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Report & Financial Statements
Syndicate 3902
2024
Ark Syndicate Management Limited
Syndicate 3902
Contents
Directors and administration
2
Syndicate Information
3
Managing agent’s report
4
Statement of managing agent’s responsibilities
9
Independent auditors’ report to the member of Syndicate 3902
10
Income statement and Statement of comprehensive income
13
Statement of financial position
14
Statement of changes in member’s balances
16
Statement of cash flows
17
Notes to the financial statements
18
Ark Syndicate Management Limited
Syndicate 3902
2
Directors and administration
Managing agent
Directors
C Atkin
(non-executive Chairman)
I Beaton
(Chief Executive)
N Brothers
M Burch
(Non-executive)
P Dawson
N Fox
P McIntosh
M Raven
M Rountree
(Non-executive)
N Smith
J Wardrop
(Non-executive)
J Welman
(Non-executive)
Company secretary
J Masson
Managing agent’s registered office
30 Fenchurch Avenue
London
EC3M 5AD
Managing agent’s company registration number
05887810
Ark Syndicate Management Limited
Syndicate 3902
3
Syndicate information
Active underwriter
P Dawson
Bankers
Lloyds TSB Bank plc
Citibank NA
Royal Bank of Canada
Investment managers
Conning Asset Management Limited
55 King William Street
London
EC4R 9AD
Independent auditors
PricewaterhouseCoopers LLP
7 More London Riverside
London
SE1 2RT
Ark Syndicate Management Limited
Syndicate 3902
4
Managing agent’s report
The directors of the managing agent present their annual report and audited accounts for the year to 31 December 20 24 . (Prior period: year to 31 December 2023 )
Principal activity and review of the business
The principal activity of the Syndicate is the underwriting of direct and reinsurance business in the Lloyd’s market. The managing agent of the Syndicate is Ark Syndicate
Management Limited (“ASML”), a company incorporated in the UK. ASML also manages the affairs of Syndicate 4020. Gross written premium income for the Year of
Account (“YOA”) and calendar (“Cal”) year is set out below, along with a brief description of each class of business:
2024
2023
2022
2024
2023
YOA Estimate
YOA Estimate
YOA Closed
Cal year
Cal year
£’000
£’000
£’000
£’000
£’000
Marine & Energy
62,346
69,889
63,480
71,718
69,856
Property
75,249
72,767
49,293
74,147
73,790
Specialty
57,590
59,091
60,160
63,849
61,476
195,185
201,747
172,933
209,714
205,122
Line of business
Reserving class and description
Marine & Energy
Cargo & Specie: Focus on small / medium sized accounts, excludes cash in transit, war on land and jewellers block.
Marine & Energy
Marine Hull & liability: emphasis on smaller brown water tonnage and older vessels on limited conditions and of protection &
indemnity (“P&I”), charters and umbrella liability.
Marine & Energy
Energy: Upstream oil and gas focussed with a broad geographical spread.
Property
Direct & Facultative: predominately written on an excess of loss basis, and consists of a diverse mix of municipalities, real
estate, heavy industry, energy, utility, transport and leisure.
Specialty
Aviation: consists of airline, general aviation (including rotor wing), hull war and excess of loss / space.
Specialty
Accident & Health: Excess of loss reinsurance makes up approximately 60% of the account, with the remainder comprising a
portfolio of contracts which cover key man, disability, credit card, sports and other personal accident risks, along with a small
direct and facultative account.
Specialty
Contingency: predominantly short tail with event cancellation the largest part.
Specialty
Political Risk & Violence: Covers all areas of the broad Political Risks and Political Violence suite of products capitalising on
cross-class, client sector and territorial knowledge.
Principal risks and uncertainties
ASML maintains a risk register within its risk management framework. Identified risk events are grouped into major risk categories according to the nature of the
potential threat they pose to the business. The risk management framework allows risks to be identified and controls to be put in place as necessary, either to prevent
the occurrence of the event or to mitigate its impact. The principal risks of the Syndicate are set out in note 2 of the accounts.
Auditors and Annual general meeting
As permitted under the Syndicate Meeting (Amendment No.1) Byelaw it is not proposed to hold a Syndicate Annual General Meeting. The members of the Syndicate
appointed PricewaterhouseCoopers LLP as auditors for the financial year ending 31 December 2021.
Disclosure of information to auditors
The directors of ASML who held office at the date of approval of this report confirm that, so far as they are each aware, there is no relevant audit information of which
the auditors of the Syndicate are unaware; and each director has taken all the steps that they ought to have taken as a director to make themselves aware of any
relevant audit information and to establish that the auditors of the Syndicate are aware of that information.
Ark Syndicate Management Limited
Syndicate 3902
5
Managing agent’s report
Six year summary - closed years
2022
YOA
2021
YOA
2020
YOA
2019
YOA
2018
YOA
2017
YOA
Syndicate allocated capacity (£m)
150.0
150.0
100.0
100.0
100.0
100.0
Number of Underwriting Members
1
1
1
1
1
1
Aggregate net premiums (£‘000)
103,767
87,392
75,611
45,427
51,025
39,110
Illustrative share of £10,000
%
%
%
%
%
%
Gross premium written (% of illustrative share)
91.5
78.0
85.1
71.0
76.5
59.8
Net premium written (% of illustrative share)
69.7
61.1
63.8
47.0
49.9
41.6
Profit / (Loss) (% of gross premium)
20.3
12.5
21.4
0.9
12.6
(8.9)
Profit / (Loss) (% of capacity)
18.6
9.8
18.2
0.7
9.7
(5.3)
Results for illustrative share of £10,000
£
£
£
£
£
£
Gross premiums written
9,147
7,795
8,512
7,101
7,646
5,979
Net premiums
6,972
6,107
6,377
4,704
4,992
4,157
RITC from an earlier year of account
4,098
2,250
1,601
1,065
975
-
Net claims
(2,860)
(2,042)
(1,424)
(2,404)
(2,861)
(2,654)
Reinsurance to close
(4,949)
(4,087)
(2,956)
(1,922)
(1,065)
(996)
Underwriting profit
3,261
2,228
3,598
1,443
2,041
507
Other syndicate operating expenses
(1,096)
(918)
(1,065)
(1,336)
(1,005)
(1,003)
Movement on foreign currency translation
21
(61)
(111)
-
-
-
Net investment return
293
139
(9)
105
76
95
Illustrative personal expenses:
Managing agent’s fee
(75)
(75)
(75)
(75)
(75)
(75)
Profit commission (“PC”)
(465)
(261)
(449)
-
-
-
Other personal expenses
(77)
(75)
(66)
(69)
(69)
(54)
Profit / (Loss) after illustrative personal
expenses / PC
1,862
977
1,823
68
968
(530)
Underwriting performance
YOA::
The 2022 YOA has closed with a profit of £27.9m after all standard personal expenses, equivalent to a profit on stamp capacity of 18.6% The claims experience for the
YOA has been good, with Hurricane Ian and Winter Storm Elliott the largest losses to impact the year. Investment return for the YOA was also better than plan, boosted
by increased interest rates.
The 2023 YOA is forecast at the 24 months to make a mid-point profit of £35.5m. The YOA has benefited from a low incidence of major natural catastrophe losses to
date. A forecast is not currently required for the 2024 YOA.
2024 YOA
2023 YOA
Capacity
£250.0m
£200.0m
Forecast results (% of capacity)
na
15.2% - 20.2%
Ark Syndicate Management Limited
Syndicate 3902
6
Managing agent’s report
Calendar year:
The profit for the 2024 calendar year is £32.2m (2023: £21.0m), which is better than plan. Despite an active US wind season, underwriting returns remain strong, which
along with the recent premium growth has led to strong inwards underwriting cashflow in the year. Investment returns in the year have been boosted by elevated
interest rates. The calendar year result together with key performance indicators is shown below:
2024
2023
Profit for the financial year (£’000)
32,211
20,993
Claims ratio (%)
39.6%
48.6%
Expense ratio (%)
44.3%
40.8%
Combined ratio (%)
83.9%
89.4%
The claims ratio is the ratio of claims incurred net of reinsurance to earned premiums net of reinsurance. The expense ratio is the ratio of operating expenses and
acquisition costs (excluding foreign exchange movements) to earned premiums net of reinsurance. The claims ratio reflects the underwriting issues previously noted,
and the expense ratio is broadly in line with plan. The combined ratio including all foreign exchange movements is 83.4%. (2023: 90.4%)
Operating expenses
Operating expenses, as set out below, are in line with plan.
2024
2023
£’000
£’000
Acquisition costs – brokerage and commissions
38,116
35,088
Acquisition costs – other
3,539
3,699
Administrative expenses
22,288
16,976
Managing agency fee
1,763
1,425
Personal expenses
8,379
5,113
Operating expenses
74,085
62,301
Cash flow
There was a net cash flow increase of £0.5m (2023: decrease £3.7m) in the year arising from normal operating activities. Profit releases on open years of £14.7m
(2023: £25.1m) were made during the year. On 26 February 2025, the ASML board approved a profit release of £29.3m for the 2023 YOA.
Investment return
Syndicate 4020 holds the majority of the cash and investments of the Syndicate, and allocates the appropriate share of investment return to the Syndicate. Funds are
actively managed by third party investment managers. Syndicate 4020 has a diversified portfolio in corporate debt, cash, property funds and investment funds with an
average duration that is appropriate compared to the expected liability duration. As set out below, the investment portfolio has returned a profit for the 2024 calendar
year.
2024
2023
Average funds available for investment in Syndicate 4020 and Syndicate 3902 (US$’000)
1,152,450
950,782
Investment return for the year before allocation to Syndicate 3902 (US$’000)
60,375
53,329
Annualised investment return (%)
5.2%
5.6%
Investment gains in the syndicate totalled £5.4m, generated from average assets of £105.3m.
Ark Syndicate Management Limited
Syndicate 3902
7
Managing agent’s report
Financial position
The main components of the statement of financial position are technical provisions and investments and cash.
Technical provisions include a provision for outstanding claims of £219.3m (2023: £185.2m) and a provision for unearned premiums of £107.6m (2023: £102.6m). The
reinsurers’ share of technical provisions is £66.3m (2023: £53.5m) in respect of unearned premiums and £8.7m (2023: £8.2m) for outstanding claims. The provision
for outstanding claims is based on evaluations of reported claims and estimates for losses incurred but not reported (“IBNR”). As claims may not be settled for a number
of years after they are incurred, the setting of provisions involves a degree of judgement as to the ultimate exposure to losses. Investments and cash total £225.6m
(2023: £178.0m).
Auditors and Annual general meeting
As permitted under the Syndicate Meeting (Amendment No.1) Byelaw it is not proposed to hold a Syndicate Annual General Meeting. The member of the Syndicate
appointed PricewaterhouseCoopers LLP as auditors for the financial year ending 31 December 2024.
Disclosure of information to auditors
The directors of ASML who held office at the date of approval of this report confirm that, so far as they are each aware, there is no relevant audit information of which
the auditors of the Syndicate are unaware; and each director has taken all the steps that they ought to have taken as a director to make themselves aware of any
relevant audit information and to establish that the auditors of the Syndicate are aware of that information
Directors
The directors of ASML served from 1 January 2023 to the date of this report, unless stated otherwise. Shareholdings in the ultimate parent company of ASML, Ark
Insurance Holdings Limited (“AIHL”) are stated as at 31 December 2024.
A1
Ordinary
shares
A2
Ordinary
shares
A3
Ordinary
shares
B1
Ordinary
shares
B3
Ordinary
shares
Z
Ordinary
shares
Z1
Ordinary
shares
C1
Ordinary
shares
C2
Ordinary
shares
Name
No.
No.
No.
No.
No.
No.
No.
No.
No.
C Atkin
-
-
-
-
-
-
-
-
-
I Beaton
129,803
18,309
-
78,777
-
908,621
555,439
76,894
12,857
N Brothers
-
-
6,970
-
4,230
-
-
12,726
2,127
M Burch
-
-
-
-
-
-
-
-
-
P Dawson
-
-
24,729
-
15,008
-
-
35,632
5,957
N Fox
-
-
18,079
-
10,972
-
-
22,906
3,830
P McIntosh
-
-
21,046
-
12,773
-
-
15,271
2,553
M Raven
-
-
18,079
-
10.972
-
-
22,906
3,830
M Rountree
-
-
-
-
-
-
-
-
-
N Smith
-
-
19,577
-
11,881
-
-
35,632
5,957
J Wardrop
-
-
-
-
-
-
-
-
-
J Welman
-
-
-
-
-
-
-
-
-
Going concern
The directors of ASML have reviewed the business plan, liquidity and operational resilience of the company, including the risks associated with the COVID-19
pandemic and the ongoing conflict in Ukraine and the recent wildfires in California. They have concluded that there are no material uncertainties that could cast
significant doubt over the Syndicate’s ability to continue as a going concern for at least a year from the date of approval of the Syndicate annual accounts.
Management's assessment of going concern is set out in note 1 on page 17.
Ark Syndicate Management Limited
Syndicate 3902
8
Managing agent’s report
Future developments
The capacity of the Syndicate for the 2025 YOA is £250.0m (2024 YOA: £250.0m). The capacity of Syndicate 4020 for the 2025 YOA is £750.0m (2024 YOA: £600.0m).
P Dawson,
Active Underwriter,
6 March 2024
Ark Syndicate Management Limited
Syndicate 3902
9
Statement of managing agent’s responsibilities
The directors of the managing agent are responsible for preparing the Syndicate annual accounts in accordance with applicable law and regulations.
The Insurance Accounts Directive (Lloyds’s Syndicate and Aggregate Accounts) Regulations 2008 requires the directors of the managing agent to prepare their
Syndicate’s annual accounts for each financial year. Under that law they have elected to prepare the annual accounts in accordance with UK Accounting Standards
and applicable law (UK Generally Accepted Accounting Practice), including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland.
Under Insurance Accounts Directive (Lloyds’s Syndicate and Aggregate Accounts) Regulations 2008 the directors of the managing agent must not approve the annual
accounts 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 these annual accounts, the directors of the managing agent are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the annual accounts;
• assess the syndicate’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
• use the going concern basis of accounting unless they either intend to cease trading, or have no realistic alternative but to do so.
The directors of the managing agent are responsible for the preparation and review of the iXBRL tagging that has been applied to the Syndicate Accounts in accordance
with the instructions issued by Lloyd’s, including designing, implementing, and maintaining systems, processes and internal controls to result in tagging that is free from
material non-compliance with the instructions issued by Lloyd’s, whether due to fraud or error.
The directors of the managing agent are responsible for keeping adequate accounting records that are sufficient to show and explain the Syndicate’s transactions and
disclose with reasonable accuracy at any time the financial position of the Syndicate and enable them to ensure that the Syndicate annual accounts comply with the
Insurance Accounts Directive (Lloyds’s Syndicate and Aggregate Accounts) Regulations 2008. They are responsible for such internal control as they determine is
necessary to enable the preparation of Syndicate annual accounts that are free from material misstatement, whether due to fraud or error, and have general responsibility
for taking such steps as are reasonably open to them to safeguard the assets of the Syndicate and to prevent and detect fraud and other irregularities.
The directors of the managing agent are responsible for the maintenance and integrity of the Syndicate and financial information included on the Syndicate’s website.
Legislation in the UK governing the preparation and dissemination of Syndicate annual accounts may differ from legislation in other jurisdictions.
On behalf of the board
Neil Smith
Director
6 March 2025
Ark Syndicate Management Limited
Syndicate 3902
10
Independent auditors’ report to the member of Syndicate 3902
Opinion
In our opinion, 3902’s syndicate annual accounts:
• give a true and fair view of the state of the syndicate’s affairs as at 31 December 2024 and of its profit and cash flows for the year then ended;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards,
including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law); and
• have been prepared in accordance with the requirements of The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations
2008 and the requirements within the Lloyd’s Syndicate Accounts Instructions version 2.0 as modified by the Frequently Asked Questions issued by Lloyd’s
version 1.1 (“the Lloyd’s Syndicate Instructions”).
We have audited the syndicate annual accounts included within the Report and Financial Statements (the “Annual Report”), which comprise: the statement of financial
position as at 31 December 2024; the income statement, the statement of comprehensive income, the statement of cash flows and the statement of changes in member’s
balances for the year then ended; and the notes to the syndicate annual accounts which include a description of the significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”), The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate
Accounts) Regulations 2008, the Lloyd’s Syndicate Instructions and other applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’
responsibilities for the audit of the syndicate annual accounts section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We remained independent of the syndicate in accordance with the ethical requirements that are relevant to our audit of the syndicate annual accounts in the UK, which
includes the FRC’s Ethical Standard, as applicable to other entities of public interest, and we have fulfilled our other ethical responsibilities in accordance with these
requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided.
Conclusions relating to going concern
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast
significant doubt on the syndicate’s ability to continue as a going concern for a period of at least twelve months from when the syndicate annual accounts are authorised
for issue.
In auditing the syndicate annual accounts, we have concluded that the Managing Agent’s use of the going concern basis of accounting in the preparation of the syndicate
annual accounts is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the syndicate's ability to continue as a going concern.
Our responsibilities and the responsibilities of the Managing Agent with respect to going concern are described in the relevant sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the syndicate annual accounts and our auditors’ report thereon. The Managing
Agent is responsible for the other information. Our opinion on the syndicate annual accounts does not cover the other information and, accordingly, we do not express
an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the syndicate annual accounts, our responsibility is to read the other information and, in doing so, consider whether the other information
is materially inconsistent with the syndicate annual accounts or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an
apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the syndicate
annual accounts or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Managing Agent’s Report (the “Managing Agent’s Report”), we also considered whether the disclosures required by The Insurance Accounts
Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 have been included.
Ark Syndicate Management Limited
Syndicate 3902
11
Independent auditors’ report to the member of Syndicate 3902
Based on our work undertaken in the course of the audit, The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 requires us
also to report certain opinions and matters as described below.
Managing Agent’s Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Managing Agent’s Report for the year ended 31 December 2024 is
consistent with the syndicate annual accounts and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the syndicate and its environment obtained in the course of the audit, we did not identify any material misstatements in
the Managing Agent’s Report.
Responsibilities for the syndicate annual accounts and the audit
Responsibilities of the Managing Agent for the syndicate annual accounts
As explained more fully in the Statement of Managing Agent’s Responsibilities, the Managing Agent is responsible for the preparation of the syndicate annual accounts
in accordance with the applicable framework and for being satisfied that they give a true and fair view. The Managing Agent is also responsible for such internal control
as they determine is necessary to enable the preparation of syndicate annual accounts that are free from material misstatement, whether due to fraud or error.
In preparing the syndicate annual accounts, the Managing Agent is responsible for assessing the syndicate’s ability to continue as a going concern, disclosing as
applicable, matters related to going concern and using the going concern basis of accounting unless it is intended for the syndicate to cease operations, or it has no
realistic alternative but to do so.
Auditors’ responsibilities for the audit of the syndicate annual accounts
Our objectives are to obtain reasonable assurance about whether the syndicate annual accounts as a whole are free from material misstatement, whether due to fraud
or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these syndicate annual accounts.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to
detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is
detailed below.
Based on our understanding of the syndicate and industry, we identified that the principal risks of non-compliance with laws and regulations related to breaches of
regulatory principles, such as those governed by the Prudential Regulation Authority and the Financial Conduct Authority, and those regulations set by the Council of
Lloyd’s, and we considered the extent to which non-compliance might have a material effect on the syndicate annual accounts. We also considered those laws and
regulations that have a direct impact on the syndicate annual accounts such as The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts)
Regulations 2008 and the Lloyd’s Syndicate Instructions . We evaluated management’s incentives and opportunities for fraudulent manipulation of the syndicate annual
accounts (including the risk of override of controls), and determined that the principal risks were related to the risk of fraud in revenue recognition, journal entries, and
the potential for management bias in significant accounting estimates, particularly in relation to incurred but not reported claims provisions included in technical provisions
and the estimation of gross written premiums. Audit. Audit procedures performed by the engagement team included:
• Discussions with senior management involved in the Risk and Compliance functions, including consideration of known or suspected instances of
noncompliance with laws and regulation and fraud;
• Assessment of any matters reported in the fraud suspicion log and the compliance issues and breach log and the results of management’s investigation
of such matters;
• Reading key correspondence with Lloyd’s, the Prudential Regulation Authority and the Financial Conduct Authority in relation to compliance with laws and
regulations;
• Reviewing relevant meeting minutes including those of the Board and Audit and Risk Assurance Committee;
• Testing journal entries identified in accordance with our fraud risk assessment;
Ark Syndicate Management Limited
Syndicate 3902
12
Independent auditors’ report to the member of Syndicate 3902
• Testing and challenging where appropriate the assumptions and judgements made by management in their significant accounting estimates, particularly in
relation to incurred but not reported provisions included in technical provision and the estimation of gross written premiums; and
• Designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations
that are not closely related to events and transactions reflected in the syndicate annual accounts. Also, the risk of not detecting a material misstatement due to fraud is
higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or
through collusion.
A further description of our responsibilities for the audit of the syndicate annual accounts is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the syndicate’s member in accordance with part 2 of The Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Other required reporting
Under The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the Managing Agent in respect of the syndicate; or
• certain disclosures of Managing Agent remuneration specified by law are not made; or
• the syndicate annual accounts are not in agreement with the accounting records.
We have no exceptions to report arising from this responsibility.
Other matter
We draw attention to the fact that this report may be included within a document to which iXBRL tagging has been applied. This auditors’ report provides no assurance
over whether the iXBRL tagging has been applied in accordance with section 2 of the Lloyd’s Syndicate Instructions version 2.0.
Sean Forster (Senior statutory auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
6 March 2025
Ark Syndicate Management Limited
Syndicate 3902
13
Income statement
For the year ended 31 December 2024
2024 | 2023 | |
Notes | £’000 | £’000 |
Technical account | ||
Earned premiums, net of reinsurance | ||
Gross premiums written 3 | ||
Outward reinsurance premiums | ( | ( |
Change in the provision for unearned premiums | ||
Gross amount | ( | ( |
| Reinsurers’ share | ||
Earned premiums, net of reinsurance | ||
Allocated investment return transferred from the non-technical account 4 | ||
Claims incurred, net of reinsurance | ||
Claims paid | ||
Gross amount | ( | ( |
| Reinsurers’ share | ||
( | ( | |
Change in the provision for claims | ||
Gross amount | ( | ( |
| Reinsurers’ share | ( | |
( | ( | |
Claims incurred, net of reinsurance | ( | ( |
| Operating expenses 5 | ( | ( |
Balance on the technical account for general business | ||
| Non-technical account | ||
Investment return | ||
Allocated investment return transferred to technical account | ( | ( |
Profit for the financial year |
Statement of comprehensive income
For the year ended 31 December 2024
2024 | 2023 | |
Notes | £’000 | £’000 |
Profit for the financial year | 32,211 | 20,993 |
Foreign exchange translation differences | ( | |
Total comprehensive income for the year 13 |
All operations are continuing. The notes on pages 18 to 39 form part of these accounts.
Ark Syndicate Management Limited
Syndicate 3902
14
Statement of financial position
As at 31 December 2024
2024
2023
Notes
£’000
£’000
Assets
Financial Investments
Deposit with ceding undertakings
Investments
7
Provision for unearned premium
Claims outstanding
8
Reinsurers’ share of technical provisions
Debtors arising out of direct insurance operations
10
Debtors arising out of reinsurance operations
11
Other debtors
Debtors
Cash at bank and in hand
12
Deferred acquisition costs
9
Other prepayments and accrued income
Prepayments and accrued income
Total assets
Ark Syndicate Management Limited
Syndicate 3902
15
Statement of financial position (continued)
As at 31 December 2024
Notes
2024
£’000
2023
£’000
Capital, reserves and liabilities
Capital and reserves
Member’s balances attributable to underwriting participations
14
Liabilities
Provision for unearned premium
13
Claims outstanding
13
Technical provisions
Creditors arising out of direct insurance operations
15
Creditors arising out of reinsurance operations
16
Creditors
Accruals and deferred income
Total liabilities
Total capital, reserves and liabilities
Comparative has been presented in compliance with the Lloyd’s syndicate Accounts Instructions. Further details provided in notes 1 and 22.
The notes on pages 18 to 39 form part of these accounts. The accounts were approved by the Board of Ark Syndicate Management Limited on 26 February 2025
and signed on its behalf by
N Smith
Director
6 March 2025
Ark Syndicate Management Limited
Syndicate 3902
16
Statement of changes in member’s balances
For the year ended 31 December 2024
2024 | 2023 | |
Notes | £’000 | £’000 |
Members balances brought forward at 1 January | ||
Total comprehensive income for the year | ||
| Payments of profit to members’ personal reserve funds | ( | ( |
Other | ( | |
| Members balances carried forward at 31 December 14 |
The notes on pages 18 to 39 form part of these accounts.
Ark Syndicate Management Limited
Syndicate 3902
17
Statement of cash flows
For the year ended 31 December 2024
Notes
2024
£’000
2023
£’000
Profit for the financial year
Change in gross technical provisions
Change in reinsurers’ share of gross technical provisions
(13,405 )
Change in insurance receivables and other debtors
(4,835 )
(3,557 )
Change in insurance payables and other creditors
(1,549 )
(8,940 )
Change in deferred acquisition costs and other assets/ liabilities
Investment return
(5,423 )
(4,878 )
Foreign exchange
Net cash flows from operating activities
Purchase of equity and debt instruments
(131,644 )
(58,091 )
Sale of equity and debt instruments
Investment income received
Investment management fees
(52 )
(40 )
Net cash flows used in investing activities
(49,821 )
(39,588 )
Distribution loss / (profit)
(2,778 )
Open year profit release
14
(14,701 )
(25,080 )
Net cash flows used in financing activities
(10,949 )
(27,858 )
Net increase / (decrease) in cash and cash equivalents
(3,526 )
Cash and cash equivalents at 1 January
Foreign exchange on cash and cash equivalents
(451 )
(220 )
Cash and cash equivalents at 31 December
12
The notes on pages 18 to 39 form part of these accounts.
Ark Syndicate Management Limited
Syndicate 3902
18
Notes to the financial statements
1. Statement of accounting policies
The financial statements have been prepared in accordance with the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and
Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (“FRS 102”) as issued in August 2015, and Financial
Reporting Standard 103 Insurance Contracts (“FRS 103”) as issued in March 2015, as well as the Lloyd’s Syndicate Accounts Instructions Version 2.0 as modified by
the Frequently Asked Questions Version 1.1 issued by Lloyd’s.
Basis of preparation
The financial statements are prepared using the historical cost convention except that financial investments and derivative financial instruments are stated at their fair
value. All amounts presented are stated in Sterling, unless stated otherwise.
The financial statements have been prepared on a going concern basis. The directors of ASML have performed an assessment of the Syndicate’s ability to continue as
a going concern, including the impact of the ongoing conflict in Ukraine and the recent wildfires in California. A going concern assessment has been undertaken, taking
into consideration availability of capital, liquidity and stress testing. The Syndicate is expected to remain a key underwriting platform for the Ark group. Ark Corporate
Member Limited (“ACML”) has already provided capital to support the 2025 YOA. On the basis of this and the improvement in performance as a result of rate increases,
ACML is also expected to have the ability and intention to form a 2026 underwriting year. The directors of ASML have therefore concluded that there are no material
uncertainties that could have cast significant doubt over the ability of the company to continue as a going concern for at least a year from the date of approval of the
financial statements.
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.
These changes comprise of reclassification and aggregation changes and are presented in further detail with note 22.
Use of judgements and estimates
In preparing these accounts, the directors of ASML have made judgements, estimates and assumptions that affect the application of the Syndicate’s accounting policies
and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to estimates are recognised prospectively. The measurement of written premium inwards, and the provision for claims
outstanding are the two most critical estimates and both involve judgements and assumptions about the future that have a significant effect on the amounts recognised
in the financial statements. Refer to the Premiums written and earned section and note 13 (Technical provisions) for further details on these estimates.
Insurance contracts
Insurance contracts (including inwards reinsurance contracts) are defined as those containing significant insurance risk. Insurance risk is considered significant if, and
only if, an insured event could cause Ark to pay significant additional benefits in any scenario, excluding scenarios that lack commercial substance. Such contracts
remain insurance contracts until all rights and obligations are extinguished or expire.
Premiums written and earned
Gross premium written is initially based on estimated premium income (“EPI”) of each contract. EPI is based on information provided by the brokers, policyholders,
coverholders, past underwriting experience, and the contractual terms of the policy. Uncertainty arises because EPI could be different to the signed premium ultimately
received. This risk is mitigated by detailed reviews of EPI and signed premium and regular reviews that coverholder income is coming through as expected.
Gross premium written includes an estimation for reinstatement premium which is determined based on incurred losses held in the technical provisions. Reviews of the
reinstatement premiums held is carried out on a regular basis as part of the reserve review process.
Ark Syndicate Management Limited
Syndicate 3902
19
Notes to the financial statements
1. Statement of accounting policies (continued)
Written premiums are recognised as earned according to the risk profile of the policy. Unearned premiums represent the proportion of premiums written in the year
that relate to unexpired terms of policies in force at the statement of financial position date. The provision is calculated on a policy by policy basis.
Reinsurance premiums ceded
Outwards reinsurance premiums are accounted for in the same accounting year as the premiums for the direct or inwards business being reinsured.
Claims provisions and related recoveries
The provision for claims comprises amounts set aside for claims notified and IBNR. Claims incurred comprise claims and claims handling expenses paid in the year
and the movement in provision for outstanding claims and future claims handling expenses. Recoverable amounts arising out of subrogation and salvage together with
reinsurance recoveries are deducted from the cost of gross claims.
Outstanding claims consist of amounts set aside for notified claims and a provision for IBNR claims. The amount included in respect of IBNR is arrived at by considering
the actuarially calculated provision, using techniques that generally involve statistical techniques of estimation applied by ASML’s actuaries and reviewed by external
consulting actuaries, as well as the opinion of the class underwriters and executive management. The actuarial techniques generally involve projecting from past
experience of the development of claims over time to form a view of the likely ultimate claims to be experienced for more recent underwriting having regard to variations
in the business accepted and the underlying terms and conditions. Large claims are generally assessed individually, being calculated on a case by case basis or
projected separately to allow for the possible distortive effects of the developments of these claims on the balance of the data. The provision for claims also includes
amounts in respect of internal and external claims handling costs.
The reinsurers’ share of provisions for claims is based on calculated amounts of outstanding claims and projections for IBNR, net of estimated irrecoverable amounts,
having regard to the reinsurance programme in place for the class of business, the claims experience for the year and the current security rating of the reinsurance
companies involved. The Syndicate uses a number of statistical techniques to assist in making these estimates.
Accordingly the two most critical assumptions as regards claims provisions are that the past is a reasonable predictor of the likely level of claims development and that
the rating and other models used for current business are fair reflections of the likely level of ultimate claims to be incurred. Ultimate liability will vary as a result of
subsequent information and events and this may result in significant adjustments to the amounts provided. Adjustments to the amount of claims provisions established
in prior years are reflected in the financial statements for the year in which the adjustments are made. The methods used, and the estimates made, are reviewed
regularly.
Acquisition costs
Acquisition costs, comprising brokerage and taxes and duties levied on them are deferred to the extent that they are attributable to premiums unearned at the statement
of financial position date.
Foreign currency translation
a) Functional and presentation currency
Items included in the financial statements are measured using the US dollar, the currency of the primary economic environment in which the Syndicate operates
(“functional currency”). The financial statements are presented in Sterling, being the presentation currency of the Syndicate. Differences arising from the translation
from the functional to presentation currency are presented in the statement of other comprehensive income.
b) Transactions and balances
Foreign currency transactions are translated into the functional currency using average exchange rates applicable to the period in which the transactions take place
and where the company considers these to be a reasonable approximation of the transaction rate. Foreign exchange gains and losses resulting from the settlement
of such transactions and from translation at the period end of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of profit
or loss. Non-monetary items recorded at historical cost in foreign currencies are translated using the exchange rate on the date of the initial transaction. For the
purposes of foreign currency translation, unearned premiums and deferred acquisition costs are treated as if they are monetary items.
Ark Syndicate Management Limited
Syndicate 3902
20
Notes to the financial statements
1. Statement of accounting policies (continued)
Investments
Investments are recognised in the statement of financial position at such time as the Syndicate becomes a party to the contractual provisions of the investment.
Purchases and sales of investments are recognised on the trade date, which is the date the Syndicate commits to purchase or sell the asset. An investment is
derecognised when the contractual rights to receive cash flows from the investments expire, or where the investments have been transferred, together with substantially
all the risks and rewards of ownership. Financial liabilities are derecognised if the obligations specified in the contract expire, are discharged or cancelled.
On acquisition of an investment, the Syndicate is required to classify the asset into one of the following categories: investments at fair value through the statement of
profit or loss, loans and receivables, assets held to maturity and assets available for sale. The Syndicate has classified its investments as investments at fair value
through profit or loss because they are managed and their performance is evaluated on a fair value basis. Information about these investments is provided internally
on a fair value basis to management, and the investment strategy is to invest and evaluate their performance with reference to their fair values.
Fair value is the price at which an orderly transaction to sell an asset or to transfer a liability would take place between market participants at the measurement date.
When available, the fair value of an instrument is measured using quoted prices in an active market for that instrument. A market is regarded as active if quoted prices
are readily and regularly available and represent actual and regularly occurring market transactions on an arm’s length basis. If a market for a financial instrument is
not active, the fair value is established using a valuation technique. Valuation techniques include using recent orderly transactions between market participants (if
available), reference to the current fair value of other instruments that are substantially the same, discounted cash flow analyses and option pricing models. The chosen
valuation technique makes maximum use of market inputs, relies as little as possible on specific estimates, incorporates all factors that market participants would
consider in setting a price, and is consistent with accepted economic methodologies for pricing financial instruments. Inputs to valuation techniques reasonably represent
market expectations and measures of the risk-return factors inherent in the financial instrument.
Where possible, valuation techniques are calibrated and tested for validity using prices from observable current market transactions in the same instrument or based
on other available observable market data.
The best evidence of the fair value of a financial instrument at initial recognition is the transaction price, i.e. the fair value of the consideration given or received, unless
the fair value of that instrument is evidenced by comparison with other observable current market transactions in the same instrument (i.e. without modification or
repackaging) or based on a valuation technique whose variables include only data from observable markets. When transaction price provides the best evidence of fair
value at initial recognition, the financial instrument is initially measured at the transaction price and any difference between this price and the value initially obtained
from a valuation model is subsequently recognised in profit or loss depending on the individual facts and circumstances of the transaction but not later than when the
valuation is supported wholly by observable market data or the transaction is closed out.
Upon initial recognition, attributable transaction costs relating to financial instruments at fair value through profit or loss are recognised in the statement of profit or loss
when incurred. Investments at fair value through profit or loss are continually measured at fair value, and changes therein are recognised in the statement of profit or
loss. Net changes in the fair value of investments at fair value through profit or loss exclude interest and dividend income, as these items are accounted for separately
as set out below.
Debtors and creditors arising out of insurance operations
Debtors and creditors arising out of insurance operations are recognised when due. These include amounts due to and from agents, brokers and insurance contract
holders. Debtors arising out of insurance operations are classified as ‘loans and receivables’ as they are non-derivative investments with fixed or determinable payments
that are not quoted on an active market. Debtors arising out of insurance operations are measured at amortised cost less any impairment losses. Insurance payables
are stated at amortised cost.
Other receivables
Other receivables are carried at amortised cost less any impairment losses.
Ark Syndicate Management Limited
Syndicate 3902
21
Notes to the financial statements
1. Statement of accounting policies (continued)
Investment return
Investment return consists of dividends, interest, realised and unrealised gains and losses and foreign exchange gains and losses on investments at fair value through
the statement of profit or loss. Dividends on equity securities are recorded as revenue on the ex-dividend date. Interest is recognised separately on an amortised cost
basis using the effective interest rate method for investments at fair value through the statement of profit or loss. The realised gains or losses on disposal of an
investment are the difference between the proceeds and the original cost of the investment. Unrealised investment gains and losses represent the difference between
the carrying value at the reporting date, and the carrying value at the previous period end or purchase value during the period.
Creditors arising out of insurance operations
Creditors arising out of insurance operations are stated at amortised cost determined on the effective interest rate method.
Cash and cash equivalents
Cash and cash equivalents consist of cash at bank and in hand, deposits held at call with banks and other short-term highly liquid investments with maturities of three
months or less from the date of acquisition. They are classified as loans and receivables and carried at amortised cost less any impairment losses.
2. Management of risk
Approach to risk management
Ark’s core business relies on the assumption of internal and external risk within the appetites and tolerances established by the Board. Primarily Ark’s business is the
assumption of Insurance Risk and Market Risk, with the additional categories of Credit Risk, Liquidity Risk, Operational Risk and Group Risk. Managing these risks in
a manner that is consistent with the strategy, appetites and tolerances established by the Board requires that Ark has in place a systematic, objective, and robust set
of governance arrangements and processes for identifying and quantifying the risks to which it is exposed. This enables Ark to determine appropriate strategies and
approaches for prevention and mitigation.
The effectiveness with which Ark manages risk is a key determinant of the level of capital resources required to run the business and its ability to achieve its strategic
objectives including, in relation to capital efficiency and the production of acceptable levels of return.
Insurance risk
This is the risk arising from the uncertainties in timing, frequency and severity of insured losses, relative to the expectations made at the time of business planning or
underwriting. Ark’s business is based on the seeking and assumption of insurance risk. The Syndicate writes a balanced and diversified book of business through a
team of experienced underwriters with the objective of charging appropriate premiums to cover claims and operational costs whilst optimising the expected return on
equity. Target returns are assessed each year, taking into account the insurance market outlook and realistic expectations of return on equity. Insurance risk comprises
the following elements:
a) Exposure management risk
This is the risk of exposure to an event, or a series of events, which causes a potential financial loss that exceeds expectations. The nature of Ark’s business and
underwriting portfolio includes the assumption of a high degree of catastrophe, non-catastrophe and accumulative exposure to different events. This is managed through
the purchase of reinsurance and diversification of business lines and geographical areas to balance exposures, with the aim of reducing the risk that one event, or a
series of events, will cause unacceptable loss to the business. Ark’s catastrophe and non-natural catastrophe modelling processes incorporate Ark-specific disaster
scenarios, aggregate caps and cross-class modelling which reflect the diversity of the portfolio.
b) Underwriting quality risk
This is the risk of inappropriate underwriting or the inadequate pricing of risks which can lead to unprofitable business or inefficient line utilisation and risk selection.
The management of underwriting quality can be difficult in a competitive market where underwriters are often under pressure to meet premium and pricing targets. Ark
operates an underwriting controls framework which includes individual underwriting authorities, continual quality monitoring and peer review of risks. The framework
aims to ensure a high quality of underwriting through monitoring of pricing and rate change, contract certainty and agreement of appropriate terms and conditions.
Ark Syndicate Management Limited
Syndicate 3902
22
Notes to the financial statements
2. Management of risk (continued)
c) Delegated underwriting quality risk
This is the risk of exposure to inappropriate risks through the delegation of underwriting authorities to third parties or the delegation of authority to inappropriate third
parties. The nature of delegated underwriting naturally increases the risk of underwriting, through the ability of third parties being able to bind the Syndicate to risks
without detailed review of the risk involved. This risk is mitigated through the application of strict guidelines, managed by a dedicated team within the Compliance
department. This team reviews coverholder and third party authority (“TPA”) approvals pre-bind and monitors a programme of audits to ensure compliance with
regulations and guidelines.
d) Claims management risk
This is the risk that claims made are not managed in an appropriate manner, leading to material adverse results through an increase in claims, payments or exposure
to legal issues. The management of claims is conducted in accordance with claims procedures, which are, in turn, in line with the Lloyd’s Minimum Standards. This
includes the management of claims workflows and response times, reviews of major claims to ensure accurate estimates, regular reserving reviews and management
of complaints. These processes are enhanced through communication with underwriting teams to understand the policy or portfolio and with the Compliance department
to manage coverholders and TPAs.
e) Reserving risk
This is the risk that the estimated claims reserves differ materially from the ultimate cost of the claim or event. Reserving risk is a significant category in the Internal
Model and has the potential to significantly impact profitability. The potential impact is controlled through the use of a mix of actuarial models and methods, industry
data and underwriter experience to produce reliable estimates that are based on up to date information, and consistently applied over time and across classes of
business. Reserves for losses arising from the conflict in Ukraine are included in the normal process as a major loss. This does not pose a potential threat to the
business or risk of going concern. These estimates are subject to an external review each year.
f) Reinsurance purchasing
This is the risk of purchasing insufficient or inappropriate reinsurance, or the exhaustion of reinsurance, leading to excessive or unexpected losses. The process of
reinsurance purchasing forms a major part of Ark’s business planning process and includes the use of the Internal Model as a tool for decision making. Reinsurance
is purchased for a mixture of risk and event losses across the majority of classes, in a mixture of excess of loss and proportional cover, dependent on the scale and
characteristics of the class or treaty concerned. Ark also employs controls and monitoring around the use of insurers, credit ratings and concentration risk.
g) Underwriting management
This is the risk that returns from the policies written are different from expectations or are not in line with the business plan. Examples include a failure to reduce or exit
from unprofitable business or a failure of underwriters to follow the business plan which sets out the parameters, classes, limitations and profitability expectation of
underwriting teams for the forthcoming year. Communication of the business plan to the underwriting teams is therefore imperative. The performance of each class
and the syndicate portfolio as a whole is reviewed against the business plan on a regular basis by the Board and various committees using information available from
the management information portal. Various controls are in place to ensure constant vigilance including underwriting authorities, monitoring of risk codes, geographical
aggregates and data quality.
+5%
-5%
General insurance business sensitivities 2024
£’000
£’000
Claims outstanding - gross of reinsurance
5,381
(5,381)
Claims outstanding – net of reinsurance
2,064
(2,064)
+5%
-5%
General insurance business sensitivities 2023
£’000
£’000
Claims outstanding - gross of reinsurance
5,132
(5,132)
Claims outstanding – net of reinsurance
2,457
(2,457)
Ark Syndicate Management Limited
Syndicate 3902
23
Notes to the financial statements
2. Management of risk (continued)
Credit risk
Credit risk arises when counterparties fail to meet their obligations in full as they fall due. The key areas where credit risk can arise include reinsurers, brokers,
coverholders and investment counterparties.
The probability of reinsurer default is modelled by the Actuarial team as part of the Internal Model. Ark seeks to reduce this risk by avoiding over-reliance on specific
reinsurers through the application of concentration limits and thresholds. This is monitored by the Security Advisory Committee (“SAC”). Prior to the transaction of
business, broker and coverholder default is mitigated through the application of due diligence on new and existing counterparties, and a rolling audit schedule post-
bind. Overdue premium is also monitored by class, broker and age of debt. The investment portfolio is managed in line with asset allocation guidelines which are
monitored by type, counterparty, quality and duration. Ark outsources the management of a significant proportion of its investment portfolio to managers who monitor
and report on performance and adherence to guidelines on a regular basis.
2024 – credit risk analysis
AAA
£’000
AA
£’000
A
£’000
BBB
£’000
Other
£’000
Not rated
£’000
Total
£’000
Shares and other variable securities
-
-
-
-
-
191,411
191,411
Debt securities
4,128
2,035
14,580
1,672
-
-
22,415
Syndicate loan to central fund
-
-
1,327
-
-
-
1,327
Overseas deposits
1,317
248
288
229
915
7,497
10,494
Deposits with ceding undertakings
-
-
-
-
-
20
20
Reinsurers share of claims outstanding
-
10,792
49,258
-
71
6,227
66,348
Debtors arising out of insurance
operations
-
-
-
-
-
74,112
74,112
Debtors arising out of reinsurance
operations
-
-
13,106
-
-
2,776
15,882
Cash at bank and in hand
-
-
-
-
-
8,016
8,016
Other debtors and accrued interest
-
-
-
-
-
219
219
5,445
13,075
78,559
1,901
986
290,278
390,244
2023 – credit risk analysis
AAA
£’000
AA
£’000
A
£’000
BBB
£’000
Other
£’000
Not rated
£’000
Total
£’000
Financial Investments
-
-
-
-
-
145,359
145,359
Debt securities
-
2,518
9,058
995
-
55
12,626
Syndicate loan to central fund
-
-
1,579
-
-
-
1,579
Overseas deposits
2,187
215
343
281
-
7,850
10,876
Deposits with ceding undertakings
-
-
-
-
-
11
11
Reinsurers share of claims outstanding
-
12,935
35,858
-
76
4,626
53,495
Debtors arising out of insurance
operations
-
-
-
-
-
69,926
69,926
Debtors arising out of reinsurance
operations
-
-
11,490
-
1
3,748
15,239
Cash at bank and in hand
-
-
-
-
-
7,559
7,559
Other debtors and accrued interest
-
-
-
-
-
73
73
2,187
15,668
58,328
1,276
77
239,207
316,743
Debtors arising out of insurance operations and other debtors balances have not been impaired, based on all evidence available, and no impairment provision has been
recognised in respect of these assets. Inwards premium receivables are credit controlled by third-party managers. Ark monitors third party coverholders’ performance
and their financial processes through the coverholder management team. A provision for doubtful debts is included within reinsurers' share of technical provisions of
£1.5m (2023: £1.3m).
Ark Syndicate Management Limited
Syndicate 3902
24
Notes to the financial statements
2. Management of risk (continued)
Financial assets that are past due or impaired
The Syndicate has debtors arising from direct insurance and reinsurance operations that are past due but not impaired at the reporting date. An analysis of the carrying
amounts of past due or impaired debtors is presented in the table below:
2024
Neither past due nor impaired
£’000
Past due but not impaired
£’000
Total
£’000
Financial Investments
191,411
-
191,411
Debt securities
22,415
-
22,415
Syndicate loan to central fund
1,327
-
1,327
Overseas deposits
10,494
-
10,494
Deposits with ceding undertakings
20
-
20
Reinsurers share of claims outstanding
66,348
-
66,348
Debtors arising out of insurance operations
64,373
9,739
74,112
Debtors arising out of reinsurance operations
5,907
9,975
15,882
Cash at bank and in hand
8,016
-
8,016
Other debtors and accrued interest
219
-
219
370,530
19,714
390,244
2023
Neither past due nor impaired
£’000
Past due but not impaired
£’000
Total
£’000
Financial Investments
145,359
-
145,359
Debt securities
12,626
-
12,626
Syndicate loan to central fund
1,579
-
1,579
Overseas deposits
10,876
-
10,876
Deposits with ceding undertakings
11
-
11
Reinsurers share of claims outstanding
53,495
-
53,495
Debtors arising out of insurance operations
60,404
9,522
69,926
Debtors arising out of reinsurance operations
4,510
10,729
15,239
Cash at bank and in hand
7,559
-
7,559
Other debtors and accrued interest
73
-
73
296,492
20,251
316,743
Ark Syndicate Management Limited
Syndicate 3902
25
Notes to the financial statements
2. Management of risk (continued)
The table below sets out the age analysis of insurancel assets that are past due but not impaired at the balance sheet date:
0-3 months past
due
3-6Months past
due
6-12 months past
due
Total
2024
£’000
£’000
£’000
£’000
Debtors arising out of direct insurance operations
6,992
1,652
1,095
9,739
0-3 months past
due
3-6Months past
due
6-12 months past
due
Total
2023
£’000
£’000
£’000
£’000
Debtors arising out of direct insurance operations
7,375
1,218
929
9,522
Market risk
This is the risk that the value of assets and liabilities changes as a result of market movements e.g. foreign exchange rates, interest rates and market prices.
a) Foreign exchange risk
The functional currency of the Syndicate is the US dollar and the presentation currency in which the Syndicate reports its results is Sterling. Therefore, the Syndicate
is exposed to fluctuations in exchange rates for non-dollar denominated transactions. The Syndicate operates in five main currencies: US dollars, Sterling, Canadian
dollars, Australian dollars and Euros. The underwriting capital is matched by currency to the principal underlying currencies of its written premiums. This helps to
mitigate the risk that the capital required to underwrite business is materially affected by any future movements in exchange rates.
Sterling
US dollars
Euros
Canadian dollars
Australian dollars
Total
2024 - Currency analysis
£’000
£’000
£’000
£’000
£’000
£’000
Investments
9,532
211,438
-
3,947
750
225,667
Reinsurers’ share of technical provisions
2,658
54,395
17,459
316
226
75,054
Debtors
6,746
69,675
10,115
1,591
1,886
90,013
Cash
1,362
-
3,111
-
3,543
8,016
Prepayments and accrued income
4,158
15,715
2,537
282
564
23,256
Total assets
24,456
351,223
33,222
6,136
6,969
422,006
Technical provisions
25,828
247,784
43,837
5,135
4,321
326,905
Creditors
187
7,998
3,447
26
(29)
11,629
Accruals and deferred income
40,952
-
116
-
-
41,068
Total liabilities
66,967
255,782
47,400
5,161
4,292
379,602
Ark Syndicate Management Limited
Syndicate 3902
26
Notes to the financial statements
2. Management of risk (continued)
Sterling
US dollars
Euros
Canadian dollars
Australian dollars
Total
2023 - Currency analysis
£’000
£’000
£’000
£’000
£’000
£’000
Investments
9,292
158,090
-
2,293
776
170,451
Reinsurers’ share of technical provisions
3,275
33,852
23,450
957
116
61,650
Debtors
7,220
60,820
11,552
3,798
1,788
85,178
Cash
181
7
3,905
-
3,466
7,559
Prepayments and accrued income
4,120
14,106
2,460
599
520
21,805
Total assets
24,088
266,875
41,367
7,647
6,666
346,643
Technical provisions
26,886
199,572
50,688
6,521
4,214
287,881
Creditors
1,061
8,823
2,783
486
25
13,178
Accruals and deferred income
25,084
-
121
-
-
25,205
Total liabilities
53,031
208,395
53,592
7,007
4,239
326,264
The table below gives an indication of the impact on profit after tax and net assets of a percentage change in the relative strength of the US dollar against the value of
the main currencies, simultaneously.
2024
2024
2023
2023
Impact on
profit
Impact on net
assets
Impact on
profit
Impact on net
assets
Sensitivity to foreign exchange risk
£’000
£’000
£’000
£’000
USD weakens by 10% against other currencies
(8,845)
(8,845)
6,187
6,187
USD strengthens by 10% against other currencies
10,811
10,811
(7,562)
(7,562)
EURO weakens by 10% against other currencies
140
140
69
69
EURO strengthens by 10% against other currencies
(171)
(171)
(84)
(84)
b) Interest rate risk
Some of the financial instruments, including certain investments at fair value, cash and cash equivalents and borrowings, are exposed to movements in market interest
rates. Interest rate risk is managed by primarily investing in short-duration investments and cash and cash equivalents. The duration of assets is monitored on a regular
basis. The duration of assets exposed to movements in market interest rates is 0.44 (2023: 0.37). Changes in interest rates, with all other variables constant, would
result in changes in the capital value of debt securities and borrowings as well as subsequent interest receipts and payments.
2024
2024
2023
2023
Impact on
Profit
Impact on net
assets
Impact on
Profit
Impact on net
assets
Sensitivity to interest rate risk
£’000
£’000
£’000
£’000
50 basis point increase in interest rates
262
262
160
160
50 basis point decrease in interest rates
(258)
(258)
(159)
(159)
c) Price risk
Investments recognised at fair value are exposed to movements in market prices. The Syndicate does not have material exposure to price risk.
Ark Syndicate Management Limited
Syndicate 3902
27
Notes to the financial statements
2. Management of risk (continued)
Liquidity risk
Liquidity risk arises where cash may not be available to pay obligations when they fall due without incurring unreasonable penalties or expense costs. The risk is
minimised by holding sufficient liquid assets to enable large and unexpected payments, predominately claims, to be made in all but the most extreme scenarios. Ark’s
Catastrophe Event Response Plan provides information to quantify liquidity implications of losses, reinsurance recoveries, cashflows and trust funds in the event of a
catastrophe or large loss. The process is stress tested using historic scenarios to determine the behaviour of the portfolio following an event or series of events.
2024 – Maturity analysis
0-1yr
£’000
1-3yrs
£’000
3-5yrs
£’000
>5yrs
£’000
Total
£’000
Gross claims outstanding
47,960
108,368
38,264
24,694
219,286
Creditors
11,629
-
-
-
11,629
59,589
108,368
38,264
24,694
230,915
2023 – Maturity analysis
0-1yr
£’000
1-3yrs
£’000
3-5yrs
£’000
>5yrs
£’000
Total
£’000
Gross claims outstanding
38,740
94,704
31,309
20,487
185,240
Creditors
13,178
-
-
-
13,178
51,918
94,704
31,309
20,487
198,418
In the above analysis, assets with no duration are included as “less than one year”.
<1yr
1-3yrs
3-5yrs
>5yrs
Total
Weighted
average
term
Net claim liability cashflow
£’000
£’000
£’000
£’000
£’000
(years)
2024
33,449
75,580
26,687
17,222
152,938
3.13
2023
27,552
67,355
22,267
14,571
131,745
3.17
Operational risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes or systems. Risks are identified within the risk register and are modelled via
operational scenarios. Ark aims to minimise its exposure to operational risk by monitoring controls and management information in the form of key indicators that
indicate changes to the risk profile.
Ark outsources a number of key functions, such as investment management, inwards premium credit control and human resources. This introduces the risk that the
Syndicate may be exposed to liability or may fail to achieve its objectives due to inappropriately arranged, or a failure of, outsource arrangements. This risk is mitigated
through pre-contract due diligence and performance review throughout the contract life cycle.
Ark recognises that the success of a business depends on the ability to retain the services of existing key staff and to attract and retain additional people in the future,
both in underwriting and support functions. This risk is managed through the provision of sufficient education and development, support for qualifications and competitive
remuneration packages.
Ark is also impacted by the risk of information technology system failure or disruption. This is mitigated through a control framework which includes network security,
data, hardware and applications and is complimented by detailed planning around back-ups, contingency and disaster recovery, all of which are monitored and tested
on a regular basis.
Ark Syndicate Management Limited
Syndicate 3902
28
Notes to the financial statements
2. Management of risk (continued)
Regulatory risk
Regulatory risk is the risk of censure following a breach of regulatory or legal requirements, or a failure to respond to deadlines or information requests from regulators
in a satisfactory and timely manner.
Ark is regulated, overseen or required to report to the Prudential Regulation Authority (“PRA”), the Financial Conduct Authority (“FCA”), Lloyd’s and other overseas
regulators. Each body requires adherence to specific requirements and guidelines. In order to mitigate this, Ark seeks to conform to the regulations as they apply to
each functional area. Much of this is operated through training and awareness to promote correct behaviour at source, as opposed to corrective action at a later stage.
The overall risk is managed by the Compliance department which seeks to ensure that deadlines are met and changes in regulation are communicated in a timely
manner.
Ark has put in place processes and controls to identify and manage the conduct risk associated with the business it underwrites. Ark will continue to lead high product
risk business where risks are consistent with the probability targets taking into account the additional requirements for oversight and monitoring conduct risk.
Capital management risk
Capital is primarily required to support underwriting at Lloyd’s. 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, license and ratings objectives.
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.
Each member of a syndicate is liable for its own share of underwriting liabilities on the syndicate(s) on which it is participating. Each member’s SCR is determined by
the sum of the member’s share of the syndicate SCR ‘to ultimate’. Where a member participates on more than one syndicate, a credit for diversification is provided to
reflect the spread of risk, but consistent with determining an SCR which reflects the capital requirement to cover a 1 in 200 year loss ‘to ultimate’ for that member. Over
and above this, an uplift is applied by Lloyd’s to the member’s capital requirement, known as the Economic Capital Assessment (“ECA”).
Ark Syndicate Management Limited
Syndicate 3902
29
Notes to the financial statements
3. Segmental analysis
An analysis of the underwriting result before investment return is set out below.
Gross
Premium
written
Gross
Premium
earned
Gross
Claims
incurred
Gross
Operating
expense
Reinsurance
balance
Underwriting
profit/(loss)
2024
£’000
£’000
£’000
£’000
£’000
£’000
Direct insurance:
Accident and health
7,151
5,880
(1,704)
(2,986)
25
1,215
Motor (other classes)
30
53
(429)
(12)
(8)
(396)
Marine aviation and transport
80,003
79,700
(51,998)
(29,566)
(4,590)
(6,454)
Fire and other damage to property
99,131
94,502
(30,988)
(32,409)
(8,529)
22,576
Third party liability
328
352
(2)
(107)
(72)
171
186,643
180,487
(85,121)
(65,080)
(13,174)
17,112
Reinsurance
23,071
23,091
(4,871)
(9,005)
463
9,678
209,714
203,578
(89,992)
(74,085)
(12,711)
26,790
Commissions paid on direct business as at year end were £39.4m (2023: £37.3m)
Gross
Premium
written
Gross
Premium
earned
Gross
Claims
incurred
Gross
Operating
expense
Reinsurance
balance
Underwriting
(loss)/ profit
2023
£’000
£’000
£’000
£’000
£’000
£’000
Direct insurance:
Accident and health
5,458
4,539
(2,317)
(2,179)
(785)
(742)
Motor (other classes)
6
6
78
(1)
-
83
Marine aviation and transport
77,267
75,514
(6,447)
(25,861)
(33,357)
9,849
Fire and other damage to property
96,063
85,259
(23,971)
(26,799)
(21,305)
13,184
Third party liability
(14)
102
103
(42)
(218)
(55)
178,780
165,420
(32,554)
(54,882)
(55,665)
22,319
Reinsurance
26,342
24,000
(42,359)
(7,419)
19,574
(6,204)
205,122
189,420
(74,913)
(62,301)
(36,091)
16,115
The gross premiums written for direct insurance location of risk is presented in the table below:
2024
2023
£’000
£’000
United Kingdon
4,344
4,209
US
53,212
56,100
Rest of the world
129,087
118,471
186,643
178,780
Ark Syndicate Management Limited
Syndicate 3902
30
Notes to the financial statements
4. Investment return
2024
2023
£’000
£’000
Income on financial investments at fair value
1,621
1,230
Interest on cash and cash equivalents
898
705
Gains on the realisation of investments
609
637
Unrealised gains on investments
2,369
2,732
Unrealised losses on investments
(24)
(386)
Investment management charges
(52)
(40)
5,421
4,878
5. Operating expenses
2024
2023
£’000
£’000
Acquisition costs
43,137
41,080
Change in deferred acquisition costs
(1,482)
(2,293)
Administrative expenses
22,288
16,976
Managing agency fee
1,763
1,425
Personal expenses
8,379
5,113
74,085
62,301
Total commission for direct insurance business for the year amounted to:
2024
2023
£’000
£’000
Total commission for direct insurance business
39,397
37,259
Administrative expenses are incurred on behalf of the Syndicate by ASML. These expenses include:
2024
2023
£’000
£’000
Fees payable to the Syndicate’s auditors for the audit of these financial statements
173
161
Other services pursuant to legislation and tagging
109
93
Performance related pay
9,559
4,506
Ark Syndicate Management Limited
Syndicate 3902
31
Notes to the financial statements
6. Directors and employees
All executive directors and staff are employed and remunerated by ASML. The following staff and related costs were recharged to the syndicate.
2024
2023
£’000
£’000
Wages and salaries
6,629
6,944
Social security costs
2,204
1,658
Pension costs
798
769
9,631
9,371
Included above are the employment costs of underwriters attributable to acquisition of business and those of claims staff treated within the technical accounts as
acquisition costs and claims handling costs respectively.
The average number of employees employed by ASML but working on syndicate matters during the year is set out below.
2024
2023
Number
Number
Underwriting
118
103
Claims
20
19
Administration
52
51
190
173
2024
£’000
2023
£’000
Emoluments of the Active Underwriter
723
514
No contributions were made to money purchases pension schemes in the year in respect of the Active Underwriter (2023: Nil).
7. Investments
Cost
Value
Cost
Value
2024
£’000
2024
£’000
2023
£’000
2023
£’000
Shares and other variable yield securities
191,432
191,411
138,271
145,359
Debt and other fixed income securities
22,395
22,415
13,428
12,627
Syndicate loan to central fund
1,327
1,327
1,579
1,579
Overseas Deposits
10,493
10,494
10,806
10,875
Deposits with ceding undertakings
20
20
11
11
225,667
225,667
164,095
170,451
The amount expected to mature before and after one year is:
Before one year
200,365
After one year
25,302
225,667
Ark Syndicate Management Limited
Syndicate 3902
32
Notes to the financial statements
7. Investments (continued)
The fair values of investments are based on prices provided by investment managers who obtain market data from numerous independent pricing services. The pricing
services used by the investment manager obtain actual transaction prices for securities that have quoted prices in active markets. For those securities which are not
actively traded, the pricing services use common market valuation pricing models. Observable inputs used in common market valuation pricing models include, but are
not limited to, broker quotes, credit ratings, interest rates and yield curves, prepayment speeds, default rates and other such inputs which are available from market
sources.
Level 1 includes fair values measured using quoted prices (unadjusted) in active markets for identical instruments. Level 2 includes fair values measured using directly
or indirectly observable inputs or other similar valuation techniques for which all significant inputs are based on market observable data. Level 3 includes fair values
measured using valuation techniques for which significant inputs are not based on market observable data.
The fair value of these assets is based on the prices obtained from both investment managers and investment custodians.
Fair value hierarchy:
2024
£’000
2023
£’000
Level 1
81,359
85,059
Level 2
27,189
17,669
Level 3
117,119
67,723
225,667
170,451
8. Reinsurers’ share of technical provisions
2024
£’000
2023
£’000
Reinsurers’ share of claims reported
17,541
10,926
Reinsurers’ share of claims incurred but not reported
48,807
42,570
66,348
53,496
9. Deferred acquisition costs
2024
2023
£’000
£’000
Balance at 1 January
21,745
20,276
Additions
39,644
37,206
Amortisation charge
(38,162)
(34,913)
Foreign exchange movement
(171)
(824)
At 31 December
23,056
21,745
10. Debtors arising out of direct insurance operations
2024
2023
£’000
£’000
Due within one year
74,112
69,926
Ark Syndicate Management Limited
Syndicate 3902
33
Notes to the financial statements
11. Debtors arising out of reinsurance operations
2024
2023
£’000
£’000
Due within one year
15,847
15,203
Due after one year
35
36
15,882
15,239
12. Cash and cash equivalents
2024
2023
£’000
£’000
Cash at bank and in hand
8,016
7,559
13. Technical Provisions
2024
2023
£’000
£’000
Claims reported and loss adjustment expenses
65,404
47,509
Claims incurred but not reported
153,882
137,732
Gross claims liabilities
219,286
185,241
Unearned premiums
107,619
102,641
326,905
287,882
Movements in technical provisions and reinsurers' share of technical provisions are as follows:
2024
2024
2024
2023
2023
2023
Gross
Reinsurance
Net
Gross
Reinsurance
Net
Claims and loss adjustment expenses
£’000
£’000
£’000
£’000
£’000
£’000
At 1 January
185,241
53,496
131,745
164,113
68,825
95,288
Claims paid
(57,215)
(11,056)
(46,159)
(45,488)
(12,900)
(32,588)
Movement arising from current years
102,062
27,197
74,865
81,383
11,270
70,113
Movement arising from prior years
(12,071)
(3,399)
(8,672)
(6,471)
(10,560)
4,089
Net exchange differences
1,269
110
1,157
(8,296)
(3,139)
(5,157)
At 31 December
219,286
66,348
152,938
185,241
53,496
131,745
2024
2024
2024
2023
2023
2023
Gross
Reinsurance
Net
Gross
Reinsurance
Net
Unearned premiums
£’000
£’000
£’000
£’000
£’000
£’000
At 1 January
102,641
8,154
94,487
91,110
6,342
84,768
Increase in the year
209,714
37,250
172,464
205,122
39,756
165,366
Release in the year
(203,578)
(36,508)
(167,070)
(189,420)
(36,800)
(152,620)
Net exchange differences
(1,158)
(190)
(968)
(4,171)
(1,144)
(3,027)
At 31 December
107,619
8,706
98,913
102,641
8,154
94,487
Ark Syndicate Management Limited
Syndicate 3902
34
Notes to the financial statements
13. Technical provisions (continued)
Assumptions and processes
a) The reserving process
Ark uses a quarterly process to set its reserves. Several actuarial and statistical methods are used to estimate the ultimate premium and claims costs, with the most
appropriate method selected depending on the nature of each class of business. In addition, the underwriting teams review the development of the incurred loss ratio
over time, work with the claims team to set reserve estimates for identified claims and utilise their detailed understanding of both risks underwritten and the nature of
the claims to establish an alternative estimate of ultimate claims cost, which is compared to the actuarially established figures. The Reserving Committee then
determines the reserves held for accounting purposes. An annual independent actuarial review is undertaken to ensure that the reserves established are not lower
than an independently established best estimate.
Chain-ladder techniques are applied to premiums, paid claims and incurred claims (i.e. paid claims plus case estimates). The basic technique involves the analysis of
historical claims development factors and the selection of estimated development factors based on historical patterns. The selected development factors are then
applied to cumulative claims data for each underwriting year that is not yet fully developed to produce an estimated ultimate claims cost for each underwriting year. The
Bornhuetter-Ferguson method uses a combination of a benchmark / market-based estimate and an estimate based on claims experience. The former is based on a
measure of exposure such as premiums; the latter is based on the paid or incurred claims observed to date. The two estimates are combined using a formula that gives
more weight to the experience-based estimate as time passes.
The choice of selected results for each underwriting year of each class of business depends on an assessment of the technique that has been most appropriate to
observed historical developments. In certain instances, this has meant that different techniques or combinations of techniques have been selected for individual
underwriting years or groups of underwriting years within the same class of business. As such, there are many assumptions used to estimate general insurance liabilities.
Triangulations of the paid / outstanding claim ratios are also reviewed as a way of monitoring any changes in the strength of the outstanding claim estimates between
underwriting years so that adjustments can be made to mitigate any subsequent over / (under)reserving. Where significant large losses impact an underwriting year,
the development is usually very different from the attritional losses. In these situations, the large loss total is extracted from the remainder of the data and analysed
separately by the respective claims managers using exposure analysis of the policies in force in the areas affected. Further assumptions are required to convert gross
of reinsurance estimates of ultimate claims cost to a net of reinsurance level and to establish reserves for unallocated claims handling expenses and reinsurance bad
debt.
b) Major assumptions
The main assumption underlying these techniques is that the Syndicate’s past claims development experience (with appropriate adjustments for known changes) can
be used to project future claims development and hence ultimate claims costs. As such these methods extrapolate the development of premiums, paid and incurred
losses, average costs per claim and claim numbers for each underwriting year based on the observed development of earlier years. Throughout, judgement is used to
assess the extent to which past trends may not apply in the future; for example, to reflect changes in external or market factors such as economic conditions, public
attitudes to claiming, levels of claims inflation, premium rate changes, judicial decisions and legislation, as well as internal factors such as portfolio mix, policy conditions
and claims handling procedures.
The loss development tables below provide information about historical claims development by the identified operating segments. The tables are by underwriting year
which in our view provides the most transparent reserving basis. The top part of the table illustrates how the estimate of the claims ratio for each underwriting year has
changed at successive year ends. The bottom half of the table reconciles the gross and net claims to the amount appearing in the statement of financial position. While
the information in the table provides a historical perspective on the adequacy of the claims liabilities established in previous years, users of these financial statements
are cautioned against extrapolating past redundancies or deficiencies on current claims liabilities. The Syndicate believes that the estimate of total claims liabilities
selected is adequate. However, due to inherent uncertainties in the reserving process, it cannot be assured that such balances will ultimately prove to be adequate.
Notes to the financial statements
Ark Syndicate Management Limited
Syndicate 3902
35
13. Technical provisions (continued)
2024
2023
2022
2021
2020
2019
2018
2017
Total
Gross claims
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
End of year one
60,888
43,133
37,008
31,479
36,941
23,235
29,463
39,058
One year later
-
63,971
60,095
82,242
48,072
56,510
39,731
57,653
Two years later
-
-
64,262
88,578
45,483
58,543
45,584
63,079
Three years later
-
-
-
95,420
42,775
58,898
48,717
61,332
Four years later
-
-
-
-
40,554
58,183
47,869
62,023
Fve years later
-
-
-
-
-
57,765
49,074
62,707
Six years later
-
-
-
-
-
-
49,172
62,558
Seven years later
-
-
-
-
-
-
-
62,641
Gross claims
60,888
63,971
64,262
95,420
40,554
57,765
49,172
62,641
494,673
PY Provision
-
Less paid claims
(892)
(16,281)
(22,948)
(38,206)
(36,972)
(52,960)
(47,046)
(60,082)
(275,387)
Claims reserve
59,996
47,690
41,314
57,214
3,582
4,805
2,126
2,559
219,286
2024
2023
2022
2021
2020
2019
2018
2017
Total
Net claims
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
End of year one
42,549
39,565
28,060
28,586
23,654
18,049
21,794
15,730
One year later
-
59,356
50,365
43,651
29,158
30,831
31,387
26,838
Two years later
-
-
53,089
50,770
29,391
29,971
32,547
32,964
Three years later
-
-
-
54,933
30,059
28,512
33,030
31,709
Four years later
-
-
-
-
25,305
29,187
33,149
31,975
Five years later
-
-
-
-
-
29,760
33,761
32,110
Six years later
-
-
-
-
-
-
33,809
32,029
Seven years later
-
-
-
-
-
-
-
32,253
Net claims
42,549
59,356
53,089
54,933
25,305
29,760
33,809
32,253
331,054
PY Provision
-
Less paid claims
(878)
(15,564)
(19,377)
(32,152)
(20,805)
(28,083)
(32,176)
(29,081)
(178,116)
Net claims reserve
41,671
43,792
33,712
22,781
4,500
1,677
1,633
3,172
152,938
Notes to the financial statements
Ark Syndicate Management Limited
Syndicate 3902
36
14. Reconciliation of member’s balances
2024 YOA
2023 YOA
2022 YOA
Total
2024
£’000
£’000
£’000
£’000
At 1 January
-
9,430
14,701
24,131
Profit for the year
6,235
19,449
6,527
32,211
Other recognised losses
438
426
15
879
Distribution
-
-
(14,817)
(14,817)
At 31 December
6,673
29,305
6,426
42,404
2023 YOA
2022 YOA
2021 YOA
Total
2023
£’000
£’000
£’000
£’000
At 1 January
-
6,918
19,093
26,011
Profit / (loss) for the year
9,643
15,032
(3,682)
20,993
Other recognised (losses)/ gains
(213)
(579)
(753)
(1,545)
Distribution
-
(6,670)
(18,410)
(25,080)
At 31 December
9,430
14,701
(3,752)
20,379
The member participate on the Syndicate by reference to YOA and the ultimate result, assets and liabilities are assessed with reference to policies incepting in that
YOA in respect of the membership of a particular year.
15. Creditors arising out of insurance operations
2024
2023
£’000
£’000
Due within one year
137
134
16. Creditors arising out of reinsurance operations
2024
2023
£’000
£’000
Due within one year
11,492
13,044
Ark Syndicate Management Limited
Syndicate 3902
37
Notes to the financial statements
17. Movement in opening and closing portfolio investments and cash net of financing
2024
2023
£’000
£’000
Net cash outflow for the year
908
(3,526)
Cash flow – portfolio investments
54,227
42,120
Movement arising from cash flows
55,135
38,594
Changes in market values and exchange rates
538
(6,940)
Total movement in portfolio investments net of financing
55,673
31,654
Balance brought forward at 1 January
178,010
146,356
Balance carried forward at 31 December
233,683
178,010
18. Movement in cash and portfolio investments
At 1 January
2024
Cash flow
Change in
market value
At 31 December
2024
£’000
£’000
£’000
£’000
Cash at bank and in hand
7,559
908
(451)
8,016
Shares and other variable yield securities
146,938
43,515
958
191,411
Debt and other fixed income securities
12,627
9,586
202
22,415
Other investments
10,875
1,116
(170)
11,821
Deposit with ceding undertakings
11
10
(1)
20
Total portfolio investments
170,451
54,227
989
225,667
Total cash and portfolio investments
178,010
55,135
538
233,683
19. Related parties
The registered office of the ultimate parent company, White Mountains Insurance Group, Ltd., is Clarendon House, 2 Church Street, Hamilton, HM11, Bermuda. The
parent company of the Ark group is AIHL, and the immediate parent company of ASML is Group Ark Insurance Holdings Limited (“GAIHL”).
The key management compensation charged to the syndicate is disclosed in note 6.
N Brothers serves without fee as a director of Accident & Health Underwriting Limited (“AHU”), a wholly owned subsidiary of GAIHL. The Syndicates underwrite business
through AHU under a binding authority. Gross premium income, excluding brokerage and commissions, due to the Syndicates under this binding authority amounted
to £5.5m (2023: £5.6m). Brokerage and commissions paid in the year by the Syndicates to AHU amounted to £3.4m (2023: £3.5m).
GAIHL is a member controlling 50% of Accident & Health Claims Services LLP (“AHC”), the other 50% being controlled by AHU. AHC provides claims handling services
to the Syndicates. Fees paid in the year by the Syndicates in respect of these services amounted to £0.3m (2023: £0.4m).
Until 30
th
April 2024, I Beaton served without fee as a director of Optio Group Limited (“Optio”), a managing general agent (“MGA”) focused on emerging insurance
risks. Optio owns Northcourt Limited, a specialty MGA. Gross premium income, excluding brokerage and commissions, due to the Syndicates under this binding
authority amounted to £1.7m (2023: £0.3m). Commissions paid to Northcourt during the year were £0.5m. (2023: £0.1m).
N Bonnar serves without fee as a director of Solis Re Agency Inc. (“Solis Re”), an MGA and Lloyd's Coverholder. ASML holds shares in Solis Re giving 20% of the
voting rights and 6% of the capital rights. The Syndicates entered into a binding authority agreement with Solis Re. Gross premium income, excluding brokerage and
commissions, due to the Syndicates amounted to £1.2m (2023: £3.1m). Commissions paid by the Syndicate in the year to Solis Re amounted to £0.2m (2023: £0.4m).
Notes to the financial statements
Ark Syndicate Management Limited
Syndicate 3902
38
19. Related parties (continued)
N Bonnar owns 8% of the share capital of Phenomen, a French MGA. The Syndicates have entered into a Binding Authority with Phenomen. Gross premium income,
excluding brokerage and commissions, due to the Syndicates amounted to £0.5m (2023: £0.7m). Commissions paid by the Syndicates to Phenomen amounted to
£0.3m (2023: £0.4m).
C Atkin serves as a director of Alwen Hough Johnson Limited ("AHJ"), a Lloyd's broker. During the year the Syndicates wrote business with premium of £6.0m (2023:
£4.0m) through AHJ. Commissions paid to AHJ in the year totalled £0.9m (2023: £0.7m).
C Atkin serves as a director of AmWins, which owns a number of insurance intermediaries acting as Brokers and Coverholders of business to the Lloyd's Market,
including AmWins Global Risks Limited (AGR), who act as a Lloyd's Broker. During the year the Syndicates wrote business with premium of £28.3m through AGR
(2023: £20.8m). Commissions paid to AGR in the year were £5.7m (2023: £5.0m). AGR also placed reinsurance protection for the syndicates. During the year ORI
premiums paid through AGR amounted to £1.3m (2023: £1.1m).
C Atkin serves as a director of Whitespace Software Limited (“Whitespace”), a software company providing a Lloyd's recognised electronic placing system. The
Syndicates use Whitespace to accept risks from brokers. License fees paid to Whitespace during the year are less than £0.1m (2023: less than £0.2m).
20. Foreign exchange rates
The following currency exchange rates have been used for principal foreign currency transactions.
1 January | 31 December | 2024 | 1 January | 31 December | 2023 | |
2024 | 2024 | Average | 2023 | 2023 | Average | |
Rate | Rate | Rate | Rate | Rate | Rate | |
Sterling | ||||||
Euro | ||||||
US dollar | ||||||
Australian dollar | ||||||
Canadian dollar |
21. Post balance sheet events
The California wildfires in January 2025 represent a significant industry loss event. Industry estimates are still preliminary and range widely. The Syndicate will have
exposure to this event primarily through the property line of business. At this time, the directors of ASML do not expect the wildfire losses will cause full year 2025
actual catastrophe losses to diverge materially from those planned for.
22. Representation of Comparative Information.
2023
Represented
2023
Statement of financial position
£’000
£’000
Assets
Financial Investments
170,440
-
Deposit with ceding undertakings
11
-
Investments
-
170,451
Notes to the financial statements
Ark Syndicate Management Limited
Syndicate 3902
39
22. Representation of Comparative Information. (continued)
2023
Represented
2023
Statement of financial position
£’000
£’000
Assets
Provision for unearned premium
8,155
-
Claims outstanding
53,495
-
Reinsurers’ share of technical provisions
-
61,650
Debtors arising out of direct insurance operations
69,926
-
Debtors arising out of reinsurance operations
15,239
-
Debtors arising out of insurance operations
-
85,165
Liabilities
Provision for unearned premium
102,641
-
Claims outstanding
185,241
-
Technical provisions
-
287,882
Creditors arising out of direct insurance operations
133
-
Creditors arising out of reinsurance operations
13,044
-
Creditors arising out of insurance operations
-
13,177
