Asta Managing Agency Ltd Draft 20/12 - 1988

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CFC Syndicate 1988

Annual Report and Accounts for the year ended

31 December 2024

Contents

Directors and administration .................................................................................................. 1

Active Underwriter’s report .................................................................................................... 2

Managing Agent's report ....................................................................................................... 4

Statement of Managing Agent's responsibilities .................................................................. 11

Independent auditor’s report to the members of Syndicate 1988 ........................................ 12

Statement of profit or loss and other comprehensive income .............................................. 17

Statement of financial position ............................................................................................ 19

Statement of changes in Members' balances ...................................................................... 21

Statement of cash flows ...................................................................................................... 22

1. Basis of preparation ..................................................................................................... 23

2. Critical accounting estimates and judgements ............................................................. 23

3. Significant accounting policies ..................................................................................... 25

4. Analysis of underwriting result...................................................................................... 32

5. Technical provisions .................................................................................................... 35

6. Net operating expenses ............................................................................................... 36

7. Auditor’s remuneration ................................................................................................. 36

8. Key management personnel compensation ................................................................. 37

9. Staff numbers and costs .............................................................................................. 37

10. Investment return .................................................................................................... 38

11. Financial Investments .............................................................................................. 38

12. Debtors arising out of direct insurance operations ................................................... 41

13. Debtors arising out of reinsurance operations.......................................................... 41

14. Other debtors .......................................................................................................... 42

15. Creditors arising out of direct insurance operations ................................................. 42

16. Creditors arising out of reinsurance operations ........................................................ 42

17. Other creditors ......................................................................................................... 42

18. Cash and cash equivalents ...................................................................................... 43

19. Related parties ........................................................................................................ 44

20. Disclosure of interests ............................................................................................. 44

21. Funds at Lloyd's ...................................................................................................... 45

22. Off-balance sheet items ........................................................................................... 45

23. Risk management ................................................................................................... 46

24. Post balance sheet events ....................................................................................... 59

Directors and administration

Managing Agent

Asta Managing Agency Ltd (“Asta”)

Directors

P A Jardine (Chairman)*

R P Barke

C V Barley

S Bradbury

E M Catchpole*

S Fisher*

L Harfitt

D B Jones

L J M McMaster

A F J Neden*

S D Redmond*

K Shah*

Non-Executive Directors*

Managing Agent's registered office

5th Floor

20 Gracechurch Street

London

EC3V 0BG

Managing Agent's registered number

1918744

Active Underwriter

M Taylor

Bankers and investment managers

Barclays

Royal Bank of Canada

Citibank

Conning

Northern Trust

Registered Auditor

Deloitte LLP

Signing Actuary

Deloitte MCS Ltd

Active Underwriter’s report

Syndicate overview

CFC Syndicate 1988 (“the Syndicate”) was established in July 2021 to participate on specialty

insurance business with a focus on micro and SME business under the oversight of Asta

Managing Agency Limited.

The Syndicate only participates on business underwritten via delegated facilities with entities

that are part of CFC Group Limited (“CFC”). In 2024 the Syndicate took on the lead position

on CFC’s cyber and technology facilities, which is a natural progression of the business given

CFC’s significant expertise in these areas.

The Syndicate’s portfolio is centred on emerging risk and specialty lines with its core products

addressing the intersection of technology and business, such as cyber, intellectual property,

digital media, FinTech, eHealth and software companies.

This mix creates a highly diversified portfolio by class, industry, and geography, with no critical

natural catastrophe exposure which is planned to deliver stable and profitable underwriting

results.

2024 Syndicate results

The 2024 calendar year continued to build on the good performance in 2023, with the

Syndicate achieving excellent underwriting results which clearly demonstrate the value of our

proposition to our capital providers. Our underwriting performance reflects CFC’s disciplined

approach as we continue to recognise good claims experience on prior underwriting years in

the current calendar year. Investment income is now making a more significant contribution to

profit as our investment portfolio continues to increase in scale.

The result for the Syndicate in calendar year 2024 is a profit of $76.8m (2023: profit of $55.1m).

The Syndicate net combined ratio for the 2024 calendar year is 77.7% (2023: 80.9%).

The 2022 and prior underwriting year made a profit of $67.4m and is closing at a net combined

ratio of 78.3%.

We remain positive regarding the 2024 and 2023 underwriting year ultimate forecast results to

our capacity providers, which are comprised of the performance of the Syndicate plus an

additional CFC portfolio participation fee. Looking ahead the business aims to maintain

profitability in the face of increasing competition and moderating rates.

The forecast underwriting year results for the 2023 and 2024 years are expected to be at a

broadly similar level to 2021 and 2022, acknowledging the early stage in the development of

the 2024 underwriting year and recognising a slight moderation in rating levels over the period.

The Syndicate results on an ultimate pure year basis as at the end of the fourth quarter of

2024 are outlined below:

Active Underwriter’s report continued

2024 YOA

2023 YOA

2022 YOA

$’000

Gross ultimate premium forecast

383,443

301,870

275,454

Syndicate NCOR*

83.7%

81.4%

80.5%

*The net combined ratio (“NCOR”) is the ratio of net claims and net operating expenses to net premiums on an

ultimate basis as per the above, this excludes the CFC portfolio participation fee paid by members.

There are no material changes to the business planned for 2025.

M Taylor

March 2025

Managing Agent's report

The Syndicate's Managing Agent is a company registered in England and Wales. The

Directors of the Managing Agent present their report for the year ended 31 December 2024.

The financial statements herein have been prepared using the annual basis of accounting as

required by Statutory Instrument No 1950 of 2008, The Insurance Accounts Directive (Lloyd's

Syndicate and Aggregate Accounts) Regulations 2008 (“Lloyds Regulations 2008”).

Results

The result for calendar year 2024 is a profit of $76,765,394 (2023: profit of $55,130,993).

The Syndicate presents its results under FRS102, the Financial Reporting Standard applicable

in the UK and Republic of Ireland. In accordance with FRS102, the Syndicate has identified its

insurance contracts and accounted for them in accordance with FRS103 Insurance Contracts.

Principal activity and review of the business

The Syndicate’s principal activity is the underwriting of direct insurance and reinsurance

business in the Lloyd’s market.

A further review is included in the Active Underwriter’s report on page 2.

Gross written premium income by class of business for the calendar year was as follows:

2024

$’000

2023

$’000

Cyber and technology

224,296

188,960

Professional Lines

67,656

57,198

Specialty Liability

36,057

30,467

Transaction Liability

19,285

17,544

Innovation

347,329

294,169

The Syndicate's financial key performance indicators during the year were as follows:

2024

$’000

2023

$’000

Gross premiums written

347,329

294,169

Profit for the financial year

76,765

55,131

Combined ratio*

77.7%

80.9%

*The combined ratio is the ratio of net claims incurred and net operating expenses to net

premiums earned in the calendar year. Lower ratios represent better performance.

Managing Agent’s report continued

The performance of the Syndicate has been assessed by measuring, as a percentage of

underwriting capacity, the 36-month forecasted result on a funded accounting basis for an

individual underwriting year of account (“YOA”). The return on capacity for each underwriting

year is shown below.

Note that the 2022 underwriting year is now closed, as of 31 December 2024.

2024 YOA

Open

2023 YOA

Open

2022 YOA

Closed

Capacity ($’000)

343,750

250,000

Forecast result ($’000)

65,637

60,848

67,412

Forecast return on capacity (%)

19.1%

19.5%

27.0%

Managing Agent’s report continued

Principal risks and uncertainties

The Syndicate sets risk appetite annually, which is approved by the Agency as part of the

Syndicate’s business planning and Solvency Capital Requirement (“SCR”) process. The

Agency Risk and Solvency Committee meets at least quarterly to oversee the risk

management framework. The Syndicate Board, a sub-committee of the Agency Board,

reviews the risk profile as reflected in the risk register, and monitors performance against risk

appetite using a series of key risk indicators. The principal risk and uncertainties facing the

Syndicate are as follows:

Insurance risk

Insurance risk includes the risks that a policy will be written for too low a premium or provide

inappropriate cover (underwriting risk), that the frequency or severity of insured events will be

higher than expected (claims risk), or that estimates of claims subsequently prove to be

insufficient (reserving risk). The Syndicate Board and Underwriting Committee manages

insurance risk through challenge and oversight of the approved business plan, which sets out

targets for volumes, pricing, line sizes and retention by class of business. The Syndicate

Board then monitors performance against the business plan and the aggregation of risk

through exposure management reporting through the year. The Syndicate Board considers

any proposed underwriting that impacts the Syndicate’s Environmental, Social and

Governance (“ESG”) profile to ensure consistency with the agreed ESG approach. Reserve

adequacy is monitored through quarterly review by the Asta Actuarial team and the Reserving

Committee.

Credit risk

The key aspect of credit risk is reinsurance counterparty risk which is the risk of default by one

or more of the Syndicate’s reinsurers and intermediaries. The Syndicate’s policy is to only use

approved reinsurers, supported by collateralisation where required. The Agency Reinsurance

Security Committee sets approval and usage criteria, monitors reinsurer ratings and is required

to approve and oversee the application of the reinsurer approval policy. The Syndicate may

also be exposed to broker credit risk, in particular where risk transfer arrangements are in

place. Aged debt reporting for premiums is reviewed in the Syndicate Board.

Managing Agent’s report continued

Market risk

Market risk exposure impacting the Syndicate relates to fluctuations in interest rates or

exchange rates and inflation. The Syndicate is exposed to foreign exchange movements as

a result of mismatches between the currencies in which assets and liabilities are denominated.

The Agency’s policy is to maintain received income or incurred expenditure in the core

currencies in which they were received or paid. Any surplus or deficit in a core currency would

be subject to review by the Syndicate Board.

Investments are monitored through Investment Managers with quarterly Investment

Committees that review the performance, duration and ESG ratings for the investments.

Liquidity risk

This is the risk that the Syndicate will not be able to meet its liabilities as they fall due, owing

to a shortfall in cash or can only meet obligations at excessive cost. To mitigate this risk the

Syndicate Board and Investment Committee reviews cash flow projections regularly and

ensures that, where needed, the Syndicate has liquidity facilities in place or has utilised the

option of a cash call from Capital providers.

Operational risk

This is the risk that errors caused by people, processes, systems and external events lead to

losses to the Syndicate. The Agency seeks to manage this risk through a robust operational

risk and control framework including detailed procedure manuals and a thorough training

programme. This is underpinned by a structured programme of testing of processes and

systems by internal audit, who serve as an independent line of assurance, reporting directly to

the Chair of the Agency Audit Committee. Business continuity and disaster recovery plans

are in place and are regularly updated and tested.

Regulatory risk is the risk of loss owing to a breach of regulatory requirements or failure to

respond to regulatory change. The Agency is required to comply with the requirements of the

Financial Conduct Authority (FCA), Prudential Regulatory Authority (PRA) and Lloyd’s. Lloyd’s

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

Agency has a Compliance and Governance Director who manages a function that monitors

business activity and regulatory developments to assess any effects on both the Agency and

the Syndicate.

The Syndicate has no appetite for failing to adhere to the requirements of the FCA Consumer

Duty regulations and continues its focus on ensuring that it is treating customers fairly. The

Syndicate manages and monitors consumer duty risk through a suite of risk indicators and

reporting metrics as part of its documented consumer duty risk framework. The consumer duty

risk framework is consistently applied across all Asta syndicates and is overseen by the

Conduct Oversight Group (COG), which is an Agency Board Committee that includes a non-

executive director as a member who fulfils the role of Consumer Duty Champion.

Managing Agent’s report continued

Group and strategic risk

Group Risk is the risk of contagion that arises from being associated with key stakeholders

and the impact that activities and events that occur within other connected or third parties has

on the business.

Strategic risk covers the risks faced by the Syndicate due to changes in underlying strategy of

the business or that of its key stakeholders (including strategic conflicts of interest).

Future developments

The Syndicate will continue to transact the current classes of general direct insurance and

reinsurance business. If opportunities arise to write new classes of business, these will be

investigated at the appropriate time.

The capacity for the 2025 underwriting year is $375.0m (2024 underwriting year: $343.8m).

Environmental, Social and Governance (ESG) and sustainability

The Syndicate has documented a position with regard to ESG and sustainability, which is

submitted annually to Lloyd’s as part of business planning. The position has been developed

in alignment with Lloyd’s principles and expectations, broader regulatory requirements, and to

support the Syndicate’s strategic objectives. Lloyd’s published an updated version of its

“Insuring the Transition” Roadmap as well as its principles for doing business regarding

sustainability, and the Syndicate continues to ensure its approach aligns with those

expectations.

Following the Prudential Regulation Authority’s (PRA) Supervisory Statement in 2019 and

subsequent Dear CEO letter in 2020, Asta have built a climate change framework, applicable

to all syndicates, covering physical, transition and liability climate change risks, based on the

underlying business written by each syndicate. Asta’s managed syndicates accept climate

change risk where it is an inherent part of an insurance business model, providing it is

understood, managed, and controlled and/or compensated. There is no appetite for

uncontrolled, unmanaged exposure to the financial risks of climate change.

The framework ensures Board-level engagement and accountability with Lloyd’s and PRA’s

requirements and expectations, assigning clear responsibilities for managing the financial risks

associated with climate change. The Agency’s Chief Risk Officer, who is a Board member, is

responsible for the climate change framework, including identifying and managing financial

climate related risks.

Asta monitors regulatory guidance and expectations on managing the financial risks of climate

change.

Managing Agent’s report continued

Emerging risks

An emerging risk or opportunity is defined as “a developing issue, triggered externally, with

the potential to have a significant business impact but which may not be sufficiently understood

or accounted for”. The business impact in this case could represent a downside risk or an

upside opportunity. Emerging risks and opportunities include:

• Syndicate insurable risks, as areas of potential future losses or new product offerings;

• Those risks that may affect a syndicate’s ability to carry out normal business operations

and/or lead to unplanned significant costs/income;

• Both new risks and those which are re-emerging in a new context.

The Agency and Syndicate continue to monitor the impact of emerging risks on the Syndicate’s

business, taking into account their impacts on the strategic direction of the Syndicate.

Monitoring takes place in various forums, including the Asta Emerging Risks and Opportunities

Group (“EROG”) which meets quarterly and considers emerging risks and opportunities from

both an internal and external lens. Specific areas of focus over the external environment

across the year at Syndicate and Asta level include:

• The geopolitical landscape from a tension and broader political risk impact, including

any exposures stemming from regional conflicts (e.g. Russia - Ukraine conflict).

• The heightened inflationary environment and subsequent volatility surrounding inflation

risk. This has also been considered by the Syndicate within their annual business

planning process and reserve reviews.

Directors

Details of the Directors of the Managing Agent that were serving at the date of signing these

financial statements are provided on page 1. Changes to Directors from the last report were

as follows:

K A Green Resigned 30 September 2024

A F J Neden Appointed 1 January 2025

S Fisher Appointed 1 February 2025

Managing Agent’s report continued

Disclosure of information to the auditor

So far as each person who was a Director of the Managing Agent at the date of approving the

report is aware, there is no relevant audit information, being information needed by the

Syndicate auditor in connection with the auditor's report, of which the auditor is unaware.

Having made enquiries of fellow Directors of the Agency and the Syndicate's auditors, each

Director has taken all the steps that he or she ought to have taken as a Director to become

aware of any relevant audit information and to establish that the Syndicate's auditor is aware

of that information.

Auditor

The Managing Agent intends to reappoint Deloitte LLP as the Syndicate’s auditor.

Syndicate Annual General Meeting

In accordance with the Syndicate Meetings (Amendment No 1) Byelaw (No 18 of 2000) the

Managing Agent does not propose holding an annual meeting this year; objections to this

proposal or the intention to reappoint the auditors for a further 12 months can be made by

Syndicate members within 21 days of this notice.

On behalf of the Board

C V Barley

Director

4 March 2025

Statement of Managing Agent's responsibilities

The Managing Agent is responsible for preparing the financial statements in accordance with

applicable law and regulations.

The Insurance Accounts Directive (Lloyd's Syndicate and Aggregate Accounts) Regulations

2008 require the managing agent to prepare financial statements at 31 December each year

in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom

Accounting Standards and applicable law) including FRS 102 the Financial Reporting

Standard applicable in the UK and Republic of Ireland. The financial statements are required

by law to give a true and fair view of the state of affairs of the Syndicate as at that date and of

its profit or loss for that year.

In preparing the financial statements, the managing agent is required to:

• select suitable accounting policies and then apply them consistently subject to changes

arising on the adoption of new accounting standards in the year;

• make judgements and estimates that are reasonable and prudent;

• state whether applicable Accounting Standards have been followed, subject to any

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

and

• prepare the Syndicate Accounts on the basis that the Syndicate will continue to write

future business unless it is inappropriate to presume that the Syndicate will do so.

The Managing Agent is responsible for keeping adequate accounting records which disclose

with reasonable accuracy at any time the financial position of the Syndicate and enable it to

comply with the Insurance Accounts Directive (Lloyd's Syndicate and Aggregate Accounts)

Regulations 2008. It is also responsible for safeguarding the assets of the Syndicate and

hence for taking reasonable steps for the prevention and detection of fraud and other

irregularities.

The Managing Agent is responsible for the maintenance and integrity of the corporate and

financial information included on the business' website. Legislation in the United Kingdom

governing the preparation and dissemination of financial statements may differ from legislation

in other jurisdictions.

The Managing Agent is responsible for the preparation and review 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,

whether due to fraud or error.

Independent auditor’s report to the members of Syndicate 1988

Report on the audit of the syndicate annual financial statements

Opinion

In our opinion the syndicate annual financial statements of Syndicate 1988 (the ‘syndicate’):

• give a true and fair view of the state of the syndicate’s affairs as at 31 December

2024 and of its profit for the year then ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted

Accounting Practice, including Financial Reporting Standard 102 “The Financial

Reporting Standard applicable in the UK and Republic of Ireland”; and

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

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

1 and 5 of the Syndicate Accounts Instructions Version 2.0. as modified by the

Frequently Asked Questions Version 1.0 issued by Lloyd’s (the “Lloyd’s Syndicate

Accounts Instructions”).

We have audited the syndicate annual financial statements which comprise:

• the statement of profit or loss and other comprehensive income;

• the statement of financial position;

• the statement of changes in members’ balances;

• the statement of cash flows; and;

• the related notes 1 to 24.

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

and United Kingdom Accounting Standards, including Financial Reporting Standard 102 “The

Financial Reporting Standard applicable in the UK and Republic of Ireland” (United Kingdom

Generally Accepted Accounting Practice).

Basis for opinion

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

(UK)),applicable law and the Syndicate Accounts Instructions. Our responsibilities under those

standards are further described in the auditor's responsibilities for the audit of the syndicate

annual financial statements section of our report.

We are independent of the syndicate in accordance with the ethical requirements that are

relevant to our audit of the syndicate annual financial statements in the UK, including the

Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard, and we have fulfilled our other

ethical responsibilities in accordance with these requirements. We believe that the audit

evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the managing agent’s use of the

going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties

relating to events or conditions that, individually or collectively, may cast significant doubt on

the syndicate’s ability to continue in operations for a period of at least twelve months from

when the syndicate financial statements are authorised for issue.

Independent auditor’s report continued

Our responsibilities and the responsibilities of the managing agent with respect to going

concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual reports and accounts,

other than the syndicate annual financial statements and our auditor’s report thereon. The

managing agent is responsible for the other information contained within the annual report.

Our opinion on the syndicate annual financial statements does not cover the other information

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

of assurance conclusion thereon.

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

information is materially inconsistent with the syndicate annual financial statements or our

knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.

If we identify such material inconsistencies or apparent material misstatements, we are

required to determine whether this gives rise to a material misstatement themselves. If, based

on the work we have performed, we conclude that there is a material misstatement of this other

information, we are required to report that fact.

We have nothing to report in this regard.

Responsibilities of managing agent

As explained more fully in the managing agent’s responsibilities statement, the managing

agent is responsible for the preparation of the syndicate annual financial statements and for

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

agent determines is necessary to enable the preparation of syndicate annual financial

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

In preparing the syndicate annual financial statements, the managing agent is responsible for

assessing the syndicate’s ability to continue in operation, disclosing, as applicable, matters

related to the syndicate’s ability to continue in operation and to use the going concern basis of

accounting unless the managing agent intends to cease the syndicate’s operations, or has no

realistic alternative but to do so.

Auditor’s responsibilities for the audit of the syndicate annual financial statements

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

financial statements as a whole are free from material misstatement, whether due to fraud or

error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a

high level of assurance, but is not a guarantee that an audit conducted in accordance with

ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise

from fraud or error and are considered material if, individually or in the aggregate, they could

reasonably be expected to influence the economic decisions of users taken on the basis of

these syndicate annual financial statements.

A further description of our responsibilities for the audit of the syndicate annual financial

statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This

description forms part of our auditor’s report.

Independent auditor’s report continued

Extent to which the audit was considered capable of detecting irregularities, including

fraud

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

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

misstatements in respect of irregularities, including fraud. The extent to which our procedures

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

We considered the nature of the syndicate and its control environment, and reviewed the

syndicate’s documentation of their policies and procedures relating to fraud and compliance

with laws and regulations. We also enquired of management, about their own identification

and assessment of the risks of irregularities.

We obtained an understanding of the legal and regulatory frameworks that the syndicate

operates in, and identified the key laws and regulations that:

• had a direct effect on the determination of material amounts and disclosures in the

financial statements. These included the Insurance Accounts Directive (Lloyd’s

Syndicate and Aggregate Accounts) Regulations 2008, the Lloyd’s Syndicate

Accounting Byelaw (no. 8 of 2005) and the Lloyd’s Syndicate Accounts Instructions;

and

• do not have a direct effect on the financial statements but compliance with which may

be fundamental to the syndicate’s ability to operate or to avoid a material penalty.

These included the requirements of Solvency II.

We discussed among the audit engagement team including relevant internal specialists such

as actuarial and IT specialists regarding the opportunities and incentives that may exist within

the organisation for fraud and how and where fraud might occur in the financial statements.

As a result of performing the above, we identified the greatest potential for fraud in the following

area, and our procedures performed to address it are described below:

• Valuation of technical provisions includes assumptions and methodology requiring

significant management judgement and involves complex calculations, and therefore

there is potential for management bias. In response to these risks we involved our

actuarial specialists to develop independent estimates of the technical provisions and

assess the underlying assumptions and methodology applied.

In common with all audits under ISAs (UK), we are also required to perform specific procedures

to respond to the risk of management override. In addressing the risk of fraud through

management override of controls, we tested the appropriateness of journal entries and other

adjustments; assessed whether the judgements made in making accounting estimates are

indicative of a potential bias; and evaluated the business rationale of any significant

transactions that are unusual or outside the normal course of business.

In addition to the above, our procedures to respond to the risks identified included the

following:

• reviewing financial statement disclosures by testing to supporting documentation to

assess compliance with provisions of relevant laws and regulations described as

having a direct effect on the financial statements;

• performing analytical procedures to identify any unusual or unexpected relationships

that may indicate risks of material misstatement due to fraud;

Independent auditor’s report continued

• enquiring of management, and internal audit concerning actual and potential litigation

and claims, and instances of non-compliance with laws and regulations; and

• reading minutes of meetings of those charged with governance and reviewing

correspondence with Lloyd’s.

Report on other legal and regulatory requirements

Opinions on other matters prescribed by The Insurance Accounts Directive (Lloyd’s

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

Accounts Instructions

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

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

the financial statements are prepared is consistent with the financial statements; and

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

requirements.

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

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

agent’s report.

Matters on which we are required to report by exception

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

Regulations 2008 we are required to report in respect of the following matters if, in our opinion:

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

records; or

• the syndicate annual financial statements are not in agreement with the accounting

records; or

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

We have nothing to report in respect of these matters.

Use of our report

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

regulation 10 of The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate

Accounts) Regulations 2008. Our audit work has been undertaken so that we might state to

the syndicate’s members those matters we are required to state to them in an auditor’s report

and for no other purpose. To the fullest extent permitted by law, we do not accept or assume

responsibility to anyone other than the syndicate’s members as a body, for our audit work, for

this report, or for the opinions we have formed.

Independent auditor’s report continued

As required by the Syndicate Accounts Instructions Version 2.0, these financial statements will

form part of the Electronic Format Annual Syndicate Accounts filed with the Council of Lloyd’s

and published on the Lloyd’s website. This auditors’ report provides no assurance over

whether the Electronic Format Annual Syndicate Accounts have been prepared in compliance

with Section 2 of the Syndicate Accounts Instructions Version 2. We have been engaged to

provide assurance on whether the Electronic Format Annual Syndicate Accounts has been

prepared in compliance with Section 2 of the Syndicate Accounts Instructions Version 2 and

will privately report to the directors of the managing agent and the Council of Lloyd’s on this.

Maike Filter (Senior statutory auditor)

For and on behalf of Deloitte LLP

Statutory Auditor

London, United Kingdom

4 March 2025

Statement of profit or loss and other comprehensive income

Technical account – general business

For the year ended 31 December 2024

Notes	2024 $’000	2023 $’000
Gross premiums written 4	347,329	294,169
Outward reinsurance premiums	(8,286)	(6,527)
Premiums written, net of reinsurance	339,043	287,642
Changes in unearned premium
Change in the gross provision for unearned premiums	(34,830)	(28,886)
Change in the provision for unearned premiums reinsurers’ share	514	468
Net change in provisions for unearned premiums 5	(34,316)	(28,418)
Earned premiums, net of reinsurance	304,727	259,224
Allocated investment return transferred from the non-technical account	12,059	4,771
Other technical income, net of reinsurance	-	-
Claims paid
Gross amount	(52,522)	(31,287)
Reinsurers’ share	-	-
Net claims paid	(52,522)	(31,287)
Changes in the provision for claims
Gross amount	(61,826)	(69,225)
Reinsurers’ share	-	-
Net change in provisions for claims 5	(61,826)	(69,225)
Claims incurred, net of reinsurance	(114,348)	(100,512)
Net operating expenses 6	(122,362)	(109,217)
Balance on the technical account – general business	80,076	54,266

All the amounts above are in respect of continuing operations.

The notes on pages 23 to 59 form part of these financial statements.

Statement of profit or loss and other comprehensive income continued

Non-technical account – general business

For the year ended 31 December 2024

Notes	2024 $’000	2023 $’000
Balance on the technical account – general business	80,076	54,266
Investment income	10,256	3,953
Realised gains/(losses) on investments	390	787
Unrealised gains/(losses) on investments	1,547	71
Investment expenses and charges	(134)	(40)
Total investment return 10	12,059	4,771
Allocated investment return transferred to the general business technical account	(12,059)	(4,771)
Gain/(loss) on foreign exchange	(3,311)	865
Profit for the financial year	76,765	55,131

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

statement of profit or loss, and hence no statement of other comprehensive income has been

presented.

All the amounts above are in respect of continuing operations.

The notes on pages 23 to 59 form part of these financial statements.

Statement of financial position

As at 31 December 2024

Notes

2024

$’000

2023

$’000

Assets

Investments

Financial investments

267,066

176,471

Deposits with ceding undertakings

Reinsurers' share of technical provisions

Provision for unearned premiums

7,274

6,759

Claims outstanding

7,274

6,759

Debtors

Debtors arising out of direct insurance operations

133,978

120,158

Debtors arising out of reinsurance operations

5,418

2,358

Other debtors

139,426

122,540

Other assets

Cash at bank and in hand

16,719

9,017

Other

14,518

10,326

31,237

19,343

Prepayments and accrued income

Deferred acquisition costs

61,561

52,064

Other prepayments and accrued income

2,946

1,867

64,507

53,931

Total assets

509,510

379,044

The notes on pages 23 to 59 form part of these financial statements.

Statement of financial position continued

As at 31 December 2024

Notes	2024 $’000	2023 $’000
Members’ balance and liabilities
Capital and reserves
Members’ balances	121,754	76,556
	121,754	76,556
Technical provisions
Provision for unearned premiums 5	183,445	154,423
Claims outstanding 5	181,455	123,965
	364,900	278,388
Creditors
Creditors arising out of direct insurance operations 15	7,617	8,801
Creditors arising out of reinsurance operations 16	14,815	13,374
Amounts owed to credit institutions	-	-
Other creditors including taxation and social security 17	-	-
	22,432	22,175
Accruals and deferred income	424	1,925
Total liabilities	387,756	302,488
Total liabilities, capital and reserves	509,510	379,044

The notes on pages 23 to 59 form part of these financial statements.

The financial statements on pages 17 to 59 were approved by Board of Directors on 25

February 2025 and were signed on its behalf by:

R P Barke

Director

4 March 2025

Statement of changes in Members' balances

For the year ended 31 December 2024

	2024 $’000	2023 $’000
Members’ balances brought forward at 1 January	76,556	21,510
Total comprehensive income/(loss) for the year	76,765	55,131
Payments of profit to members’ personal reserve funds	(31,450)	-
Losses collected on closure of underwriting year	-	-
Cash calls on open underwriting years	-	-
Members agent fees	(95)	(80)
Net movement on funds in syndicate	-	-
Other	(22)	(5)
Members’ balances carried forward at 31 December	121,754	76,556

Statement of cash flows

For the year ended 31 December 2024

Notes

2024

$’000

2023

$’000

Cash flows from operating activities

Profit for the financial year

76,765

55,131

Adjustments:

Increase/(decrease) in gross technical provisions

86,512

102,399

(Increase)/decrease in reinsurers’ share of technical

provisions

(515)

(468)

(Increase)/decrease in debtors

(16,886)

(38,386)

Increase/(decrease) in creditors

257

12,234

(Increase)/decrease in deposits received from

reinsurers

Movement in other assets/liabilities

(16,269)

(16,987)

Foreign exchange

Investment return

(12,059)

(4,771)

Net cash flows from operating activities

117,805

109,152

Cash flows from investing activities

Purchase of equity and debt instruments

(285,542)

(102,342)

Sale of equity and debt instruments

171,454

70,181

Investment income received

10,511

3,984

Net cash flows from investing activities

(103,577)

(28,177)

Cash flows from financing activities

Distribution of profit

(31,450)

Collection of losses

Injection/(release) of Funds in Syndicate

Other

(117)

(85)

Net cash flows from financing activities

(31,567)

(85)

Net increase/(decrease) in cash and cash

equivalents

(17,339)

80,890

Cash and cash equivalents at the beginning of

the year

141,841

60,951

Foreign exchange on cash and cash equivalents

Cash and cash equivalents at the end of the year

124,502

141,841

Notes to the financial statements

1. Basis of preparation

Statement of compliance

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

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

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

Reporting Standard 102 (FRS 102), Financial Reporting Standard 103 (FRS 103) in relation

to insurance contracts, and the Lloyd’s Syndicate Accounts Instructions Version 2.0 as

modified by the Frequently Asked Questions Version 1.0 issued by Lloyd’s.

The financial statements have been prepared on the historical cost basis, with the exception

of financial assets which are measured at fair value through the profit and loss account.

The financial statements are presented in USD, the functional currency of the Syndicate is

USD. All amounts have been rounded to the nearest thousand, unless otherwise indicated.

Going Concern

The Directors of the Managing Agent have assessed the Syndicate’s ability to continue as a

going concern. As part of this assessment, the Directors have considered cash forecasts, the

availability of financial resources, consistency of loss ratios, credit worthiness of reinsurers,

capital support for the existing underwriting years, business plans for future underwriting years

and availability of future capital support. Following this assessment, the Directors consider it

appropriate to adopt the going concern basis in preparing the annual report and financial

statements.

2. Critical accounting estimates and judgements

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

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

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

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

accounting policies:

• Valuation of claims reserves

The measurement of the provision for claims outstanding involves judgements and

assumptions about the future that have a significant effect on the value recognised in

the financial statements.

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

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

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

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

uncertain.

Case estimates are generally set by skilled claims technicians applying their

experience and knowledge to the circumstances of individual claims. Critical

judgement is applied when estimating the value of amounts that should be provided for

Critical accounting estimates and judgements

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

(IBNR) to the Syndicate. This is a source of significant estimation uncertainty.

The ultimate cost of outstanding claims is estimated using a range of techniques

including actuarial and statistical projections, benchmarking, case by case review and

judgement. Statistical techniques assume that past claims development experience

can be used as a basis to project ultimate claims costs. Typical methods employed

include, but are not limited to, the chain ladder method and the Bornhuetter-Ferguson

method, whilst plan and pricing loss ratios are also considered.

The reserving process will disaggregate the insured risks into reserving classes – these

are collections of risks of a similar profile. Each reserving class will be assessed

separately, and corresponding claims development patterns will be selected as bases

against which to forecast expected claims. Judgement is used to assess the extent to

which past trends may not apply in the future. When selecting historic data to use for

claims forecasting purposes, the suitability and reliability of the dataset is considered.

A dataset that most closely resembles the expected risk profile of a given reserving

class will be selected. The benchmark data provided by Lloyd’s is generally used as

reserving development patterns, but these can be substituted by or blended with

additional data, providing that this additional data has an established track record and

is relevant.

Whilst the Directors consider that the claims reserves are fairly stated based on the

information currently available to them, the ultimate liability will vary as a result of

subsequent information and events.

Sensitivities relating to this critical judgement have been assessed in further detail in

note 23.

3. Significant accounting policies

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

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

Gross premiums

Gross written premiums comprise the total premiums receivable for the whole period of cover

provided by the contracts entered into during the reporting period, regardless of whether these

are wholly due for payment in the reporting period, together with any adjustments arising in

the reporting period to such premiums receivable in respect of business written in prior

reporting periods. They are recognised on the date on which the policy commences. This is

applicable to both direct premium and assured (inwards reinsurance) premium. Gross written

premiums are stated gross of brokerage payable to intermediaries, and exclude taxes and

duties levied on the policyholder.

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

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

underlying business which has been written.

Ceded reinsurance premiums

Reinsurance written premiums comprise the total premiums payable for the whole cover

provided by contracts entered into the period, including portfolio premiums payable, and are

recognised on the date on which the policy incepts. Premiums include any adjustments arising

in the accounting period in respect of reinsurance contracts incepting in prior accounting

periods. They are recognised on the date on which the policy commences.

Provisions for unearned premiums

Unearned premiums are those proportions of premiums written up to the reporting date that

relate to periods of risk after the reporting date. In respect of general insurance business,

written premiums are recognised as earned over the period of the policy on a time

apportionment basis having regard where appropriate, to the incidence of risk. The proportion

attributable to subsequent periods is deferred as a provision for unearned premiums.

Unearned reinsurance premiums are those proportions of ceded premiums written up to the

reporting date that relate to periods of risk after the reporting date. Ceded reinsurance

premiums are earned on the same basis as the inwards business being protected.

Claims incurred

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

paid in the year and the movement in provision for outstanding claims and settlement

expenses processed in the year. The provision for claims comprises amounts set aside for

claims notified and claims incurred, but not yet reported (IBNR). The Syndicate does not

discount its liability for outstanding claims.

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

by actuaries. These techniques generally involve projecting from past experience of the

development of claims over time to form a view of the likely ultimate claims to be experienced,

having regard to variations in the business accepted and the underlying terms and conditions.

The provision for claims also includes amounts in respect of internal and external claims

handling costs. For the most recent years, where a high degree of volatility arises from

projections, estimates may be based in part on output from rating and other models of the

business accepted and assessments of underwriting conditions. An element of IBNR can also

relate to specific large losses.

Significant accounting policies continued

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

claims and projections for IBNR, net of estimated irrecoverable amounts, having regard to the

reinsurance programme in place for the class of business and the claims experience for the

year. The Syndicate uses a number of statistical techniques to assist in making these

estimates where relevant.

Accordingly, the two most critical assumptions as regards claims provisions are that the past

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

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

incurred.

The Directors consider that the provisions for gross claims and related reinsurance recoveries

are fairly stated on the basis of the information currently available to them. However, ultimate

liability will vary as a result of subsequent information and events and this may result in

significant adjustments to the amounts provided.

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

financial statements for the period in which the adjustments are made. The methods used,

and the estimates made, are reviewed regularly.

Unexpired risks

A provision for unexpired risks is made where claims and related expenses are likely to arise

after the end of the financial period in respect of contracts concluded before that date, are

expected to exceed the unearned premiums and premiums receivable under these contracts,

after the deduction of any acquisition costs deferred.

The provision for unexpired risks is calculated separately by reference to classes of business

which are managed together.

As at 31 December 2024, the Syndicate had a nil net unexpired risk provision, (2023: nil).

Reinsurance assets

The Syndicate cedes insurance risk in the normal course of business. Reinsurance assets

represent balances due from reinsurance companies. Amounts recoverable from reinsurers

are estimated in a manner consistent with the outstanding claims provision including IBNR or

settled claims associated with the reinsurer's policies and are in accordance with the related

reinsurance contract.

Reinsurance assets are reviewed for impairment at each reporting date, or more frequently if

an indication of impairment arises during the reporting year. Impairment occurs when there is

objective evidence as a result of an event that occurred after initial recognition of the

reinsurance asset that the Syndicate may not receive all outstanding amounts due under the

terms of the contract and the event has a reliably measurable impact on the amounts that the

Syndicate will receive from the reinsurer. The impairment loss is recorded in the statement of

profit or loss.

Gains or losses on buying reinsurance are recognised in the statement of profit or loss

immediately at the date of purchase and are not amortised.

Ceded reinsurance arrangements do not relieve the Syndicate from its obligations to

policyholders.

Significant accounting policies continued

Acquisition costs

Acquisition costs comprise costs arising from the conclusion of insurance contracts, such as

intermediary brokerage and commissions. It is not the Syndicate’s policy to reallocate a portion

of indirect costs, such as the advertising costs or the administrative expenses connected with

the processing of proposals and the issuing of policies, to acquisition costs.

The deferred acquisition cost asset represents the proportion of acquisition costs

corresponding to the proportion of gross premiums written that is unearned at the balance

sheet date. Deferred acquisition costs are amortised over the period in which the related

premiums are earned.

Foreign currencies

Transactions denominated in currencies other than the functional currency are initially

recorded in the functional currency at the exchange rate ruling at the date of the transactions.

Monetary assets and liabilities (which include all assets and liabilities arising from insurance

contracts including unearned premiums and deferred acquisition costs) denominated in foreign

currencies are retranslated into the functional currency at the exchange rate ruling on the

reporting date.

Foreign exchange differences are recorded in the non-technical account.

The following currency exchange rates have been used for principal foreign currency

transactions:

2024

2023

Start of

Period Rate

End of

Period Rate

Average

Rate

Start of

Period Rate

End of

Period Rate

Average

Rate

GBP

0.79

0.80

0.78

0.83

0.79

0.81

USD

1.00

CAD

1.32

1.44

1.37

1.36

1.32

1.35

EUR

0.91

0.97

0.92

0.94

0.91

0.93

AUD

1.47

1.62

1.52

1.48

1.47

1.51

JPY

141.54

157.52

151.20

132.26

141.54

141.10

Significant accounting policies continued

Financial assets and liabilities

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

provisions of IAS 39 Financial Instruments: Recognition and Measurement (as adopted for use

in the UK).

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

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

loss and other comprehensive income. Financial assets and liabilities are classified on their

initial recognition.

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

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

determined at initial recognition, reassessment is only required subsequently when there has

been a modification of contractual terms that is relevant to an assessment of the classification.

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

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

recognition. Investments in shares and other variable yield securities, units in unit trusts, and

debt and other fixed income securities are designated as at fair value through profit or loss on

initial recognition, as they are managed on a fair value basis in accordance with the

Syndicate’s investment strategy. Other financial assets, principally certain debt and other fixed

income securities are classified as available for sale.

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

receivables.

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

provisions of the instrument. Financial assets are derecognised if the Syndicate’s contractual

rights to the cash flows from the financial assets expire or if the Syndicate transfers the

financial asset to another party without retaining control of substantially all risks and rewards

of the asset. A financial liability is derecognised when its contractual obligations are

discharged, cancelled or expired.

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

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

the asset.

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

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

attributable to its acquisition or issue.

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

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

measured at fair value through profit or loss includes foreign exchange gains/losses arising on

their translation to the functional currency but excludes interest and dividend income.

Significant accounting policies continued

Financial assets classified as available for sale are initially recognised at fair value, which

typically equates to the cost, plus transaction costs directly attributable to its acquisition. After

initial measurement, these assets are subsequently measured at fair value. Interest earned

whilst holding available for sale financial assets is reported as interest income. Impairment

losses and foreign exchange gains or losses are reported in profit or loss. Other fair value

changes are recognised in other comprehensive income. Any gain or loss recognised in OCI

will be recycled to profit and loss on derecognition of the asset.

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

using the effective interest method.

Objective evidence that financial assets are impaired includes observable data that comes to

the attention of the Syndicate about any significant financial difficulty of the issuer, or significant

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

operates.

Impairment losses on available for sale financial assets are recognised by reclassifying the

losses accumulated in other comprehensive income to profit or loss. The net cumulative loss

that is reclassified from other comprehensive income to profit or loss is the difference between

the acquisition cost, net of any principal repayment, and the current fair value, less any

impairment loss recognised previously in profit or loss. If, in a subsequent period, the fair value

of an impaired available for sale debt security increases and the increase can be related

objectively to an event occurring after the impairment loss was recognised, the impairment

loss is reversed through profit or loss. Otherwise it is reversed through the statement of

comprehensive income.

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

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

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

simultaneously.

Investment return

Investment return comprises investment income and movements in unrealised gains and

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

expenses, interest expense, realised losses and impairment losses. Investment income

comprises interest income, dividends receivable and realised investment gains.

For the purpose of separately presenting investment income and unrealised gains and losses

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

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

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

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

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

balance sheet date and the fair value at the previous balance sheet date, or purchase price if

acquired during the year. Movements in unrealised investment gains and losses comprise the

increase/decrease in the reporting period in the value of the investments held at the reporting

date and the reversal of unrealised investment gains and losses recognised in earlier reporting

periods in respect of investment disposals of the current period.

Significant accounting policies continued

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

full to the general business technical account to reflect the investment return on funds

supporting underwriting business.

Cash and cash equivalents

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

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

fair value and are used by the Syndicate in the management of its short-term commitments.

Bank overdrafts that are repayable on demand and form an integral part of the Syndicate’s

cash management are included as a component of cash and cash equivalents for the purpose

of the statement of cash flows.

Taxation

Under Schedule 19 of the Finance Act 1993 managing agents are not required to deduct basic

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

20%) deducted from Syndicate investment income is recoverable by managing agents and

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

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

No provision has been made for any other overseas tax payable by members on underwriting

results or investment earnings. Any payments on account made by the Syndicate during the

year have been included in the balance sheet under the heading ‘other debtors’.

Profit commission

There is no profit commission agreement in place.

Deposits with ceding undertakings

Deposits with ceding undertakings are funds held by Lloyd’s Europe on behalf of the Syndicate

to settle Part VII claims. These funds are held at amortised cost in the balance sheet.

Operating expenses

Where expenses are incurred by the Managing Agent for the administration of managed

syndicates, these expenses are apportioned using various methods depending on the type of

expense. Expenses which are incurred jointly are apportioned between the Managing Agent

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

of business transacted.

Reinsurers’ commission and profit participation

Reinsurers’ commissions and profit participations, which include reinsurance profit

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

Significant accounting policies continued

Debtors and creditors

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

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

financial assets with fixed or determinable payments that are not quoted on an active market.

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

Insurance creditors are stated at amortised cost. The Syndicate does not have any debtors

directly with policyholders, all transactions occur via an intermediary.

Where permitted under UK GAAP accounting standards, insurance creditors are netted off

against insurance debtors where the legally enforceable right to offset exists.

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

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

determinable payments that are not quoted on an active market. Reinsurance debtors are

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

stated at amortised cost. Reinsurance debtor principally relates to claims recoveries where the

underlying claim has been settled and the recovery is due. Reinsurance creditors are primarily

premiums payable for reinsurance contracts and are recognised as an expense when due.

4. Analysis of underwriting result

An analysis of the underwriting result before investment return is presented in the table below:

2024

Gross

premiums

written

Gross

premium

earned

Gross

claims

incurred

Gross

operating

expenses

Reinsurance

balance

Underwriting

Result

$’000

$‘000

$’000

Direct insurance

Marine

820

800

(225)

(450)

125

Fire and

damage to

property

4,247

3,411

(1,739)

(1,355)

317

Third party

liability

327,090

294,873

(106,247)

(114,822)

(7,407)

66,397

Pecuniary loss

3,802

3,549

(1,049)

(1,071)

1,429

Total Direct

335,959

302,633

(109,260)

(117,698)

(7,407)

68,268

Reinsurance

acceptances

11,370

9,866

(5,088)

(4,664)

(365)

(251)

Total

347,329

312,499

(114,348)

(122,362)

(7,772)

68,017

The below is an additional disclosure for Lloyd’s reporting purposes and is included to facilitate

the classification of the above segments into the Lloyd’s aggregate classes of business:

2024

Gross

premiums

written

Gross

premium

earned

Gross

claims

incurred

Gross

operating

expenses

Reinsurance

balance

Underwriting

Result

Additional

analysis

$’000

$‘000

$’000

Fire and damage to property of which is:

Specialties

(7)

Energy

Third party liability of which is:

Energy

Analysis of underwriting result continued

2023

Gross

written

premiums

Gross

premium

earned

Gross

claims

incurred

Gross

operating

expenses

Reinsurance

balance

Underwriting

Result

$’000

$‘000

$’000

Direct insurance

Marine

298

255

(106)

(169)

(20)

Fire and other

damage to

property

3,133

2,558

(2,328)

(940)

(710)

Third-party

liability

248,857

233,792

(88,084)

(94,023)

(6,802)

44,883

Pecuniary loss

2,052

828

(375)

(352)

101

Total Direct

254,340

237,433

(90,893)

(95,484)

(6,802)

44,254

Reinsurance

acceptances

39,829

27,850

(9,619)

(13,733)

743

5,241

Total

294,169

265,283

(100,512)

(109,217)

(6,059)

49,495

The below is an additional disclosure for Lloyd’s reporting purposes and is included to facilitate

the classification of the above segments into the Lloyd’s aggregate classes of business:

2023

Gross

premiums

written

Gross

premium

earned

Gross

claims

incurred

Gross

operating

expenses

Reinsurance

balance

Underwriting

Result

Additional

analysis

$’000

$‘000

$’000

Fire and damage to property of which is:

Specialties

(3)

(16)

Energy

Third party liability of which is:

Energy

Analysis of underwriting result continued

The gross premiums written for direct insurance by underwriting location is presented in the

table below:

2024

2023

$’000

United Kingdom

347,329

294,169

European Union Member States

Rest of the world

Total gross premiums written

347,329

294,169

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

(2023: nil).

5. Technical provisions

2024

Gross

provisions

$’000

Reinsurance

assets

$’000

Net

$’000

Claims outstanding

Balance at 1 January

123,965

Claims paid during the year

(52,522)

Expected cost of current year claims

123,726

Change in estimates of prior year provisions

(9,378)

Foreign exchange movements

(4,336)

Balance at 31 December

181,455

Unearned premiums

Balance at 1 January

154,423

(6,759)

147,664

Premiums written during the year

347,329

(8,286)

339,043

Premiums earned during the year

(312,499)

7,772

(304,727)

Foreign exchange movements

(5,808)

(1)

(5,809)

Balance at 31 December

183,445

(7,274)

176,171

Deferred acquisition costs

Balance at 1 January

52,064

Incurred deferred acquisition costs

122,472

Amortised deferred acquisition costs

(111,025)

Foreign exchange movements

(1,950)

Balance at 31 December

61,561

2023

Gross

provisions

$’000

Reinsurance

assets

$’000

Net

$’000

Claims outstanding

Balance at 1 January

53,078

Claims paid during the year

(31,287)

Expected cost of current year claims

112,517

Change in estimates of prior year provisions

(12,005)

Foreign exchange movements

(1,662)

Balance at 31 December

123,965

Unearned premiums

Balance at 1 January

122,911

(6,291)

116,620

Premiums written during the year

294,169

(6,527)

287,642

Premiums earned during the year

(265,283)

6,059

(259,224)

Foreign exchange movements

2,626

Balance at 31 December

154,423

(6,759)

147,664

Deferred acquisition costs

Balance at 1 January

41,187

Incurred deferred acquisition costs

106,429

Amortised deferred acquisition costs

(96,429)

Foreign exchange movements

877

Balance at 31 December

52,064

6. Net operating expenses

2024

2023

$’000

Acquisition costs

(122,472)

(106,429)

Change in deferred acquisition costs

11,447

10,000

Reinsurance commissions and profit participation

Administration expenses

(5,345)

(7,106)

Members’ standard personal expenses

(5,992)

(5,682)

Net operating expenses

(122,362)

(109,217)

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

2024

2023

$’000

Total commission for direct insurance business

(117,778)

(90,329)

7. Auditor’s remuneration

2024

2023

$’000

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

statements

(181)

(161)

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

other services pursuant to legislation

(205)

(178)

Total

(386)

(339)

Auditors’ remuneration is included as part of administrative expenses in note 6.

8. Key management personnel compensation

The Active Underwriter’s salary was not recharged to the Syndicate during 2024. The cost is

borne by CFC Underwriting Ltd.

The aggregate emoluments of the Directors and staff of the Asta Group are charged to

companies of the Asta Group in accordance with the proportion of their time associated with

each company. Further disclosures regarding Directors’ emoluments are provided in the

financial statements of Asta Managing Agency Ltd.

No emoluments of the Directors of Asta Managing Agency Ltd were directly charged to the

Syndicate. No other compensation was payable to key management personnel.

9. Staff numbers and costs

The Syndicate has no employees beyond the Active Underwriter, and so no salary costs were

recharged to the Syndicate during 2024 (2023: nil). All services are provided by CFC

Underwriting Ltd and the Managing Agent (which invoices the Syndicate for the services

provided).

10. Investment return

2024

2023

From financial assets designated at fair value through profit or

loss

$’000

Interest and similar income

5,132

1,067

Dividend income

Interest on cash at bank

5,123

2,886

Gains on the realisation of investments

440

Losses on the realisation of investments

(50)

(14)

Unrealised gains on investments

1,975

814

Unrealised losses on investments

(427)

(27)

Investment management expenses

(134)

(40)

Total investment return

12,059

4,771

11. Financial Investments

31 December 2024

Carrying

value

Cost

$’000

Shares and other variable yield securities and units in unit trusts

107,783

107,716

Debt securities and other fixed income securities

159,283

156,975

Loans and deposits with credit institutions

Syndicate loans to central fund

Other investments

Total financial investments

267,066

264,691

31 December 2023

Carrying

value

Cost

$’000

Shares and other variable yield securities and units in unit trusts

125,354

125,353

Debt securities and other fixed income securities

42,720

42,860

Loans and deposits with credit institutions

7,471

Syndicate loans to central fund

Other investments

Total financial investments

176,471

175,684

Financial investments continued

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

classification:

2024

2023

$’000

Financial assets measured at fair value through profit or loss

267,066

176,471

Financial assets measured at fair value as available for sale

Financial assets measured at amortised cost

Total financial investments

267,066

176,471

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

fair value hierarchy based on the inputs used in the valuation techniques as follows:

• Level 1 – financial assets that are measured by reference to published quotes in an

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

prices are readily and regularly available from an exchange, dealer, broker, industry

group, pricing service or regulatory agency and those prices represent actual and

regularly occurring market transactions on an arm’s length basis.

• Level 2 – financial assets measured using a valuation technique based on assumptions

that are supported by prices from observable current market transactions. For

example, assets for which pricing is obtained via pricing services but where prices have

not been determined in an active market, financial assets with fair values based on

broker quotes, investments in private equity funds with fair values obtained via fund

managers and assets that are valued using the Syndicate’s own models whereby the

significant inputs into the assumptions are market observable.

• Level 3 – financial assets measured using a valuation technique (model) based on

assumptions that are neither supported by prices from observable current market

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

Therefore, unobservable inputs reflect the Syndicate's own assumptions about the

assumptions that market participants would use in pricing the asset or liability (including

assumptions about risk). These inputs are developed based on the best information

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

Financial investments continued

The following table shows financial investments recorded at fair value analysed between the

three levels in the fair value hierarchy.

2024

$’000

Level 1

Level 2

Level 3

Assets

held at

amortised

cost

Total

Shares and other variable

yield securities and units in

unit trusts

107,783

Debt securities and other

fixed income securities

159,283

Loans and deposits with

credit institutions

Syndicate loans to central

fund

Other investments

Total

107,783

159,283

267,066

2023

$’000

Level 1

Level 2

Level 3

Assets

held at

amortised

cost

Total

Shares and other variable yield

securities and units in unit trusts

125,353

Debt securities and other fixed

income securities

43,647

Loans and deposits with credit

institutions

7,471

Syndicate loans to central fund

Other investments

Total

176,471

Financial investments continued

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

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

Debt securities are generally valued using prices provided by external pricing vendors. Pricing

vendors will often determine prices by consolidating prices of recent trades for identical or

similar securities obtained from a panel of market makers into a composite price. The pricing

service may make adjustments for the elapsed time from a trade date to the valuation date to

take into account available market information. Lacking recently reported trades, pricing

vendors will use modelling techniques to determine a security price.

Some government and supranational securities are listed on recognised exchanges and are

generally classified as level 1 in the fair value hierarchy. Those that are not listed on a

recognised exchange are generally based on composite prices of recent trades in the same

instrument and are generally classified as level 2 in the fair value hierarchy.

Corporate bonds, including asset backed securities, that are not listed on a recognised

exchange or are traded in an established over the counter market are also mainly valued using

composite prices. Where prices are based on multiple quotes and those quotes are based on

actual recent transactions in the same instrument the securities are classified as level 2,

otherwise they are classified as level 3 in the fair value hierarchy.

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

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

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

12. Debtors arising out of direct insurance operations

2024

2023

$’000

Due within one year

133,978

120,158

Due after one year

Total

133,978

120,158

13. Debtors arising out of reinsurance operations

2024

2023

$’000

Due within one year

5,418

2,358

Due after one year

Total

5,418

2,358

14. Other debtors

2024

2023

$’000

Due within one year

Total

15. Creditors arising out of direct insurance operations

2024

2023

$’000

Due within one year

7,617

8,801

Due after one year

Total

7,617

8,801

16. Creditors arising out of reinsurance operations

2024

2023

$’000

Due within one year

14,815

13,374

Due after one year

Total

14,815

13,374

17. Other creditors

2024

2023

$’000

Due within one year

Total

18. Cash and cash equivalents

2024

2023

$’000

Cash at bank and in hand

16,719

9,017

Deposits with credit institutions

7,470

Shares and other variable yield securities and units in unit trusts

107,783

125,354

Bank overdrafts

Total cash and cash equivalents

124,502

141,841

Shares and other variable yield securities and units in unit trusts are investments in nature but

are treated as cash and cash equivalents for cash flow purposes, so therefore are included in

both Financial investments and Cash and cash equivalents.

Deposits with credit institutions with maturities of three months or less that are used by the

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

equivalents.

Of the total cash and cash equivalents, the following amount was held in regulated bank

accounts in overseas jurisdictions:

2024

2023

$’000

Total cash and cash equivalents held in regulated accounts in overseas

jurisdictions

6,536

18,097

19. Related parties

Asta provides services and support to the Syndicate in its capacity as Managing Agent. During

the year, Managing Agency fees of $3.1m were charged to the Syndicate (2023: $2.6m). Asta

also recharged $2.3m worth of service charges in the year (2023: $2.2m) and as at 31

December 2024 a cumulative amount of $0.1m is owed to Asta in respect of this service (2023:

$0.2m).

From time to time, syndicates managed by Asta enter into (re)insurance contracts with one

another. All such transactions are subject to Asta’s internal controls which ensure that all are

compliant with Lloyd’s Related Party Byelaw provisions. All transactions are on an arm’s length

basis.

Asta Capital Ltd, the parent of Asta Managing Agency Ltd, is owned by the Davies Group but

maintains a level of independence by virtue of separate boards and a separate governance

structure. Other entities within the wider Davies Group provide insurance-related services to

the syndicates under Asta’s management. The provision of these services is managed by a

separate management team distinct from Asta, and these services are provided at an arm’s

length basis.

The ultimate parent company of Asta Managing Agency Ltd is Tennessee Topco Ltd.

20. Disclosure of interests

During 2024 Asta was the Managing Agent for the following syndicates on behalf of third-party

capital providers:

• Syndicates 1322, 1609, 1699, 1892, 1985, 1988, 2525, 2689, 2786, 3123, 4242 and

4747,

• Special Purpose Arrangement 1416,

• Syndicates-in-a-Box 1796, 1902, 1922, 1966, 2427, 2880, 3456 and 5183.

During 2024, Asta took on management of the following syndicates:

• Syndicate 1922 on 1 January 2024

• Syndicate 1966 on 13 June 2024

• Syndicate 2427 on 1 May 2024

• Syndicate 3123 on 1 July 2024.

On 1 January 2024, Asta reinsured to close Syndicate 2288 into Renaissance Re Syndicate

1458.

On 1 January 2025, Asta took on management of Syndicate 1618.

The agency also provides administrative services to syndicates and special purpose

arrangements, also undertaking several ancillary roles for other clients.

The Financial Statements of the Managing Agency can be obtained by application to the

Registered Office (see page 1).

21. Funds at Lloyd's

Every member is required to hold capital at Lloyd's which is held in trust and known as Funds

at Lloyd's (“FAL”). These funds are intended primarily to cover circumstances where Syndicate

assets prove insufficient to meet participating members' underwriting liabilities. The level of

FAL that Lloyd's requires a member to maintain is determined by Lloyd's based on PRA

requirements and resource criteria. FAL has regard to a number of factors including the nature

and amount of risk to be underwritten by the member and the assessment of the reserving risk

in respect of business that has been underwritten. Since FAL is not under the management of

the managing agent, no amount has been shown in these financial statements by way of such

capital resources. However, the managing agent is able to make a call on the members' FAL

to meet liquidity requirements or to settle losses.

22. Off-balance sheet items

The Syndicate has not been party to an arrangement, which is not reflected in its statement of

financial position, where material risks and benefits arise for the Syndicate.

23. Risk management

a) Governance framework

The Syndicate's risk and financial management framework aims to protect the Syndicate's

members capital from events that might otherwise prevent the Syndicate from meeting its

policyholder obligations, while maximising the returns to its members. The Directors recognise

the critical importance of having efficient and effective risk management systems in place.

Asta maintains a risk management function for the Syndicate with clear terms of reference

from the Syndicate Board, its committees and sub committees.

Asta supplements this with a clear organisational structure with documented delegated

authorities and responsibilities from the main Asta Managing Agency board to the Syndicate

who perform the underwriting activities. Lastly, the Syndicate policy framework sets its risk

management and control and business conduct standards for operations. Asta reviews and

monitors each policy to ensure compliance with the policy throughout the Syndicate.

The Syndicate Board approves the risk management policies and meets regularly to approve

any commercial, regulatory and organisational requirements of such policies. These policies

define the identification of risk and its interpretation to ensure the appropriate quality and

diversification of assets, align underwriting and reinsurance strategy to the Syndicate goals,

and specify reporting requirements. The Syndicate Board places significant emphasis on the

assessment and documentation of risks and controls, including the articulation of the

Syndicate's risk appetite.

b) Capital management objectives, policies and approach

Capital framework at Lloyd's

The Society of Lloyd's (Lloyd's) is a regulated undertaking and subject to the supervision of

the Prudential Regulatory Authority (PRA) under the Financial Services and Markets Act 2000.

Within the supervisory framework, Lloyd's applies capital requirements at member level and

centrally to ensure that Lloyd's complies with Solvency II capital requirements, and beyond

that to meet its own financial strength, licence and ratings objectives.

Although Lloyd's capital setting processes use a capital requirement set at Syndicate level as

a starting point, the requirement to meet Solvency II and Lloyd's capital requirements apply at

overall and member level only respectively, not at Syndicate level. Accordingly the capital

requirement in respect of the Syndicate is not disclosed in these financial statements.

Lloyd's capital setting process

In order to meet Lloyd's requirements, each Syndicate is required to calculate its Solvency

Capital Requirement (SCR) for the prospective underwriting year. This amount must be

sufficient to cover a 1 in 200 year loss, reflecting uncertainty in the ultimate run-off of

underwriting liabilities (SCR 'to ultimate'). The Syndicate must also calculate its SCR at the

same confidence level but reflecting uncertainty over a one year time horizon (one year SCR)

for Lloyd's to use in meeting Solvency II requirements. The SCRs of each Syndicate are

subject to review by Lloyd's and approval by the Lloyd's Capital and Planning Group.

Risk management continued

A Syndicate may be comprised of one or more underwriting members of Lloyd's. Each member

is liable for its own share of underwriting liabilities on the Syndicate on which it is participating

but not other members' shares. Accordingly, the capital requirement that Lloyd's sets for each

member operates on a similar basis. Each member's SCR shall thus be determined by the

sum of the member's share of the Syndicate SCR 'to ultimate'. Where a member participates

on more than one Syndicate, a credit for diversification is provided to reflect the spread of risk,

but consistent with determining an SCR which reflects the capital requirement to cover a 1 in

200 year loss 'to ultimate' for that member. Over and above this, Lloyd's applies a capital uplift

to the member's capital requirement, known as the Economic Capital Assessment (ECA). The

purpose of this uplift, which is a Lloyd's not a Solvency II requirement, is to meet Lloyd's

financial strength, licence and ratings objectives. The capital uplift applied for 2024 was 35%

of the member's SCR 'to ultimate'.

Provision of capital by members

Each member may provide capital to meet its ECA either by assets held in trust by Lloyd's

specifically for that member (funds at Lloyd's), held within and managed within a Syndicate

(funds in Syndicate) or as the member's share of the members' balances on each Syndicate

on which it participates. Accordingly, the ending members balances reported on the Statement

of Financial Position on page 19 represent resources available to meet members' and Lloyd's

capital requirements.

c) Insurance risk

The principal risk the Syndicate faces under insurance contracts is that the actual claims and

benefit payments or the timing thereof, differ from expectations. This is influenced by the

frequency of claims, severity of claims, actual benefits paid and subsequent development of

long-term claims. Therefore, the objective of the Syndicate is to ensure that sufficient reserves

are available to cover these liabilities.

The risk exposure is mitigated by diversification across a large portfolio of insurance contracts

and geographical areas. The variability of risks is also improved by careful selection and

implementation of underwriting strategy guidelines, as well as the use of reinsurance

arrangements.

The Syndicate purchases reinsurance as part of its risk mitigation programme. The Syndicate’s

reinsurance program is predominantly covered by a whole account, non-proportional losses

occurring during policy which covers the calendar year. Amounts recoverable from reinsurers

are estimated in a manner consistent with the outstanding claims provision and are in

accordance with the reinsurance contracts. The Syndicate's placement of reinsurance is

diversified such that it is neither dependent on a single reinsurer nor are the operations

substantially dependent upon any single reinsurance contract.

Sub committees of the Syndicate Board oversee the management of reserving risk. The use

of standardised and internal modelling techniques, as well as benchmarking and the review of

claims development are key in mitigating reserving risk. The purpose of these underwriting,

reinsurance and reserving strategies is to limit exposure to catastrophes or large losses based

on the Syndicate's risk appetite as decided by the Syndicate Board.

The Syndicate uses both its own and commercially available risk management software to

assess catastrophe exposure. However, there is always a risk that the assumptions and

techniques used in these models are unreliable or that claims arising from an un-modelled

event are greater than those arising from a modelled event.

Risk management continued

Key assumptions

The principal assumption underlying the liability estimates is that the future claims

development will follow a similar pattern to past claims development experience. This includes

assumptions in respect of average claim costs, claim handling costs, claim inflation factors

and claim numbers for each underwriting year. Additional qualitative judgements are used to

assess the extent to which past trends may not apply in the future, for example: once-off

occurrence; changes in market factors such as public attitude to claiming: economic

conditions: as well as internal factors such as portfolio mix, policy conditions and claims

handling procedures. Judgement is further used to assess the extent to which external factors

such as judicial decisions and government legislation affect the estimates.

Other key circumstances affecting the reliability of assumptions include variation in interest

rates, delays in settlement and changes in foreign currency rates.

Sensitivities

The claim liabilities are sensitive to the key assumptions that follow. It has not been possible

to quantify the sensitivity of certain assumptions, such as legislative changes, uncertainty in

the estimation process. The following analysis is performed for reasonably possible

movements in key assumptions with all other assumptions held constant, showing the impact

on net liabilities, profit and members' balances. The correlation of assumptions will have a

significant effect in determining the ultimate claims liabilities, but to demonstrate the impact

due to changes in assumptions, assumptions had to be changed on an individual basis. It

should be noted that movements in these assumptions are non-linear.

The method used for deriving sensitivity information and significant assumptions did not

change from the previous period.

Sensitivity

General insurance business sensitivities as at 31

December 2024

+5.0%

$’000

-5.0%

$’000

Claims outstanding – gross of reinsurance

(9,073)

9,073

Claims outstanding – net of reinsurance

(9,073)

9,073

Impact on members balance

(9,073)

9,073

Impact on (loss) / profit

(9,073)

9,073

Sensitivity

General insurance business sensitivities as at 31

December 2023

+5.0%

$’000

-5.0%

$’000

Claims outstanding – gross of reinsurance

(6,198)

6,198

Claims outstanding – net of reinsurance

(6,198)

6,198

Impact on members balance

(6,198)

6,198

Impact on (loss) / profit

(6,198)

6,198

Risk management continued

Claims development

The tables below show the Syndicate's cumulative incurred claims development, including

both claims notified and IBNR for each underwriting year, together with the cumulative

payments to date on a gross and net of reinsurance basis at the balance sheet date. The

Syndicate has elected to translate estimated claims and claims payments at a consistent rate

of exchange as determined by the balance sheet date.

The uncertainty associated with the ultimate claims experience of an underwriting year is

greatest when the underwriting year is at an early stage of development and the margin for

future experience potentially being more adverse than assumed is at its highest. As claims

develop, and the ultimate cost of the claims becomes more certain, the relative level of margin

should decrease. Due, however, to the uncertainty inherent in the claims estimation process,

initial reserves may not always be in a surplus. This is particularly so for large catastrophe

claims where uncertainly is initially great.

All numbers presented in $’000

Underwriting year

2021

2022

2023

2024

Estimate of cumulative gross claims

incurred

At end of first underwriting year

8,295

15,635

17,024

20,934

One year later

49,352

91,988

102,398

Two years later

54,887

97,754

Three years later

55,059

Less cumulative gross claims paid

(33,734)

(38,371)

(21,579)

(1,006)

Gross claims reserves

21,325

59,383

80,819

19,928

Total gross claims reserves

181,455

All numbers presented in $’000

Underwriting year

2021

2022

2023

2024

Estimate of cumulative net claims

incurred

At end of first underwriting year

8,295

15,635

17,024

20,934

One year later

49,352

91,988

102,398

Two years later

54,887

97,754

Three years later

55,059

Less cumulative net claims paid

(33,734)

(38,371)

(21,579)

(1,006)

Net claims reserves

21,325

59,383

80,819

19,928

Total net claims reserves

181,455

Risk management continued

d) Financial risk

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

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

Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss by failing

to discharge an obligation. The Syndicate has the following policies and procedures in place

to mitigate the exposure to credit risk:

• Reinsurance is placed with counterparties that have a good credit rating and

concentration of risk is avoided by following policy guidelines in respect of

counterparties' limits. If the counterparty is downgraded or does not have a good credit

rating, then collateral is sought to mitigate any risk. This is monitored by the Syndicate

Board.

The tables below show the maximum exposure to credit risk (including an analysis of financial

assets exposed to credit risk) for the components of the statement of financial position. The

maximum exposure is shown gross, before the effect of mitigation through collateral

agreements and the use of credit derivatives.

2024

$’000

Neither

past due

nor

impaired

assets

Past due

but not

impaired

assets

Gross

value of

impaired

assets

Impairment

allowance

Total

Shares and other variable

yield securities and units in

unit trusts

107,783

Debt securities and other

fixed income securities

159,283

Loans and deposits with

credit institutions

Syndicate loans to central

fund

Other investments

Reinsurers’ share of claims

outstanding

Debtors arising out of

reinsurance operations

5,418

Debtors arising out of direct

insurance operations

133,978

Cash at bank and in hand

16,719

Overseas deposits

14,518

Other debtors and accrued

interest

71,811

Total

509,510

Risk management continued

2023

$’000

Neither

past due

nor

impaired

assets

Past due

but not

impaired

assets

Gross

value of

impaired

assets

Impairment

allowance

Total

Shares and other variable

yield securities and units in

unit trusts

125,353

Debt securities and other

fixed income securities

43,647

Loans and deposits with

credit institutions

7,471

Syndicate loans to central

fund

Other investments

Reinsurers’ share of claims

outstanding

Debtors arising out of

reinsurance operations

2,358

Debtors arising out of direct

insurance operations

120,158

Cash at bank and in hand

9,017

Overseas deposits

10,326

Other debtors and accrued

interest

60,714

Total

379,044

Risk management continued

The table below sets out the age analysis of financial assets that are past due but not impaired

at the balance sheet date:

2024

$’000

0-3 months

past due

3-6 months

past due

6-12

months

past due

Greater

than 1 year

past due

Total

Shares and other variable

yield securities and units in

unit trusts

Debt securities and other

fixed income securities

Loans and deposits with

credit institutions

Syndicate loans to central

fund

Other investments

Reinsurers’ share of claims

outstanding

Debtors arising out of

reinsurance operations

Debtors arising out of direct

insurance operations

Cash at bank and in hand

Overseas deposits

Other debtors and accrued

interest

Total

Risk management continued

2023

$’000

0-3 months

past due

3-6 months

past due

6-12

months

past due

Greater

than 1 year

past due

Total

Shares and other variable

yield securities and units in

unit trusts

Debt securities and other

fixed income securities

Loans and deposits with

credit institutions

Syndicate loans to central

fund

Other investments

Reinsurers’ share of claims

outstanding

Debtors arising out of

reinsurance operations

Debtors arising out of direct

insurance operations

Cash at bank and in hand

Overseas deposits

Other debtors and accrued

interest

Total

Risk management continued

The table below provides information regarding the credit risk exposure of the Syndicate at the

reporting date by classifying assets according to independent credit ratings of the

counterparties. AAA is the highest possible rating.

2024

$’000

AAA

BBB

Other

Not

Rated

Total

Shares and other variable

yield securities and units in

unit trusts

90,251

17,532

107,783

Debt securities and other

fixed income securities

47,297

41,913

70,073

159,283

Loans and deposits with

credit institutions

Syndicate loans to central

fund

Other investments

Reinsurers’ share of claims

outstanding

Debtors arising out of

reinsurance operations

900

4,518

5,418

Debtors arising out of direct

insurance operations

133,978

Cash at bank and in hand

16,719

Overseas deposits

8,453

1,562

1,722

1,564

100

1,117

14,518

Other debtors and accrued

interest

71,811

Total

146,001

2,462

82,404

71,637

100

206,906

509,510

Risk management continued

2023

$’000

AAA

BBB

Other

Not

Rated

Total

Shares and other variable

yield securities and units in

unit trusts

106,100

19,253

125,353

Debt securities and other

fixed income securities

28,956

13,190

1,501

43,647

Loans and deposits with

credit institutions

7,471

Syndicate loans to central

fund

Other investments

Reinsurers’ share of claims

outstanding

Debtors arising out of

reinsurance operations

2,358

Debtors arising out of direct

insurance operations

120,158

Cash at bank and in hand

9,017

Overseas deposits

4,656

1,394

790

758

2,686

10,326

Other debtors and accrued

interest

60,714

Total

139,712

1,394

49,721

2,259

185,916

379,044

Maximum credit exposure

It is the Syndicate's policy to maintain accurate and consistent risk ratings across its credit

portfolio. This enables management to focus on the applicable risks and the comparison of

credit exposures across all lines of business.

Risk management continued

Liquidity risk

Liquidity risk is the risk that the Syndicate may not have enough cash to pay insurance claims

and other liabilities. This risk is reduced by reviewing the Syndicate’s expected cash

obligations on a weekly basis and keeping adequate cash on deposit to meet those obligations.

Further, a Liquidity Committee meets monthly to review liquidity strength and forthcoming

liquidity needs on a monthly basis.

The table below summarises the maturity profile of the Syndicate's financial liabilities based

on remaining undiscounted contractual obligations, including interest payable and outstanding

claim liabilities based on the estimated timing of claim payments resulting from recognised

insurance liabilities. Repayments which are subject to notice are treated as if notice were to

be given immediately.

2024

$’000

No stated

maturity

0-1 Year

1-3 Years

3-5 Years

> 5 years

Total

Claims

outstanding

69,587

68,791

27,928

15,149

181,455

Creditors

22,432

Total

92,019

68,791

27,928

15,149

203,887

2023

$’000

No stated

maturity

0-1 Year

1-3 Years

3-5 Years

> 5 years

Total

Claims

outstanding

48,258

45,325

19,501

10,882

123,965

Creditors

22,175

Total

70,433

45,324

19,501

10,882

146,140

Risk management continued

Market risk

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

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

three types of risk: currency risk, interest rate risk and other price risk. Other price risk has

been assessed as negligible, given that the Syndicate does not invest in equities.

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

within acceptable parameters, while optimising the return on risk.

a) Currency risk

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

fluctuate because of changes in foreign exchange rates.

The Syndicate's functional currency is USD and its exposure to foreign exchange risk arises

primarily with respect to transactions in Sterling, Euro, Canadian Dollar and Australian Dollar.

The Syndicate seeks to mitigate the risk by matching the estimated foreign currency

denominated liabilities with assets denominated in the same currency.

The Syndicate matches its currency position, so it holds net assets across a number of

currencies. The Syndicate takes into consideration the underlying currency of the Syndicate's

required capital and invests its assets proportionately across these currencies so as to protect

the solvency of the Syndicate, against variation in foreign exchange rates.

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

currency exchange risk at the reporting date, as follows, with all numbers reported in converted

USD:

Risk management continued

2024

GBP

USD

EUR

CAD

AUD

Total

Investments

55,216

136,595

11,413

44,634

19,208

267,066

Reinsurers’ share of

technical provisions

7,274

Debtors

28,014

77,804

4,630

16,746

12,202

139,396

Other assets

17,621

41,636

4,628

17,707

12,695

94,287

Prepayments and

accrued income

747

740

1,487

Total assets

101,598

264,049

20,671

79,087

44,105

509,510

Technical provisions

(76,855)

(191,045)

(14,762)

(53,307)

(28,931)

(364,900)

Deposits received

from reinsurers

Creditors

(805)

(19,774)

(481)

(1,084)

(288)

(22,432)

Accruals and deferred

income

(390)

(34)

(424)

Total liabilities

(78,050)

(210,853)

(15,243)

(54,391)

(29,219)

(387,756)

Total capital and

reserves

23,548

53,196

5,428

24,696

14,886

121,754

2023

GBP

USD

EUR

CAD

AUD

Total

Investments

29,845

100,991

7,256

30,909

7,470

176,471

Reinsurers’ share of

technical provisions

6,759

Debtors

30,601

54,797

4,277

18,776

14,065

122,516

Other assets

14,306

30,170

3,180

14,301

9,776

71,733

Prepayments and

accrued income

877

688

1,565

Total assets

75,629

193,405

14,713

63,986

31,311

379,044

Technical provisions

(60,178)

(141,393)

(10,272)

(43,819)

(22,726)

(278,388)

Deposits received from

reinsurers

Creditors

(1,853)

(17,474)

(723)

(1,618)

(507)

(22,175)

Accruals and deferred

income

(343)

(1,582)

(1,925)

Total liabilities

(62,374)

(160,449)

(10,995)

(45,437)

(23,233)

(302,488)

Total capital and

reserves

13,255

32,956

3,718

18,549

8,078

76,556

Risk management continued

Sensitivity to changes

The table below gives an indication of the impact on profit of a percentage change in the

relative strength of the USD against the value of the Sterling and the Canadian Dollar (being

the two largest non-USD currencies holding net assets). The analysis is based on the

information as at the reporting date.

Currency risk

Impact on profit and member’s balance

2024

2023

$’000

10 percent increase in GBP/USD exchange rate

2,355

1,326

10 percent decrease in GBP/USD exchange rate

(2,355)

(1,326)

10 percent increase in CAD/USD exchange rate

2,470

1,855

10 percent decrease in CAD/USD exchange rate

(2,470)

(1,855)

b) Interest rate risk

Interest rate risk is the risk that the value or future cash flows of a financial instrument will

fluctuate in response to changes in market interest rates.

Floating rate instruments expose the Syndicate to cash flow interest risk, whereas fixed rate

instruments expose the Syndicate to fair value interest risk.

The analysis below is performed for reasonably possible movements in market interest rates

with all other variables held constant, showing the impact on the result before tax due to

changes in fair value of financial assets (whose fair values are recorded in the profit and loss

account) and members’ balances.

Interest rate risk

Impact on profit and member’s balance

2024

2023

$’000

50 basis points increase in yield curves

(1,663)

(423)

50 basis points decrease in yield curves

1,663

423

Insurance liabilities are not discounted and therefore are not exposed to interest rate risk.

24. Post balance sheet events

The Syndicate will distribute $67.3m to members during 2025, in relation to the 2022

underwriting year profit.