’s
affairs as at 31 December 2024 and of its
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 requirements within
Lloyd’s
Syndicate Accounts Instructions.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)), The Insurance
Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, the Lloyd’s Syndicate
Accounts Instructions and other applicable law. Our responsibilities under those standards are further described
in the “Auditor’s responsibilities for the audit of the syndicate annual accounts” section of our report. We are
independent of the syndicate in accordance with the ethical requirements that are relevant to our audit of the
syndicate annual accounts in the UK, including the
FRC’s
Ethical Standard as applied to other entities of public
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.
Other Matter
–
iXBRL tagging
In forming our opinion on the syndicate annual accounts, which is not modified, we draw attention to the fact
that this report may be included within a document to which
iXBRL tagging has been applied. This auditors’
report provides no assurance over whether the iXBRL tagging has been applied in accordance with the
Lloyd’s
Syndicate Accounts Instructions.
Conclusions relating to going concern
In auditing the
syndicate annual accounts, we have concluded that the Managing Agent’s use of the going
concern basis of accounting in the preparation of the syndicate annual accounts is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the syndicate's ability to continue as a
going concern for a period of at least twelve months from when the syndicate annual accounts are authorised
for issue.
Our responsibilities and the responsibilities of the Managing Agent with respect to going concern are described
in the relevant sections of this report.
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Independent
Auditor’s
Report to the Member of Syndicate 1254 (continued)
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Other information
The other information comprises the information included in the Syndicate Annual Report and Accounts, other
than the syndicate annual accounts and our auditor’s report thereon. The Managing Agent is responsible for
the other information. Our opinion on the syndicate annual accounts does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion
thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the syndicate annual accounts or our knowledge obtained in the course of the audit
or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a material misstatement in the syndicate
annual accounts. If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Insurance Accounts Directive
(Lloyd’s
Syndicate and Aggregate
Accounts) Regulations 2008
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the Managing
Agent’s
Report for the financial year for 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 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 in relation to which The Insurance Accounts
Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 requires us to report to you, if in our
opinion:
•
the Managing Agent in respect of the syndicate has not kept adequate accounting records; or
•
the syndicate annual accounts are not in agreement with the accounting records; or
•
certain disclosures of the Managing
Agent’s
remuneration specified by law are not made; or
•
we have not received all the information and explanations we require for our audit.
Responsibilities of the Managing Agent
As explained more fully in the Statement of Managing
Agent’s
Responsibilities set out on page 10, 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.
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Independent
Auditor’s
Report to the Member of Syndicate 1254 (continued)
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Responsibilities of the Managing Agent (continued)
In preparing the syndicate annual accounts, the Managing Agent is responsible for assessing the syndicate’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Managing Agent either intends for the syndicate to cease
operations, or has no realistic alternative but to do so.
Auditor’s
responsibilities for the audit of the syndicate annual accounts
Our objectives are to obtain reasonable assurance about whether the syndicate annual accounts as a whole
are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s
report that includes
our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted
in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of the syndicate annual accounts.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures
in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities,
including fraud.
Based on our understanding of the syndicate and its industry, we considered that non-compliance with the
following laws and regulations might have a material effect on the syndicate annual accounts: permissions and
supervisory requirements of the Prudential Regulation Authority (the
‘PRA’)
and the Financial Conduct Authority
(the ‘FCA’), and regulations set by the Council of Lloyd’s.
To help us identify instances of non-compliance with these laws and regulations, and in identifying and
assessing the risks of material misstatement in respect to non-compliance, our procedures included, but were
not limited to
•
Gaining an understanding of the legal and regulatory framework applicable to the syndicate and the
industry in which it operates, and considering the risk of acts by the syndicate which were contrary to
the applicable laws and regulations, including fraud;
•
Inquiring of directors and management of the Managing Agent and the
syndicate’s
management as to
whether the syndicate is in compliance with laws and regulations, and discussing their policies and
procedures regarding compliance with laws and regulations;
•
Inspecting correspondence, if any, with relevant licensing or regulatory authorities including the PRA,
FCA and the Council of Lloyd’s;
•
Reviewing minutes of meetings of the Managing Agent in the year; and
•
Discussing amongst the engagement team the laws and regulations listed above, and remaining alert
to any indications of non-compliance.
We also considered those laws and regulations that have a direct effect on the preparation of the syndicate
annual accounts such as United Kingdom Generally Accepted Accounting Practice, The Insurance Accounts
Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, and the Lloyd’s Syndicate Accounts
Instructions.
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Independent
Auditor’s
Report to the Member of Syndicate 1254 (continued)
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Auditor’s
responsibilities for the audit of the syndicate annual accounts (continued)
In addition, we evaluated the directors’ and management of the Managing Agent’s and the syndicate
management’s incentives and
opportunities for fraudulent manipulation of the syndicate annual accounts,
including the risk of management override of controls and determined that the principal risks related to posting
manual journal entries to manipulate financial performance, management bias through judgements and
assumptions in significant accounting estimates, in particular in relation to the valuation of the provisions for the
settlement of future claims, and significant one-off or unusual transactions.
Our audit procedures in relation to fraud included but were not limited to:
•
Making enquiries of the directors and management of the Managing Agent and syndicate management
on whether they had knowledge of any actual, suspected or alleged fraud;
•
Gaining an understanding of the internal controls established to mitigate risks related to fraud;
•
Discussing amongst the engagement team the risks of fraud;
•
Addressing the risks of fraud through management override of controls by performing journal entry
testing; and
•
Reviewing the accounting estimate in relation to valuation of insurance liabilities for evidence of
management bias.
•
Designing audit procedures to incorporate unpredictability around nature, timing or extent of our testing.
The primary responsibility for the prevention and detection of irregularities, including fraud, rests with both those
charged with governance and management.
As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery,
intentional omissions, misrepresentations or the override of internal controls.
A further description of our responsibilities is available on the Financial Reporting Council’s website at
www.frc.org.uk/auditorsresponsibilities
.
This description forms part of our auditor’s report.
Use of the audit report
This report is made solely to the syndicate’s members as a body in accordance with The Insurance Accounts
Directive
(Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008. Our audit work has been undertaken
so that we might state to the
syndicate’s
members those matters we are required to state to them in an
auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the syndicate and the
syndicate’s members,
as a body, for our audit work, for this report,
or for the opinions we have formed.
Andrew Jones (Senior Statutory Auditor)
for and on behalf of Forvis Mazars LLP
Chartered Accountants and Statutory Auditor
30 Old Bailey
London
EC4M 7AU
4th March 2025
Docusign Envelope ID: BF6D9D5A-05CA-42B3-B440-F06708556B6B
Statement of profit or loss and other comprehensive
income
15
Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
www.polo.works
Technical account
–
General business/long-term business
For the year ended 31 December 2024
Note
2024
£000
£000
2023
(Restated)
£000
£000
Gross premiums written
5
Outwards reinsurance premiums
(49,081 )
Premiums written, net of reinsurance
Changes in unearned premium
15
Change in the gross provision for unearned
premiums
Net change in provisions for unearned
premiums
Earned premiums, net of reinsurance
Allocated investment return transferred from the
non-technical account
9
(799 )
Claims paid
15
Gross amount
(19,818 )
(25,265 )
Reinsurers’
share
Net claims paid
(16,739 )
(22,959 )
Change in the provision for claims
15
Gross amount
(56,161 )
Reinsurers’
share
(10,401 )
Net change in provisions for claims
(23,288 )
Claims incurred, net of reinsurance
(46,247 )
Net operating expenses
6
(1,483 )
(209 )
Balance on the technical account
–
general
business/ long-term business
Docusign Envelope ID: BF6D9D5A-05CA-42B3-B440-F06708556B6B
Statement of profit or loss and other comprehensive
income (continued)
16
Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
www.polo.works
Non-technical account
–
General business/long-term business
For the year ended 31 December 2024
Note
2024
£000
£000
2023
(Restated)
£000
£000
Balance on the technical account
–
general business/long-term business
Investment income
9
Realised gains on investments
9
Unrealised (losses)/gains on
investments
9
(6,135 )
Investment expenses and charges
9
(130 )
(111 )
Total investment return
(799 )
Allocated investment return transferred
to the general business technical
account
(6,107 )
(Loss)/gain on foreign exchange
(335 )
Other expenses
(2,337 )
Profit for the financial year
Other comprehensive income:
Currency translation gain/(loss)
(327 )
Total comprehensive income for the
year
The accompanying notes from page 21 to 51 form an integral part of these financial statements.
Docusign Envelope ID: BF6D9D5A-05CA-42B3-B440-F06708556B6B
17
Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
www.polo.works
Balance sheet
–
Assets
As at 31 December 2024
Note
2024
£000
£000
2023
(Restated)
£000
£000
Other Financial investments
11
Deposits with ceding undertakings
Investments
Reinsurance Claims outstanding
15
Reinsurers’
share of technical provisions
Debtors arising out of reinsurance
operations
12
Other debtors
13
Debtors
Cash at bank and in hand
19
Other assets
Other prepayments and accrued income
Prepayments and accrued income
Total assets
Docusign Envelope ID: BF6D9D5A-05CA-42B3-B440-F06708556B6B
18
Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
www.polo.works
Balance sheet (continued)
–
Liabilities
As at 31 December 2024
Note
2024
£000
£000
2023
£000
£000
Members’
balances
Total Capital and reserves
Provision for unearned premiums
15
Claims outstanding
15
Technical provisions
Creditors arising out of reinsurance operations
17
Other creditors including taxation and social security
18
Creditors
Accruals and deferred income
Total liabilities
Total liabilities, Capital and reserves
The accounting policies and notes on pages 21 to 51 form part of these financial statements.
The Syndicate Annual Financial Statements were approved by the Board of Directors of Polo Managing
Agency Limited and were signed on its behalf:
M J Bishop
Finance Director
4
th
March 2025
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19
Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
www.polo.works
Statement of changes in
member’s
balances
For the year ended 31 December 2024
2024
£000
2023
£000
Member’s
balances brought forward at 1 January
Total recognised gains for the year
Member’s
balances carried forward at 31 December
Docusign Envelope ID: BF6D9D5A-05CA-42B3-B440-F06708556B6B
20
Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
www.polo.works
Statement of cash flows
For the year ended 31 December 2024
Note
2024
£000
£000
2023
(Restated)
£000
£000
Cash flows from operating activities
Profit for the financial year
Adjustments:
(Decrease)/increase in gross technical provisions
(31,932 )
Increase/(decrease) in
reinsurers’
share of gross
technical provisions
(33,963 )
Increase in debtors
(Decrease)/increase in creditors
(3,784 )
Movement in other assets/liabilities
(5,158 )
Investment return
(6,107 )
Foreign exchange
(327 )
Other
(193 )
Net cash flows from operating activities
(18,086 )
Cash flows from investing activities
Purchase of equity and debt instruments
(35,905 )
(107,585 )
Sale of equity and debt instruments
Investment income received
Other
(15 )
Net cash flows from investing activities
(77,226 )
Net decrease in cash and cash equivalents
(3,919 )
(1,097 )
Cash and cash equivalents at the beginning of the
year
Foreign exchange on cash and cash equivalents
(97 )
Cash and cash equivalents at the end of the
year
19
Docusign Envelope ID: BF6D9D5A-05CA-42B3-B440-F06708556B6B
21
Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
www.polo.works
Notes to the financial statements
1. General information
Syndicate 1254 is a Lloyd’s syndicate domiciled in England and Wales. It is managed by PMA, a private
company, limited by shares that is incorporated in
England and whose registered office is 'Grange Park’,
Bishops Cleeve, Cheltenham, Gloucestershire, United Kingdom, GL52 8YQ. The Syndicate is supported by
Marco Corporate Capital Limited.
2.
Compliance with accounting standards
These financial statements have been prepared in accordance with United Kingdom Accounting Standards
including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, FRS 103
“Insurance Contracts”, the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts
Regulations 2008) and the Lloyd’s Syndicate Accounts Instructions Version 2.0 as modified by the Frequently
Asked Questions Version 1.1 issued by Lloyd’s. There were no material departures from those standards.
3.
Summary of significant accounting polices
The following significant accounting policies have been applied consistently in dealing with items which are
considered material in relation to the Syndicate’s financial statements.
Basis of preparation
The financial statements have been prepared on the historical cost basis, except for some financial assets
which are measured at fair value through the profit and loss account.
The functional currency for the Syndicate continues to be US Dollars and the presentational currency continues
to be Pounds Sterling.
During 2024, Lloyd's introduced changes to the syndicate accounts process to rationalise and standardise
financial reporting across the market. As a result, certain comparative information has been restated to ensure
consistency with current year presentation and compliance with the Lloyd's Syndicate Accounts Instructions.
The changes comprise:
a)
Reclassification changes
Certain financial statement line items have been reclassified whilst the underlying amounts remain
unchanged. The principal change is the reclassification of overseas deposits as part of investments,
previously shown as a separate balance sheet item, to form part of other assets. The comparative
balances have also been represented to align with the current period presentation.
b)
Aggregation changes
To align with Lloyd's reporting requirements whilst maintaining FRS 102 compliance, certain items have
been aggregated or disaggregated within the financial statements and related notes. This includes the
presentation of realised and unrealised gains and losses on investments, which are now shown on a
disaggregated basis in the Non-technical account of the Statement of profit or loss and other
comprehensive income.
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22
Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
www.polo.works
Going concern basis
These financial statements are prepared on a going concern basis.
The Syndicate’s business activities,
together with the factors likely to affect its future development, are set out
in the business review contained within the Managing Agent's report. In addition, the risk management section
provides details of the financial risks the syndicate is exposed to and how those risks are managed.
The directors consider it appropriate to adopt the going concern basis of accounting in preparing these the
annual financial statements as the Syndicate has adequate resources to meet its obligations as they fall due for
a period of at least 12 months from the date of these financial statements, in addition to Funds at
Lloyd’s
of the
member supporting the Syndicate (as detailed in note 26).
Basis of accounting
The underwriting results are determined on an annual basis of accounting. Under the annual basis of
accounting, the incurred cost of claims, commission and related expenses are charged against the earned
proportion of premiums, net of reinsurance as follows:
Premiums written
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. Additional or return premiums are treated as a re-measurement of the initial premium and are
recognised when advised by the cedant. Premiums are shown gross of brokerage payable and exclude taxes
and duties levied on them.
Inwards RITC premiums are not included in premiums written as the net value of assets and liabilities transferred
to the Syndicate is nil, see the ‘Reinsurance to close’ accounting policy on page 24.
Unearned premiums
Unearned premiums represent the proportion of premiums that relate to unexpired terms of policies in force at
the balance sheet date, calculated on a time apportionment basis. Where possible, a look through basis
approach is taken to premium earnings, as is the case with the 2023 year of account underwriting. Where look
through
isn’t
possible, in line with market practice, all policies are deemed to have expired within 36 months of
the start of the relevant year of account, unless cedants explicitly report unexpired premium provisions in respect
of the underlying policies.
Unexpired risks provision
When appropriate, provision is made for any deficiencies arising when unearned premiums, net of associated
acquisition costs, are insufficient to meet expected claims and expenses. The expected claims are calculated
based on information available at the balance sheet date. Unexpired risks surpluses and deficits are offset only
where business classes are managed together and a provision is made if an aggregate deficit arises across
these groups when assessed individually.
Acquisition costs
Acquisition costs which represent commission and other related expenses are deferred over the period in which
the related premiums are earned, unless cedants explicitly report the Syndicate's share of deferred acquisition
costs in respect of the underlying policies.
Docusign Envelope ID: BF6D9D5A-05CA-42B3-B440-F06708556B6B
23
Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
www.polo.works
Reinsurance premium ceded
Reinsurance premiums are allocated in accordance with the underlying risks being protected or in relation to
the coverage period of the contract as appropriate. Any reinsurance premium adjustments are charged
according to the basis on which the adjustments concerned are calculated.
Unearned reinsurance premiums
Outwards reinsurance premium is earned according to the risk profile of the policy. Unearned premiums
represent the proportion of premiums written in the year that relate to unexpired terms of policies in force at the
balance sheet date, calculated on the basis of established earnings patterns, time apportionment or loo through
to underlying gross exposures as appropriate.
Technical provisions
–
claims incurred and
reinsurers’
share
Gross claims incurred represents the change in the forecast ultimate cost of settling all claims, whether reported
or not, including related direct and indirect claims handling costs.
The technical provisions include an estimate of the cost of claims incurred but not reported (IBNR) at the balance
sheet date based on statistical methods. This reserve also includes an allowance for any expected deficiency
or redundancy in notified outstanding claims. The provision for reserves also includes a provision for related
claims handling costs and bad debts. The technical provisions have been calculated using statistical techniques
and cashflow projections. These are generally statistical analysis of historical experience, which assumes that
the development pattern of the current claims will be consistent with past experience. These methods can
incorporate judgmental allowances, for example, for changes in business mix or market conditions.
The reinsurers’ share of provisions for claims is based on the amounts of outstanding claims and projected
IBNR, net of estimated irrecoverable amounts, having regard to the relevant reinsurance programme for each
class of business.
The most critical assumption, as regards claims provisions, is that the past is a reasonable guide to the likely
level of future claims development. In forming its judgements, the Syndicate has had access to: the historic
claims experience of the portfolios acquired or reinsured; industry benchmark data derived from data provided
by its peers in the Lloyd's market; and the expertise of external actuarial consultants with access to their own
benchmark data. In addition, claim estimates include an explicit uplift for inflation based on expectations of both
economic and social inflation, and their impact on specific classes.
Standard actuarial methods for non-life business usually assume that the development of claims, i.e. reporting,
processing, and settlement of claims, is consistent with previous experience. Accumulation of experience over
many underwriting years helps to moderate the effect of short-term random variation. The Syndicate's own
experience is limited, for example the inwards RITC portfolio was originally underwritten over a period of three
years commencing in 2017. For this reason, the Syndicate has placed greater reliance on market data that
covers a longer period, a greater volume of business, and is more credible as a result.
Liabilities for settled and potential PPOs, assume that historic rates of wage inflation, mortality, and
improvements in longevity are a guide to the future, after allowing for the recent surge in inflation. Due to their
long duration, discounted settled and potential PPO claim estimates are very sensitive to the choice of discount
rate.
Docusign Envelope ID: BF6D9D5A-05CA-42B3-B440-F06708556B6B
24
Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
www.polo.works
Technical provisions
–
claims incurred and
reinsurers’
share (continued)
Claim estimates are also sensitive to inflation assumptions. Types of inflation that can affect claim costs include
wage inflation, cost of materials, medical inflation, and social inflation. Economic inflation has been high, so it
is likely that, in the short-term, claim inflation could be higher than the rate implicitly captured by claim
development patterns and long-term trends. To allow for this, the Syndicate has included an explicit uplift for
inflation.
Claim estimates are less sensitive to new claims arising from past events as most policies have already expired.
Claim reserves are primarily for unsettled claims for losses that have already occurred. Uncertainty arises from
reporting delays, and delays in adjusting losses, for example delays in establishing coverage under a policy,
establishing the policyholder's liability, and establishing the quantum of the claim.
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, the ultimate liability will vary as a result of
subsequent information and events, and this may result in significant adjustments to the amounts provided.
Estimates of IBNR are generally subject to a greater degree of uncertainty than estimates of the cost of settling
claims that have already been notified to the Syndicate, where more information about the claim event is
generally available. The portfolio of settled and potential PPO claims is a closed list of claims, so all claims
possible claims have already been reported for this portfolio. Claims are projected on an underwriting year
basis.
As described under Insurance Risk in the Risk Management section, later in this report, there is a thorough
review process of claims notifications and reserving estimates, including actuarial evaluation of past claims
development. However, there remains a risk that past performance may not be a good indicator of the future
developments.
Claim estimates include both direct claim handling expenses attributable to individual claims, such as legal
costs, and indirect expenses, such as salaries of claims handling staff.
Technical provisions for the 2022 & prior years of account are reported on an undiscounted basis due to the
relative short-term of the liabilities. The forecast average duration of liabilities is less than 3 years from the
balance sheet date. Technical provisions for the 2023 year of account are reported on a discounted basis due
to the long-term nature of the liabilities. The forecast average duration of liabilities is 28 years. The liabilities
relate to bodily injury claims where many claims are settled as Periodic Payment Orders that are payable over
many years. The selected discount rate of 4.36% is linked to a long-term view of inflation and long-term Sterling
yields.
Reinsurance to close
In the Syndicate's view, an RITC contract of insurance transfers all known and unknown liabilities relating to a
year (or years) of account from the ceding Lloyd’s syndicate to the reinsuring syndicate. The use of the term
reinsurance is misleading as, for practical purposes, the contract extinguishes the liabilities of the transferor
syndicate. Following the RITC, the transferor is released from its obligations to account for and to report on the
transferring liabilities. This is unlike a conventional reinsurance contract which reinsures the cedant, but does
not transfer the cedant's primary responsibility for the liabilities. The Syndicate understands that there are
differing approaches to the accounting treatment of RITC contracts; however, the Syndicate considers that its
accounting policy is appropriate and that it assists the users of the accounts to understand both the transaction
and subsequent performance.
Docusign Envelope ID: BF6D9D5A-05CA-42B3-B440-F06708556B6B
25
Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
www.polo.works
Reinsurance to close (continued)
Where an external RITC occurs, the RITC premium is the cost to the transferor of transferring the liabilities to
the transferee. The RITC does not transfer intangible assets, such as a brand or future policy renewal rights.
For an arm's-length transaction, it provides an objective assessment of the fair value of the liabilities. Therefore,
the net value of the assets and liabilities transferring to the reinsuring syndicate is nil, and they are not
recognised through profit or loss. Subsequent revenues, expenses and revaluation of assets and liabilities are
included in the statement of profit or loss, or other comprehensive income as appropriate. Any RITC premiums
received in the period are disclosed as a note to the annual financial statements.
Net operating expenses
Net operating expenses are accounted for on the accruals basis. Employee costs include the cost of all
employee benefits to which employees have become entitled as a result of service rendered to the entity during
the reporting period, which the Managing Agent considers to be attributable to this Syndicate. The Syndicate
has no employees. Also included is any commission amounts, both inwards and outwards.
Distribution of profits and collection of losses
Lloyd’s operates a
detailed set of regulations regarding solvency and the distribution of profits and payment of
losses between syndicates and their members.
Lloyd’s
continues to require membership of syndicates to be on
an underwriting year of account basis and profits and losses belong to members according to their membership
of a year of account. Normally profits and losses are transferred between the Syndicate and members after
results for a year of account are finalised after 36 months. This period may be extended if a year of account
goes into run-off and RITC is not achieved. The Syndicate may make earlier on account distributions or cash
calls according to the cash flow of a particular year of account and subject to Lloyd’s requirements.
Foreign currencies
The Syndicate financial statements are presented in Pounds Sterling (the presentation currency) and rounded
to thousands. The Syndicate's functional currency is US Dollars. Foreign currency transactions are translated
into the functional currency using the opening exchange rate for the month of each transaction. At each period
end, foreign currency monetary items are translated using the closing rate. For this purpose, all assets and
liabilities arising from insurance contracts (including unearned premiums, deferred acquisition costs, and
unexpired risk provisions) are monetary items.
Monetary items - Foreign exchange gains and losses resulting from the settlement of transactions and from the
translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies
are recognised in the non-technical account.
Non-monetary items - Non-monetary assets and liabilities are translated at the exchange rate at the date of
their last valuation. When a gain or loss on a non-monetary item is recognised in other comprehensive income,
any exchange component of that gain or loss is recognised in other comprehensive income. Conversely, when
a gain or loss on a non-monetary item is recognised in profit or loss, any exchange component of that gain or
loss is recognised in profit or loss.
Non-monetary items measured at historical cost are translated using the opening exchange rate for the month
of the transaction and non-monetary items measured at fair value are measured using the exchange rate when
the fair value was determined
Docusign Envelope ID: BF6D9D5A-05CA-42B3-B440-F06708556B6B
26
Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
www.polo.works
Foreign currencies (continued)
The functional currency amounts are translated into the presentation currency as follows:
•
assets and liabilities are translated at the closing rate at the balance sheet date;
•
income and expenses are translated at the average rate of exchange during the year; and
•
all resulting exchange differences are recognised in other comprehensive income.
Financial assets and liabilities classification
Financial assets
The Managing Agent has chosen to adopt Sections 11 and 12 of FRS 102 in respect of financial instruments.
The full provisions of FRS 102 have been applied to the treatment of financial assets. The accounting
classification of financial assets and liabilities determines their basis of measurement and how changes in those
values are presented in the profit or loss or other comprehensive income. These classifications are made at
initial recognition and subsequent reclassification is only permitted in restricted circumstances. Financial assets
and liabilities are offset, and the net amount reported in the balance sheet only when there is a legally
enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise
the asset and settle the liability simultaneously.
Financial assets at fair value through profit and loss
The Syndicate classifies its investments at fair value through profit and loss.
Purchases and sales of investments are accounted for at their fair values (normally their cost of acquisition or
proceeds of disposal) on the trade date, which is the date the Syndicate commits to purchase or sell the assets.
The fair value of quoted investments is based on quoted bid prices. Realised and unrealised gains and losses
arising from the changes in fair values are included in investment return in the profit and loss account in the
period in which they arise. Unquoted investments are initially carried at cost as the best estimate of fair value,
which is adjusted using appropriate valuation techniques and having regard to subsequent events or changes
in circumstances.
Impairment of financial instruments measured at amortised cost
At each balance sheet date, the Syndicate assesses whether there is objective evidence of impairment of any
financial assets that are measured at amortised cost. If there is objective evidence of impairment, an impairment
loss is recognised in profit or loss immediately.
Objective evidence that a financial asset or group of assets is impaired includes:
•
significant financial difficulty of the issuer or obligor;
•
a breach of contract, such as a default or delinquency in interest or principal payments;
•
the Syndicate, for economic or legal reasons relating to the
debtor’s
financial difficulty, granting to the
debtor a concession that would not otherwise be considered;
•
it has become probable that the debtor will enter bankruptcy or other financial reorganisation; and
•
observable data indicating that there has been a measurable decrease in the estimated future cash
flows from a group of financial assets since the initial recognition of those assets, even though the
decrease cannot yet be identified with the individual financial assets in the group, such as adverse
national or local economic conditions or adverse changes in industry conditions.
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27
Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
www.polo.works
Impairment of financial instruments measured at amortised cost (continued)
Other factors may also be evidence of impairment, including significant changes with an adverse effect that
have taken place in the technological, market, economic or legal environment in which the debtor operates.
For financial assets carried at amortised cost, the amount of an impairment is the difference between the
asset’s
carrying amount and the present value of estimated future cash flows, discounted at the financial
asset’s
original
effective interest rate, i.e. using the effective interest method.
For financial assets carried at cost less impairment, the impairment loss is the difference between the asset’s
carrying amount and the best estimate of the amount that would be received for the asset if it were to be sold
at the reporting date.
Where indicators exist for a decrease in impairment loss, and the decrease can be related objectively to an
event occurring after the impairment was recognised, the prior impairment loss is tested to determine reversal.
An impairment loss is reversed on an individual impaired financial asset to the extent that the revised
recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment
been recognised. The amount of the reversal is recognised in profit and loss immediately.
Offsetting
Debtors/creditors arising from insurance/reinsurance operations shown in the balance sheet include the totals
of all outstanding debit and credit transactions as processed by the
Lloyd’s
central facility. No account has been
taken of any offsets which may be applicable in calculating the net amounts due between the Syndicate and
each of its counterparty insureds, reinsurers or intermediaries as appropriate.
Investment return
Investment return comprises all investment income, realised investment gains and losses and movements in
unrealised gains and losses, net of investment expenses, charges and interest.
Realised gains and losses on investments are calculated as the difference between sale proceeds and purchase
price. Unrealised gains and losses on investments represent the difference between the valuation at the balance
sheet date and their valuation at the previous balance sheet date, or purchase price, if acquired during the year,
together with the reversal of unrealised gains and losses recognised in earlier accounting periods in respect of
investment disposals in the current period.
Investment return is initially recorded in the non-technical account. A transfer is made from the non-technical
account to the general business technical account. Investment return has been wholly allocated to the technical
account as all investments relate to the technical account.
Taxation
Under Schedule 19 of the Finance Act 1993 managing agents are not required to deduct basic rate income tax
from trading income. In addition, all UK basic rate income tax deducted from Syndicate investment income is
recoverable by managing agents and consequently the distribution made to members is gross of tax. Capital
appreciation falls within trading income and is also distributed gross of tax
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28
Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
www.polo.works
Taxation (continued)
No provision has been made for any United States Federal Income Tax payable on underwriting results or
investment earnings. Any payments on account made by the Syndicate during the year have been included in
the balance sheet under the heading ‘other debtors’.
No provision has been made for any other overseas tax payable by members on underwriting results.
Pension costs
No pension costs are directly borne by the Syndicate.
Key accounting judgements
Of the various accounting judgements, assumptions and estimates made in the preparation of these financial
statements those relating to the determination of the technical provisions and investment valuations are
considered to be those most critical to understanding the Syndicate’s results and financial position.
In the Syndicate's judgement, an RITC is a sale/purchase at fair market value based on an arm's-length
commercial agreement, therefore the net value of the transferring assets and liabilities is nil.
In the
Syndicate’s
opinion, the continued use of US Dollars as the functional currency is considered appropriate.
An assessment is carried out annually, as to whether there is evidence of a significant and permanent change
in circumstances. Wherein consideration is given to a range of factors including, but not limited to, the current
balance sheet position, future underwriting transactions known to be under review and whether the primary
currency of the market the Syndicate operates in has changed.
The presentational currency of the financial statements continues to be Pounds Sterling, in order to match other
key elements of the Lloyd’s regulatory reporting.
If this ceases to be the case, a reassessment will be made.
Key sources of estimation uncertainty
The Syndicate makes estimates and assumptions concerning the future. The resulting accounting estimates
will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant
risk of causing a material adjustment to the carrying amounts of assets and liabilities, both within the next
financial year and further into the future are addressed below.
Key sources of estimation uncertainty in investment valuations
All investments are shown at their fair value as described in the accounting policies on page 26 and details of
the risks relating to investments are disclosed in the Risk Management section in note 4. Most investments are
Government securities or investment-grade corporate bonds and regularly traded on major stock exchanges
hence any risks in their valuations are reduced. The Syndicate also invests in a level 3 senior secured credit
fund, which is measured at fair value, based on the net asset value of investee funds. Determination of the net
asset value of the underlying fund includes certain inputs (e.g. valuation of assets and liabilities of the fund) that
are unobservable, these are considered for materiality at each reporting date and, if required, further
assessment carried out prior to valuation finalisation.
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Key sources of estimation uncertainty in technical provisions valuations
The accounting policy for technical provisions is described on page 23 and the related risks are described within
the risk management section below. The net technical provisions after the
reinsurers’
share is £33.6m (2023
£43.7m) for the 2022 year of account and £52.0m (2023 £59.6m) undiscounted and £23.5m (2023 £34.3m)
discounted for the 2023 year of account.
The most uncertain element within these technical provisions is the amount for gross claims outstanding, which
covers amounts where either the claim has been notified to the Syndicate, or where there has not yet been a
notification, or although notified there has been insufficient information to date to be certain regarding its ultimate
costs. This amounted to £33.2m (2023 £43.2m) for the 2022 Year of Account and £47.0m (2023 £68.3m) for
the 2023 Year of Account. As described in the Risk Management section there is a thorough review process of
claims notifications and reserving estimates, including detailed actuarial evaluation of past claims development.
There is however a risk that past performance may not be a good indicator of the future developments.
A large proportion of the reserves held are in respect of business where the claims are handled by the
reinsureds. To minimise the impact of the reporting lag on the technical provisions, the Syndicate maintains
close contact with cedants as far as possible.
The inherent uncertainty of future claim payments is mitigated by: a diverse portfolio of policies; diverse classes
of business; geographical diversification; and diversification between accident years, this reduces the risk of a
common trend of adverse development occurring. Outwards reinsurance mitigates the uncertainty in gross
technical provisions.
The 'Technical provisions
–
claims incurred and reinsurers’ share' accounting policy, above, discussed the
sensitivity of accounting estimates.
4.
Risk and capital management
Introduction and overview
This note presents information about the nature and extent of insurance and financial risks to which the
Syndicate is exposed, the
Managing Agent’s objectives, policies and processes for measuring and managing
insurance and financial risks, and for managing the Syndicate’s capital.
Risk management framework
The Syndicate’s activities expose it to a variety of financial and
non-financial risks. In order to achieve its
business plan and objectives, the Syndicate recognises that it is necessary to take risk and expects to be
rewarded for doing so. The Syndicate is also exposed to several unrewarded risks as a function of its operating
model, such as operational risk. The Managing Agent is responsible for understanding and managing the
Syndicate’s exposure to such risks and does this through the deployment of its Enterprise Risk Management
(“ERM”) framework.
The Managing Agent's ERM includes processes such as the annual review and approval of Syndicate risk
appetites for the Syndicate as a part of the Syndicate's Own Risk and Solvency Assessment (ORSA) and capital
setting process, risk and control assessment, regular risk appetite monitoring, risk incident root cause analysis,
emerging risk horizon scanning and risk management reporting
.
Critical to the risk management of the Syndicate is ensuring sufficient liquidity is in place to meet the solvency
needs of the Syndicate.
Syndicate risk exposures
The following provides a summary of the types of risks to which the Syndicate is exposed, the materiality of the
risk to the Syndicate, their key drivers, and the risk management tools and processes in place to mitigate these
risks.
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A.
Insurance risk
Underwriting and pricing for inwards legacy reinsurance contracts is on a case by case basis and is the
responsibility of the Marco Group, which provides the
Syndicate’s
capital. This, together with the run-off nature
of the business mean that the Syndicate is primarily exposed to:
•
the uncertainty of the reporting and quantification of claim payments in respect of losses that have
already occurred (Reserving Risk); as opposed to
•
the additional uncertainty of losses that might arise due to as yet unknown future events, as would be
the case for a traditional syndicate writing live risks (Underwriting Risk).
The insurance risk the Syndicate is exposed and can be separated into underwriting risk and reserve risk.
Underwriting risk
The managing agent is responsible for approving all inwards legacy reinsurance contracts, including that
sufficient and effective due diligence has been undertaken on behalf of the Syndicate before approving any
transactions. The Underwriting function is responsible for the day-to-day operational aspects of managing the
Syndicate’s portfolio, including any reinsurance arrangements, should these be deemed necessary.
Reserve Risk
Reserving risk is the risk of exposure to the financial consequences of material uncertainty in ultimate claim
payments and expenses.
Management of insurance risk
This risk is mitigated by the Syndicate's Actuarial function using external expertise and recognised actuarial
reserving approaches, coupled with close liaison with claims personnel to identify potential downside risks
before they become apparent in the data. These results are then subject to formal annual external peer review,
the result of which is an independent third party Statement of Actuarial Opinion, over the held reserves being at
least as high as a mean best estimate by year of account. The Statement is provided annually to Lloyd’s.
The governance process supporting Syndicate reserving is applied through a reserving committee, reporting to
the Audit Committee, which is responsible for approving Syndicate reserves quarterly, as delegated by the PMA
Board. The level of booked reserves is subject to an external audit annually.
Management of insurance risk (continued)
Claim estimates for 2022 Year of Account are sensitive to the actual rate of claims development and inflation. If
the Syndicate's rate of claim development is faster than the market, standard methods would overestimate
future claims. Conversely, if the Syndicate's rate of claim development is slower than the market, standard
methods would underestimate future claims. The Syndicate's portfolio consists of inwards reinsurance policies
which generally develop more slowly than direct policies due to reporting delays. Types of inflation that can
affect claim costs include wage inflation, cost of materials, medical inflation, and social inflation. Current
economic inflation is starting to slow down following the high levels in 2023 and 2024, therefore claim inflation
could be higher than the rate implicit captured by claim development patterns. The Syndicate has reviewed the
delay to the market development patterns including inflation to allow for this effect.
Claims estimates for settled and potential PPOs, for the 2023 Year of Account, are sensitive to inherent
uncertainty due to changes in:
•
the estimates of future inflation, specifically the wage inflation indices such as ASHE, that are used to
index future PPO payments;
•
the estimates of the future life expectancy of claimants; and
•
the estimates of the propensity of open claims to settle as a PPO, as opposed to a lump sum.
Changes to the discount rate, used to discount future claim payments, will also generate volatility in reserves,
which is mitigated by holding assets with a similar duration to the liabilities.
The risk of future inflation is partially mitigated by the fact that deductibles on inward claims are also indexed
for inflation. Finally, the gross insurance risk is mitigated by outwards reinsurance.
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Concentration of insurance risk
The increase in claims incurred in the early years are largely attributable to exposure to new claims during the
on-risk period of the underlying policies. Most policies are off-risk after two years from the end of the underwriting
year.
Sensitivity to insurance risk
The liabilities established could be significantly lower or higher than the ultimate cost of settling the claims
arising. This level of uncertainty varies between the classes of business and the nature of the risk being
underwritten and can arise from developments in case reserving for large losses and catastrophes, or from
changes in estimates of claims IBNR.
The following table presents the sensitivity of the value of insurance liabilities disclosed in the accounts to
potential movements in the assumptions applied within the technical provisions. Given the nature of the
business underwritten by the Syndicate, the approach to calculating the technical provisions for each class can
vary and as a result the sensitivity performed is to apply a beneficial and adverse risk margin to the total
insurance liability.
General insurance business sensitivities as at 31 December 2024
Sensitivity
+5.0%
£000
-5.0%
£000
Claims outstanding
–
gross of reinsurance
2,623
(2,623)
Claims outstanding
–
net of reinsurance
1,640
(1,640)
Sensitivity to insurance risk (continued)
General insurance business sensitivities as at 31 December 2023
Sensitivity
+5.0%
£000
-5.0%
£000
Claims outstanding
–
gross of reinsurance
3,359
(3,359)
Claims outstanding
–
net of reinsurance
2,121
(2,121)
B.
Financial risk
The focus of financial risk management for the Syndicate is ensuring that the proceeds from its financial assets
are sufficient to fund the obligations arising from its insurance contracts. The goal of the investment
management process is to optimise the risk adjusted investment income and risk adjusted total return by
investing in a diversified portfolio of securities, whilst ensuring that the assets and liabilities are managed on a
cash flow and duration matching basis.
a.
Credit risk
Credit risk arises where counterparties fail to meet their financial obligations in full as they fall due. The primary
sources of credit risk for the Syndicate are:
•
Reinsurers: Whereby reinsurers may fail to pay valid claims against a reinsurance contract held by the
Syndicate;
•
Brokers and intermediaries: Whereby counterparties fail to pass on premiums collected or claims paid
on behalf of the Syndicate; and
•
Investments: Whereby issuer default results in the Syndicate losing all or part of the value of a financial
instrument.
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Financial risk (continued)
i.
Management of credit risk
Inwards debtors arising out of reinsurance operations relate to funds withheld by a major cedant. The credit risk
on this balance is mitigated by netting-off against an equivalent liability for future claim payments.
ii.
Exposure to credit risk
The Syndicate has debtors, creditors, bank balances and investments in various currencies in the normal course
of its business. The Syndicate's exposure to credit risk is typical for an insurer. The most material external
exposure relates to £20.6m of UK Government gilts which are held in the investment portfolio. At present the
only exposure to reinsurers is on a funds withheld basis and intragroup, current exposures to brokers are
immaterial. Exposures to individual issuers of bonds are capped by the investment guidelines. The Syndicate
does not actively enter into derivatives, hedging or other uses of financial instruments as part of its financial risk
management.
The following table shows credit risk exposure of the
Syndicate’s
financial assets as at the balance sheet date.
AAA
£000
AA
£000
A
£000
BBB
£000
Other
£000
Not rated
£000
Total
£000
Shares and other variable yield securities
and units in unit trusts
2,302
-
47
-
-
14,794
17,143
Debt securities and other fixed income
securities
2,358
21,782
31,549
28,176
18
-
83,883
Syndicate loans to central fund
-
-
-
-
-
-
-
Deposits with ceding undertakings
-
-
21
-
-
-
21
Reinsurers’
share of claims outstanding
-
-
23,522
-
-
-
23,522
Debtors arising out of reinsurance
operations
-
13,804
-
-
-
-
13,804
Cash at bank and in hand
-
-
828
-
-
41
869
Other debtors and accrued interest
53
221
661
623
-
-
1,558
Total
4,713
35,807
56,628
28,799
18
14,835
140,800
Other debtors and accrued interest has been fully analysed in 2024 based on more accurate ratings.
Year 2023
AAA
£000
AA
£000
A
£000
BBB
£000
Other
£000
Not rated
£000
Total
£000
Shares and other variable yield securities
and units in unit trusts
126
-
56
-
-
13,770
13,952
Debt securities and other fixed income
securities
1,803
27,919
41,363
30,298
73
-
101,456
Syndicate loans to central fund
-
-
331
-
-
-
331
Deposits with ceding undertakings
-
-
7
-
-
-
7
Reinsurers’
share of claims outstanding
-
-
33,963
-
-
-
33,963
Debtors arising out of reinsurance
operations
-
-
-
-
-
15,679
15,679
Cash at bank and in hand
-
-
4,600
-
-
22
4,622
Other debtors and accrued interest
-
-
1,707
-
-
-
1,707
Total
1,929
27,919
82,027
30,298
73
29,471
171,717
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Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
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iii.
Reinsurance credit risk
Reinsurance credit risk is the risk that the Syndicate's reinsurance counterparties fail to pay debts owed to the
Syndicate, when these fall due, with a consequence that the Syndicate suffers bad debt.
PMA oversees the operation of the Syndicate's reinsurance programme and monitors reinsurer concentrations
as well as recoveries as they fall due. Outwards reinsurance credit matters are reported at the Syndicate's
Management Committee, which meets quarterly. The largest reinsurers used by the Syndicate operate on a
funds withheld basis and are Marco Group companies, hence credit risk is minimal on these counterparties.
iv.
Financial assets that are past due or impaired
The Syndicate has debtors arising from reinsurance operations. But none are past due or impaired, please see
analysis below;
Neither past
due
nor
impaired
assets
Past due
but not
impaired
assets
Gross
value of
impaired
assets
Impairment
allowance
Total
2024
£000
£000
£000
£000
£000
Shares and other variable yield
securities and units in unit trusts
17,143
-
-
-
17,143
Debt securities and other fixed income
securities
83,883
-
-
-
83,883
Syndicate loans to central fund
-
-
-
-
-
Deposits with ceding undertakings
21
-
-
-
21
Reinsurers' share of claims outstanding
23,522
-
-
-
23,522
Debtors arising out of reinsurance
operations
13,804
-
-
-
13,804
Other debtors and accrued interest
1,466
92
-
-
1,558
Cash at bank and in hand
869
-
-
-
869
Total
140,708
92
-
-
140,800
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Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
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Financial assets that are past due or impaired (continued)
Neither past
due nor
impaired
assets
Past due
but not
impaired
assets
Gross
value of
impaired
assets
Impairment
allowance
Total
2023
£000
£000
£000
£000
£000
Shares and other variable yield securities
and units in unit trusts
13,952
-
-
-
13,952
Debt securities and other fixed income
securities
101,456
-
-
-
101,456
Syndicate loans to central fund
331
-
-
-
331
Deposits with ceding undertakings
7
-
-
-
7
Reinsurers' share of claims outstanding
33,963
-
-
-
33,963
Debtors arising out of reinsurance
operations
15,679
-
-
-
15,679
Other debtors and accrued interest
1,707
-
-
-
1,707
Cash at bank and in hand
4,622
-
-
-
4,622
Total
171,717
-
-
-
171,717
b.
Liquidity risk
Liquidity risk is the risk of failure to ensure that sufficient financial resources are available at all times to meet
payment obligations, with financing only being possible at an additional cost.
I.
Management of liquidity risk
To mitigate liquidity risk, the Investment Committee regularly reviews cash flow projections and maintains cash
levels consistent with the needs of the Syndicate. In addition, an overdraft facility has been arranged, in order
to provide an additional layer of liquidity.
II.
Maturity analysis of syndicate liabilities
The following table illustrates the undiscounted maturity profile of the
Syndicate’s
financial liabilities.
Net cash flows
Year 2024
No
maturity
stated
£000
0-1 yrs
£000
1-3 yrs
£000
3-5 yrs
£000
>5 yrs
£000
Total
£000
Claims outstanding
-
21,410
21,004
10,019
84,850
137,283
Creditors
36,417
8,797
-
-
-
45,214
Total
36,417
30,207
21,004
10,019
84,850
182,497
Creditors have been reanalysed in 2024 on to a contractual basis, in 2023 these were presented on an
expected basis
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Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
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Maturity analysis of syndicate liabilities (continued)
Net cash flows
Year 2023
No
maturity
stated
£000
0-1 yrs
£000
1-3 yrs
£000
3-5 yrs
£000
>5 yrs
£000
Total
£000
Claims outstanding
-
22,624
22,475
5,814
60,597
111,510
Creditors
-
6,158
3,859
3,077
35,904
48,998
Total
-
28,782
26,334
8,891
96,500
160,508
c.
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument or insurance contract will
fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk,
currency risk and equity price risk.
The objective of market risk management is to manage and control market risk exposures within acceptable
parameters, while optimising the return on risk. The nature of the Syndicate exposures to market risk and its
objectives, policies and processes for managing market risk have not changed significantly from the prior year.
I.
Management of market risks
The Syndicate's asset holdings expose it to market risk, driven by the following sub-risk types: equity price,
currency, and interest rate risks. The Syndicate is also exposed to liquidity risk; however, this risk is low given
the investment strategy with significant highly liquid holdings in place.
The Syndicate’s assets are managed according to Marco
Group's Investment policy, which has been adopted
by the Syndicate’s Investment Committee. In order to mitigate market risk, the Committee has engaged an
external fund manager that provide a specialist service for insurers. The Committee assesses the investment
manager’s reports, monitors economic developments, and takes appropriate action to mitigate their effect on
the value of Syndicate assets. Asset-liability matching, by currency and duration, is used to mitigate currency
risk and interest rate risk. Spread risk and concentration risk are mitigated by investment guidelines, which
place limits on the amounts that can be invested with different grades of counterparty.
Currency risk and interest rate risk are covered in more detail in the sections below.
II.
Interest rate risk
Interest rate risk is the risk that the fair value and/or future cash flows of a financial instrument will fluctuate
because of changes in interest rates.
The Syndicate’s main exposure to fluctuations in interest rates arises from its effect on the valuation of assets
invested in fixed interest securities, such as government and corporate bonds. This is largely offset by
movements in the discount rate upon which the long-term claims liabilities are held, which act as a natural
hedge.
A large element of the Syndicate’s investments comprises fixed income securities. The fair value of the
investment in fixed income securities is inversely correlated to the movement in market interest rates. If market
rates fall, the fair value of the Syndicate’s fixed interest investments would tend to rise and vice versa.
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III.
Currency risk
The exposure to foreign currency risk arises from Syndicate business written outside the functional currency.
The Syndicate seeks to mitigate the risk by looking to match the estimated foreign currency denominated
liabilities with assets denominated in the same currency where possible.
The Syndicate is exposed to changes in the unmatched value of assets and liabilities due to movements in
foreign exchange rates.
The Syndicate has six settlement currencies: UK Sterling; Canadian dollars; Euros; Australian dollars; US
dollars; and Japanese Yen. Transactions also take place in other currencies, although these are immediately
converted to US dollars or UK Sterling, as required.
The Syndicate has not taken out any transactions to hedge these balances.
The table below summarises the carrying value of the
Syndicate’s
assets and liabilities, at the reporting date:
GBP
US $
Euro
CAN $
AUS $
JPY
Other
Total
2024
£000
£000
£000
£000
£000
£000
£000
£000
Investments
89,774
11,254
-
40
-
-
-
101,068
Reinsurers' share of
technical provisions
23,522
-
-
-
-
-
-
23,522
Debtors
-
13,804
-
-
-
-
-
13,804
Other assets
171
245
467
-
12
46
-
941
Prepayments and accrued
income
1,370
97
-
-
-
-
-
1,467
Total assets
114,837
25,400
467
40
12
46
-
140,802
Technical provisions
(47,344)
(32,643)
(539)
(76)
(2)
(28)
-
(80,632)
Creditors
(44,926)
(163)
-
-
-
-
-
(45,089)
Accruals and deferred
income
(567)
-
(5)
-
-
-
-
(572)
Total liabilities
(92,837)
(32,806)
(544)
(76)
(2)
(28)
-
(126,293)
Total Capital and
reserves
22,000
(7,406)
(77)
(36)
10
18
-
14,509
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Currency risk (continued)
GBP
US $
Euro
CAN $
AUS $
JPY
Other
Total
2023
£000
£000
£000
£000
£000
£000
£000
£000
Investments
95,234
20,470
-
57
-
-
-
115,760
Reinsurers' share of technical
provisions
33,963
-
-
-
-
-
-
33,963
Debtors
-
15,679
-
-
-
-
-
15,679
Other assets
3,857
710
88
-
14
4
-
4,673
Prepayments and accrued
income
1,462
179
-
-
-
-
-
1,641
Total assets
134,516
37,038
88
57
14
4
-
171,717
Technical provisions
(69,034)
(41,824)
(882)
(173)
(5)
(49)
-
(111,967)
Creditors
(48,848)
(21)
(4)
-
-
-
-
(48,873)
Accruals and deferred income
(582)
-
(8)
-
-
-
-
(590)
Total liabilities
(118,464)
(41,845)
(894)
(173)
(5)
(49)
-
(161,430)
Total Capital and reserves
16,052
(4,807)
(806)
(116)
9
(45)
-
10,287
IV.
Equity price risk
Equity price risk is the risk that the fair value of a financial instrument will fluctuate because of changes in market
prices (other than those arising from interest rate risk or currency risk), principally investment securities, whether
those changes are caused by factors specific to the individual financial instrument or its issuer, or factors
affecting all similar financial instruments traded in the market.
The Syndicate holds a limited portfolio of equities which are subject to equity price risk. This exposure benefits
members through the enhanced longer-term returns on equities compared with debt securities.
Equity price risks are managed by setting and monitoring objectives and constraints on investments,
diversification plans and limits on investments. The Management ensures that the Syndicate’s internal capital
requirements are met at all times, as well as those mandated by the Syndicate’s external regulators.
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Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
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V.
Sensitivity analysis to market risks
The analysis below is performed for reasonably possible movements in market indices on financial instruments
with all other variables held constant, showing the impact on the result before tax due to changes in fair value
of financial assets and liabilities (whose fair values are recorded in the profit and loss account) and members’
balances.
2024
Impact on
results
£000
2024
Impact on
members’
balances
£000
2023
Impact on
results
£000
2023
Impact on
members’
balances
£000
Interest rate risk
+ 50 basis points shift in yield curves
(2,268)
(2,268)
(3,313)
(3,313)
- 50 basis points shift in yield curves
3,382
3,382
4,791
4,791
Equity price risk
5 percent increase in equity prices
163
-
154
-
5 percent decrease in equity prices
(163)
-
(154)
-
A 10% increase (or decrease) in exchange rates, 5% increase (or decrease) in equity prices and a 50 basis
point increase (or decrease) in yield curves have been selected on the basis that these are considered to be
reasonably possible changes in these risk variables over the following year.
A 10% adverse movement in the values of all non US Dollar (the functional currency) net assets due to exchange
rate movements would lead to a £2.2m loss (2023: £1.6m loss).
Similarly, a 10% favourable movement would lead to a £2.2m profit (2023: £1.6m profit).
The sensitivity analysis demonstrates the effect of a change in a key variable while other assumptions remain
unchanged. However, the occurrence of a change in a single market factor may lead to changes in other market
factors as a result of correlations.
The sensitivity analyses do not take
into consideration that the Syndicate’s financial investments are actively
managed. Additionally, the sensitivity analysis is based on the Syndicate’s financial position at the reporting
date and may vary at the time that any actual market movement occurs. As investment markets move past
pre-
determined trigger points, action would be taken which would alter the Syndicate’s position.
d.
Capital management
I.
Capital framework at
Lloyd’s
The Society of
Lloyd’s
(Lloyd’s)
is a regulated undertaking and subject to the supervision of the PRA under the
Financial Services and Markets Act 2000 and in accordance with Solvency II requirements.
Within this supervisory framework,
Lloyd’s
applies capital requirements at member level and centrally to ensure
that Lloyd’s complies with Solvency II, and beyond that to meet its own financial strength, licence and ratings
objectives.
Although, as described below,
Lloyd’s
capital setting processes use a capital requirement set at syndicate level
as a starting point, the
requirement to meet Solvency II and Lloyd’s capital requirements apply at overall and
member level only respectively, not at syndicate level. Accordingly, the capital requirement in respect of
Syndicate 1254 is not disclosed in these financial statements.
Docusign Envelope ID: BF6D9D5A-05CA-42B3-B440-F06708556B6B
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Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
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II.
Lloyd’s
capital setting process
In order to meet
Lloyd’s
requirements, each Syndicate is required to calculate its Solvency Capital Requirement
(“SCR”) for the prospective underwriting year. This amount must be sufficient to cover a 1
-in-200 year loss,
reflecting uncertainty in the ultimate run-
off of underwriting liabilities (SCR ‘to ultimate’). The Syndicate must
also calculate its SCR at the same confidence level but reflecting uncertainty over a one year time horizon (one
year
SCR) for Lloyd’s to use in meeting Solvency II requirements.
The SCRs of each Syndicate are subject to
review by Lloyd’s and approval by the Lloyd’s Capital and Planning Group.
A syndicate must comprise one or more underwriting members of Lloyd’s. Each member is liable for its own
share of underwriting liabilities on the syndicate(s) on which it 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 is the member’s share of the Syndicate SCR ‘to ultimate’. Where a member participates on
more than one syndicate, a credit for diversification is provided to reflect the spread of risk, but consistent with
determining an SCR which reflects the capital requirement to cover a 1-in-200-
year loss ‘to ultimate’ for that
member. Over and above this, Lloyd’s applies a capital uplift to the member’s capital requirement, 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 Syndicate's objective is to comply with the Lloyd's capital setting process and to actively ensure policy
holder protection at all times. The Syndicate manages its member's balances, while FAL is managed by the
corporate member. Member's balances are held and invested in accordance with the approved investment
guidelines. Member's balances consist of retained surpluses and there are no other types of capital, such as
subordinated loans. There are no inadmissible assets. The Syndicate and its corporate member complied with
all Lloyd's requirements throughout the year.
III.
Provision of capital by members
Every member of
Lloyd’s
is required to hold additional capital at
Lloyd’s
which is held in trust and known as FAL.
These funds are required primarily in case a
syndicate’s assets prove
insufficient
to meet members’
underwriting
liabilities.
The level of FAL
that Lloyd’s requires a member to maintain is determined by Lloyd’s according to the nature
and the amount of risk to be underwritten by the member and the assessment of the reserving risk in respect of
that business.
In addition to the FAL and any additional funds a member may introduce to meet losses, there is a Central Fund
controlled by Lloyd’s which they may utilise to meet any syndicate liabilities that are not met by a member.
e.
Solvency risk
The Risk Committee, delegated by the Board, sets the Syndicate’s risk appetite in line with its strategy and
ensures that sufficient capital resources are raised to cover material risks, in line with regulatory and Lloyd’s
capital setting processes. The Risk Committee monitors risk appetite and tolerances on behalf of the Board on
a quarterly basis.
In the event of extreme adverse claims experience, it is possible that the Syndicate may not be able to settle its
claim liabilities out of its own funds. In that event, the capital structure underpinning the Syndicate is such that
any deficits can be called from the Syndicate’s capital provider (member) in accordance with Lloyd’s rules. In
the event of the member being unable to fulfil its share of such a call, Lloyd’s Central Fund may, at Lloyd’s
discretion, be applied to make good any deficits for the benefit of policyholders.
Docusign Envelope ID: BF6D9D5A-05CA-42B3-B440-F06708556B6B
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Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
www.polo.works
f.
Operational risk
Much of the effect of the Syndicate’s exposure to operational risks is reflected in the various risk headings
above, and is mitigated and managed through the design and implementation of management controls and
actions. The main additional exposures are in relation to business continuity, i.e. the risk that the ability of the
Syndicate to continue in business will be affected by events not reflected under other headings, for example the
impact of terrorist activity, and in the management of relationships and arrangements with key members of staff.
In relation to the former, the managing agent maintains a Business Continuity Plan ("BCP") which sets out the
anticipated risks, including those relating to the robustness and sustainability of IT infrastructure and business
applications, and the arrangements in place to mitigate those risks. The BCP is monitored and updated regularly.
There are established policies and procedures designed to achieve an appropriate commonality of interest
between the syndicate and the third parties concerned; these third-party relationships are regularly monitored
throughout, and contractual arrangements reviewed periodically; In addition, to mitigate the risk of loss of key
staff, the managing agent seeks to maintain a succession plan to reduce the dependence on any one individual
so far as is practicably possible.
Operational risk is monitored via regular risk and control assessments, reporting to management committees,
and tested for adequate risk mitigation in place through scenario assessments.
g.
Operational Resilience
Operational Resilience is concerned with “the ability of firms (and the financial sector as a whole) to prevent,
adapt, respond to, recover and learn from operational disruptions”.
The PMA Operations Committee is responsible for monitoring the implementation of operational resilience
requirements and to consider the work undertaken to date on the existing client base and also the future strategy
/ framework for new clients.
h.
Regulatory risk
The Managing Agent is required to comply, inter alia, with the requirements of the Prudential Regulation
Authority, the Financial Conduct Authority and
Lloyd’s.
Failure to comply with applicable regulations could result
in a variety of sanctions, the most extreme being a withdrawal of the right to conduct business at Lloyd’s.
Regulatory risk is the risk of loss owing to a breach of regulatory requirements or failure to respond to regulatory
change.
Lloyd’s
requirements include those imposed on the
Lloyd’s
market by overseas regulators, particularly
in respect of US situs business. The Agency has a Compliance Officer who manages a function that monitor
business activity and regulatory developments to assess any effects on the Agency.
The Managing Agent has established a culture of compliance and sound risk management, proportionate to the
nature, scale and complexity of the Syndicate's operations. Management has also put in place appropriate
monitoring structures to mitigate the risk of failing to meet this standard. The Director of Risk & Compliance
monitors regulatory developments to ensure the managing agent remains compliant. In addition, the
Compliance and the Risk Management functions provide oversight monitoring of adherence of compliance
policies and procedures and compliance controls testing as a part of their respective second-line function
responsibilities. The internal audit function supports the monitoring process via independent audits and directly
reports into the PMA Audit Committee, itself comprised of non-executive directors of the managing agent.
Docusign Envelope ID: BF6D9D5A-05CA-42B3-B440-F06708556B6B
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Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
www.polo.works
i.
Climate Change
Climate change is driving unprecedented physical impacts, with increased frequency of extreme weather events
and rising sea levels resulting in business disruption. At the same time, global policy and technology changes
that seek to limit warming and reduce the unprecedented physical effects can also cause disruption to business.
As with any form of disruption, climate change is creating and will continue to create risks and opportunities for
business in a number of ways. As prompted by the Paris Agreement, the recommendations of the Financial
Stability
Board’s
Task Force on Climate-Related Financial Disclosures ("TCFD"), the heightened awareness of
physical impacts and risks detailed in the Special Report of the Intergovernmental Panel on Climate Change
("IPCC") on Global Warming of 1.5°C, the impact of climate change, risk management and its integration into
business is key in long term resilience.
Climate change is one of the issues addressed by the Syndicate's Environmental, Social and Governance
framework (“ESG”). The Syndicate works with the appointed investment manager to:
•
consider adverse impacts of investment decisions, including greenhouse gas emissions, the use of
finite natural resources, and hazardous and non-recyclable waste, as well as violation of social norms
and employee rights;
•
consider Lloyd’s market
-wide ambition of phasing out investment in thermal coal-fired power plants,
thermal coal mines, oil sands and new Arctic energy exploration activities; and
•
identify, measure, and monitor exposures using industry research.
The Syndicate will continue to ensure compliance with future PRA and
Lloyd’s
requirements in relation to
climate change.
5.
Analysis of underwriting result
An analysis of the technical account balance before investment return is set out below:
2024
Gross
premiums
written
£000
Gross
premiums
earned
£000
Gross claims
incurred
£000
Net operating
expenses
£000
Reinsurance
balance
£000
Underwriting
result
£000
Reinsurance
acceptances
1,269
1,335
11,775
(1,483)
(7,322)
4,305
Total
1,269
1,335
11,775
(1,483)
(7,322)
4,305
The Syndicate does not write direct insurance, therefore no analysis is required. Premiums written in the year
relate to adjustments on previously underwritten portfolios.
2023
Gross
premiums
written
£000
Gross
premiums
earned
£000
Gross claims
incurred
£000
Net operating
expenses
£000
Reinsurance
balance
£000
Underwriting
result
£000
Reinsurance
acceptances
99,356
99,467
(81,426)
(209)
(13,902)
3.930
Total
99,356
99,467
(81,426)
(209)
(13,902)
3.930
In 2023, the Syndicate underwrote a portfolio comprising expired motor policies, consisting of catastrophic injury
claims; quota-share reinsurance cover is in place for this business.
All premiums were concluded in the United Kingdom.
No gains or losses were recognised in profit or loss during the year on buying reinsurance (2023: £
nil
).
Docusign Envelope ID: BF6D9D5A-05CA-42B3-B440-F06708556B6B
42
Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
www.polo.works
6. Net operating expenses
2024
£000
2023
£000
Acquisition costs
307
388
Administrative expenses
673
882
Members’
standard personal expenses
503
534
Reinsurance commissions and profit
participation
-
(1,595)
Net operating expenses
1,483
209
Member's standard personal expenses amounting to £503k (2023: £534k) is made up of managing agent's fees
£503k.
Administrative expenses include:
2024
£000
2023
£000
Auditors’
remuneration:
Fees payable to the
Syndicate’s
auditor for the audit of these financial
statements
130
129
Fees payable to the
Syndicate’s
auditor and its associates in respect of other
services pursuant to legislation
102
102
7.
Key management personnel compensation
No emoluments of the directors of PMA were directly charged to the Syndicate and consequently no meaningful
disclosure can be made. All disclosures relating to
directors’ emoluments and staff costs can be found in the
accounts of Polo Managing Agency Limited.
8.
Staff numbers and costs
There were no staff directly employed by the Syndicate. All disclosures relating to staff costs can be found in
the accounts of Polo Managing Agency Limited.
Docusign Envelope ID: BF6D9D5A-05CA-42B3-B440-F06708556B6B
43
Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
www.polo.works
9. Investment return
2024
£000
2023
£000
Interest and similar income
From financial instruments designated at fair value through profit or loss
Interest and similar income
5,097
4,482
Other income from investments
From financial instruments designated at fair value through profit or loss
Gains on the realisation of investments
535
473
Losses on the realisation of investments
(166)
(7)
Unrealised (losses)/gains on investments
(6,135)
1,270
Investment management expenses
(130)
(111)
Total investment return
(799)
6,107
Transferred to the technical account from the non-technical account
(799)
6,107
Investment return on Funds in Syndicate
-
-
Impairment losses on debtors recognised in administrative expenses
-
-
The investment return was wholly allocated to the technical account.
10. Distribution and open years of account
The loss on the closed year 2022 Year of Account (“YOA”) will lead to a cash call
rather than a distribution to
members. In 2023 there were no open year distributions or cash calls on the 2022 YOA or 2023 YOA.
11. Financial investments
Carrying value
Cost
2024
£000
2023
£000
2024
£000
2023
£000
Shares and other variable yield securities and units in
unit trusts
17,143
13,952
15,353
13,186
Debt securities and other fixed income securities
83,760
101,287
88,885
100,201
Syndicate loans to central fund
-
331
-
331
Other investments
164
191
164
191
Total financial investments
101,067
115,761
104,402
113,909
The amount ascribable to listed investments is £3,252k (2023: £3,088k).
The table below presents an analysis of financial investments by their measurement classification.
2024
£000
2023
£000
Financial assets measured at fair value through profit or loss
101,067
115,761
Financial assets measured at fair value as available for sale
-
-
Financial assets measured at amortised cost
-
-
Total financial investments
101,067
115,761
Docusign Envelope ID: BF6D9D5A-05CA-42B3-B440-F06708556B6B
Financial investments (continued)
44
Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
www.polo.works
During the year, the Syndicate has not held or purchased any derivative contracts: As the Syndicate is fully
aligned, the Syndicate may hold some of the capital supporting their underwriting in their
Syndicate’s
premium
trust funds. These funds are known as Funds In Syndicate (“FIS”) and can only contain Tier 1 Assets.
At 31 December 2024 there were no FIS (2023: £nil).
In accordance with FRS 102 paragraph 11.27 the above financial instruments have been classified using three
levels to estimate their fair values, with Level 1 being the most reliable. The levels within the fair value hierarchy
are defined as follows:
•
Level 1
–
The unadjusted quoted prices in an active market for identical assets or liabilities that the entity
can access at the measurement date.
•
Level 2
–
Inputs other than quoted prices included within Level 1 that are observable (i.e. developed using
market data), for the asset or liability, either directly or indirectly.
•
Level 3
–
Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability.
The table below analyses financial instruments held at fair value in the Syndicate’s balance sheet at the
reporting date by its level in the fair value hierarchy.
2024
Level 1
£000
Level 2
£000
Level 3
£000
Assets held at
amortised cost
Total
£000
Shares and other variable yield securities and
units in unit trusts
3,252
2,349
11,542
-
17,143
Debt securities and other fixed income
securities
-
83,760
-
-
83,760
Syndicate loans to central fund
-
-
-
-
-
Other investments
164
-
-
-
164
Total assets
3,416
86,109
11,542
-
101,067
Total
3,416
86,109
11,542
-
101,067
2023
Level 1
£000
Level 2
£000
Level 3
£000
Assets held at
amortised cost
Total
£000
Shares and other variable yield securities and
units in unit trusts
3,088
182
10,682
-
13,952
Debt securities and other fixed income
securities
-
101,287
-
-
101,287
Syndicate loans to central fund
-
-
331
-
331
Other investments
191
-
-
-
191
Total assets
3,279
101,469
11,013
-
115,761
Total
3,279
101,469
11,013
-
115,761
Docusign Envelope ID: BF6D9D5A-05CA-42B3-B440-F06708556B6B
Financial investments (continued)
45
Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
www.polo.works
Information on the methods and assumptions used to determine fair values for each major category of financial
instrument measured at fair value is provided below.
Equity instruments listed on a recognised exchange are valued using prices sourced from the primary exchange
on which they are listed. Units in unit trusts and OEICs are valued using the latest unit price or share price
provided by the unit trust or OEIC managers. Shares and other variable securities and units in unit trusts are
generally categorised as level 1 in the fair value hierarchy except where they are not actively traded, in which
case they are generally measured at prices of recent transactions in the same instrument. The Syndicate has
no exposure to hedge funds.
Debt securities are generally valued using prices provided by external pricing vendors. Pricing vendors will often
determine prices by consolidating prices of recent trades for identical or similar securities obtained from a panel
of market makers into a composite price. The pricing service may make adjustments for the elapsed time from
a trade date to the valuation date to take into account available market information. Lacking recently reported
trades, pricing vendors will use modelling techniques to determine a security price.
Some government and supranational securities are listed on recognised exchanges and are generally classified
as level 1 in the fair value hierarchy. Those that are not listed on a recognised exchange are generally based
on composite prices of recent trades in the same instrument and are generally classified as level 2 in the fair
value hierarchy.
Corporate bonds, including asset backed securities, that are not listed on a recognised exchange or are traded
in an established over-the-counter market are also mainly valued using composite prices. Where prices are
based on multiple quotes and those quotes are based on actual recent transactions in the same instrument the
securities are classified as level 2, otherwise they are classified as level 3 in the fair value hierarchy.
There are no derivative assets and liabilities held at the reporting date (2023: none held).
Management performs an analysis of the prices obtained from pricing vendors to ensure that they are
reasonable and produce a reasonable estimate of fair value. Management considers both qualitative and
quantitative factors as part of this analysis. Examples of analytical procedures performed include reference to
recent transactional activity for similar securities, review of pricing statistics and trends and consideration of
recent relevant market events.
At the reporting date Level 1 and Level 2 financial assets and liabilities were valued using valuation techniques
based on observable market data. All of the investments categorised as Level 3 are fair valued based on the
inputs to the valuation technique used. The Syndicate also invests in a level 3 senior secured credit fund, which
is measured at fair value, based on the net asset value of investee funds.
12. Debtors arising out of reinsurance operations
2024
£000
2023
£000
Amounts due within one year
13,804
15,679
Amounts due after one year
-
-
Total
13,804
15,679
Docusign Envelope ID: BF6D9D5A-05CA-42B3-B440-F06708556B6B
46
Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
www.polo.works
13. Other debtors
2024
£000
2023
£000
Other
92
66
Total
92
66
14. Claims Development
The following tables illustrate the development of the estimates of earned ultimate cumulative claims incurred,
including claims notified and IBNR, for each successive underwriting year, illustrating how amounts estimated
have changed from the first estimates made.
As these tables are on an underwriting year basis, there is an apparent large increase from amounts reported
for the end of the underwriting year to one year later as a large proportion of premiums are earned in the year
of account’s second year of development.
Balances have been translated at exchange rates prevailing at 31 December 2024 in all cases.
Gross:
2017 and prior
2018
2019
2023
Total
Pure underwriting year
£000
£000
£000
£000
£000
Estimate of gross claims
at end of underwriting year
34,515
38,343
37,006
73,826
one year later
59,973
87,249
66,663
57,730
two years later
60,745
93,185
68,397
-
three years later
63,721
90,283
65,905
-
four years later
62,170
87,993
71,127
-
five years later
62,154
92,481
72,002
-
six years later
63,042
93,622
-
-
seven years later
64,298
-
-
-
eight years later
-
-
-
-
nine years later
-
-
-
-
Estimate of gross claims reserve
64,298
93,622
72,002
57,730
287,652
Less gross claims paid
(57,998)
(78,398)
(60,333)
(10,687)
(207,416)
Gross claims reserve
6,300
15,224
11,669
47,043
80,236
Docusign Envelope ID: BF6D9D5A-05CA-42B3-B440-F06708556B6B
Claims Development (continued)
47
Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
www.polo.works
Net:
2017 and
prior
2018
2019
2023
Total
Pure underwriting year
£000
£000
£000
£000
£000
Estimate of net claims
at end of underwriting year
34,515
35,433
36,522
37,615
one year later
59,973
83,856
66,519
28,865
two years later
60,745
94,265
68,413
-
three years later
63,721
86,890
65,905
-
four years later
62,170
84,601
71,127
-
five years later
62,154
89,089
72,002
-
six years later
63,042
90,230
-
-
seven years later
64,298
-
-
-
eight years later
-
-
-
-
nine years later
-
-
-
-
Estimate of net claims reserves
64,298
90,230
72,002
28,865
255,395
Less net claims paid
(57,998)
(75,006)
(60,333)
(5,343)
(198,680)
Net claims reserve
6,300
15,224
11,669
23,522
56,715
15. Technical provisions
The table below shows changes in the insurance contract liabilities and assets from the beginning of the
period to the end of the period.
2024
2023
Gross
provisions
£000
Reinsurance
assets
£000
Net
£000
Gross
provisions
£000
Reinsurance
assets
£000
Net
£000
Balance at 1 January
111,510
(33,963)
77,547
55,574
-
55,574
Claims paid during the year
(19,818)
3,079
(16,739)
(25,265)
2,306
(22,959)
Change in estimates of
prior year provisions
(5,088)
3,808
(1,280)
134,831
(61,703)
73,128
Discount unwind
(6,687)
3,514
(3,173)
(53,405)
26,524
(26,881)
Foreign exchange
movements
319
40
359
(225)
(1,090)
(1,315)
Balance at 31 December
80,236
(23,522)
56,714
111,510
(33,963)
77,547
Docusign Envelope ID: BF6D9D5A-05CA-42B3-B440-F06708556B6B
Technical provisions (continued)
48
Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
www.polo.works
The unwind of discounting has been included within the statement of profit or loss
–
technical account
–
claims
incurred.
2024
2023
Gross
provisions
£000
Reinsurance
assets
£000
Net
£000
Gross
provisions
£000
Reinsurance
assets
£000
Net
£000
Unearned premiums
Balance at 1 January
457
-
457
595
-
595
Premiums written
during the year
1,269
-
1,269
99,356
(49,081)
50,275
Premiums earned
during the year
(1,335)
-
(1,335)
(99,467)
49,081
(50,386)
Foreign exchange
movements
6
-
6
(27)
-
(27)
Balance at 31
December
397
-
397
457
-
457
Refer to Note 4 for the sensitivity analysis performed over the value of insurance liabilities, disclosed in the
accounts, to potential movements in the assumptions applied within the technical provisions.
16. Discounted claims
Discounting may be applied to claims provisions where there are individual claims with structured settlements
that have annuity like characteristics, or for books of business with mean term payment greater than four years
from the accounting date.
The claims have been discounted as follows:
Average discounted rates
Average mean term of liabilities
2024
2023
2024
2023
Class of business
Motor (third party liability)
3.43%
3.27%
28
24
The period that will elapse before claims are settled is determined using adjusted mortality tables. The claims
provision before and after discounting are as follows:
Undiscounted claims
Effect of discounting
After discounting
2024
£000
2023
£000
2024
£000
2023
£000
2024
£000
2023
£000
Gross claims provisions
137,175
162,232
(57,046)
(50,265)
80,129
111,967
Reinsurers share of total claims
(52,045)
(58,924)
28,523
24,961
(23,522)
(33,963)
Net claims provisions
85,130
103,308
(28,523)
(25,304)
56,607
78,004
Docusign Envelope ID: BF6D9D5A-05CA-42B3-B440-F06708556B6B
49
Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
www.polo.works
17. Creditors arising out of reinsurance operations
2024
£000
2023
£000
Due within one year
45,089
48,873
Due after one year
-
-
Total
45,089
48,873
Reinsurance operations includes intragroup balances of £45.1m (2023: £48.9m), arising from the quota-share
agreement on 2023 year of account.
18. Other creditors
2024
£000
2023
£000
Other related party balances (non-syndicates)
125
125
Total
125
125
19. Cash and cash equivalents
2024
£000
2023
£000
Cash at bank and in hand
828
4,600
Deposits with credit institutions
230
371
Total cash and cash equivalents
1,058
4,971
Of the total cash and cash equivalents, the following amount was not available for use by the Syndicate because
it was held in regulated bank accounts in overseas jurisdictions:
2024
£000
2023
£000
Cash at bank and in hand
30
27
Total cash and cash equivalents not
available for use by the syndicate
30
27
20. Analysis of net debt
At 1 January
2024
Cash
flows
Acquired
Fair value and
exchange
movements
Non-cash
changes
At 31
December
2024
Cash and cash
equivalents
4,971
(3,919)
-
6
-
1,058
Total
4,971
(3,919)
-
6
-
1,058
Docusign Envelope ID: BF6D9D5A-05CA-42B3-B440-F06708556B6B
50
Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
www.polo.works
21. Related parties
•
During the year Polo Managing Agency Limited recharged £0.5m (2023: £0.5m) in respect of managing
agents fee and time and materials costs. This amount has been charged on an arm's-length basis.
•
In 2023 the Syndicate entered into a quota share with intragroup companies. Funds withheld balances
are £45.1m (2023: £48.9m) on the 2023 year of account. The ceding commission has been credited to
net operating expenses.
These disclosure requirements are in addition to the requirement to disclose key management personnel
compensation. This disclosure is given in note 7
.
22. Off-balance sheet items
The Syndicate has not been party to an arrangement, which is not reflected in its balance sheet, where material
risks and benefits arise for the Syndicate.
23. Post balance sheet events
The Syndicate has entered into an agreement with Coverys to take on the RITC of Syndicate 1975 2022 YOA.
This will take effect from 1.1.2025.
24. Contingencies and commitments
There are no contingencies or commitments.
25. Foreign exchange rates
The following currency exchange rates have been used for principal foreign currency transactions:
2024
2023
Start of
period rate
Year-end
rate
Average
rate
Start of
period rate
Year-end
rate
Average
rate
Sterling
Euro
US dollar
Canadian dollar
Australian dollar
Japanese Yen
26. Funds at
Lloyd’s
Every member is required to hold capital at
Lloyd’s
which is held in trust and known as Funds at
Lloyd’s.
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 Prudential Regulatory Authority requirements and resource criteria. The
determination of FAL has regard to a number of factors including the nature and amount of risk to be
underwritten by the member and the assessment of the reserving risk in respect of business that has been
underwritten. Since FAL is not under the management of the Managing Agent, no amount has been shown in
these Financial Statements by way of such capital resources. However, the Managing Agent is able to make a
call on the Member’s FAL to meet liquidity requirements or to settle losses.
Docusign Envelope ID: BF6D9D5A-05CA-42B3-B440-F06708556B6B
51
Registered office: Polo Managing Agency, registered in England & Wales Registration no. 03935227
www.polo.works
27. Disclosure of Interest
Managing
Agent’s
interest:
During 2024 PMA was the Managing Agent for five Syndicates. Syndicates 1110, 1347, 1975, 1996 and 1254.
Syndicates taken on this year are:
On 9 August 2024, PMA took on the management of Syndicate 1110
Effective from the 1
st
January 2025, PMA has taken on the management of two further syndicates:
Syndicate 2843 Oak Reinsurance
Syndicate 2025 Awbury
The Financial Statements of the Managing Agent can be obtained by application to the Registered Office (see
page 3).
Docusign Envelope ID: BF6D9D5A-05CA-42B3-B440-F06708556B6B