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Annual report and accounts 2024
Welcome to our Annual report 2024
As a leading global
specialist insurer, we are
passionate about bringing
an innovative and
progressive approach to
helping our clients
mitigate the risks of the
world. 2024 saw this
syndicate achieve its
highest written premium
ever.
Contents
1
Highlights
2
Strategic report of the managing agent
4
Managing agent’s report
10
Statement of managing agent’s
responsibilities
11
Independent auditor’s report to the
members of Syndicate 5623
14
Statement of comprehensive income
15
Balance sheet
16
Statement of changes in members’
balances
17
Cash flow statement
18
Notes to the syndicate annual accounts
43
Syndicate 5623 2022 underwriting year
accounts
44
Managing agent’s report
45
Statement of managing agent’s
responsibilities
46
Independent auditor’s report to the
members of Syndicate 5623 – 2022
closed year of account
49
Profit or loss account
50
Statement of changes in members'
balances
51
Balance sheet
52
Cash flow statement
53
Notes to the syndicate 2022
underwriting year of account
57
Five-year summary of closed year results
at 31 December 2024
58
Managing agent's corporate information
Highlights
Syndicate capacity Profit for the financial year Combined ratio
£396.6m $61.6m 90%
(2023: £339.8m) (2023: $40.6m)
(2023: 90%)
Gross premiums written Rate increase on renewals Cash and investments
$491.8m 0.9% $498.6m
(2023: $390.1m) (2023: 7.8%) (2023: $184.5m)
Net premiums written Claims ratio Investment return
$458.2m 54% 7.2%
(2023: $363.1m) (2023: 57%) (2023: 8.1%)
Earned premiums, net of reinsurance Expense ratio
$426.9m 36%
(2023: $294.2m) (2023: 33%)
.
www.beazley.com
Beazley | Syndicate 5623 Annual report 2024 01
Strategic report of the managing agent
Overview
Syndicate 5623 (the ‘syndicate’) writes portfolio underwriting business at Lloyd's and operates a follow-only portfolio. The
syndicate began writing business directly at Lloyd's from the start of 2023, having previously been a special purpose
reinsurance vehicle for syndicate 3623. During 2024, the syndicate began following the lead underwriting of syndicates 2623
and 623 to write business on a multi-line basis which provides a choice of additional capacity for large corporate clients who
meet the eligibility standards of the environmental, social and governance ('ESG') scoring criteria that have been developed with
support from specialist, independent rating agencies.
The capacities of the syndicates managed by Beazley Furlonge Limited ('BFL') are as follows:
2024 £m 2023 £m
623 887.2 818.6
2623 2,299.6 3,794.5
3622 37.0 33.8
3623 1,325.6 —
4321 — 33.1
5623 396.6 339.8
6107 57.8 43.3
Total 5,003.8 5,063.1
The result for the syndicate for the year ended 31 December 2024 is a profit of $61.6m (2023: $40.6m). Gross premiums
written increased to $491.8m (2023: $390.1m).
Year of account results
The 2022 year of account ('YOA') has closed with a return on capacity of 14.5% despite being adversely impacted by a number
of catastrophe events including Hurricane Ian and Storm Elliott. This return on capacity shows that the follow-only model can
produce robust returns in the face of industry-wide catastrophe events. The 2023 YOA is currently forecasting a return on
capacity of 15.0%. The 2024 YOA is also forecasting a positive return on capacity but it is still in the early stages of
development.
Rating environment
The premium rates charged for renewal business on existing lines increased by 0.9% during 2024 (2023: 7.8%).
Combined ratio
The combined ratio is a measure of operating performance and represents the ratio of the syndicate's total costs (excluding
foreign exchange movements) to total net earned premium. The syndicate’s combined ratio for 2024 was 90% (2023: 90%).
The increase in expense ratio and the offsetting decline in claims ratio has resulted in a relatively flat combined ratio.
Claims
The claims ratio is a measure of the syndicate's claims experience and represents the ratio of its net insurance claims to net
earned premium. The 2024 claims ratio for Syndicate 5623 decreased to 54% (2023: 57%). This is driven by prior year
releases, offset by catastrophe events which occurred throughout the year, the most notable being Hurricane Helene.
Net operating expenses
Net operating expenses, including business acquisition costs and administrative expenses were $154.9m (2023: $98.3m). The
breakdown of these costs is shown below:
2024
2023
$m $m
Brokerage costs 102.6 66.7
Other acquisition costs 4.2 3.1
Total acquisition costs 106.8 69.8
Administration and other expenses 31.5 27.6
Profit commissions payable to managing agent 16.6 0.9
Net operating expenses
154.9 98.3
* A further breakdown of net operating expenses can be seen in note 4.
2
Beazley | Syndicate 5623 Annual report 2024 www.beazley.com
Brokerage costs as a percentage of net earned premium are approximately 24% (2023: 23%). Brokerage costs are deferred and
expensed over the life of the associated premiums in accordance with accounting guidelines. Other acquisition costs comprise
of costs that have been identified as being directly related to underwriting activity (e.g. underwriters’ salaries and Lloyd’s box
rental). These costs are also deferred in line with premium earning patterns. Administrative expenses comprise primarily IT
costs, facilities costs, Lloyd’s central costs and other support costs.
The expense ratio is a measure of net operating expenses to net earned premium. The expense ratio for 2024 is 36%
(2023: 33%). The increase is primarily driven by increased brokerage rates and the syndicate beginning to incur profit
commissions payable to the managing agent on profits from the directly written portfolio.
Reinsurance
In 2024, the amount spent on outward reinsurance was $33.6m (2023: $27.0m). As a percentage of gross premiums written
this was 7% (2023: 7%).
Outlook
The 2023 underwriting year is expected to produce a positive return on capacity. The relatively quiet natural catastrophe season
assisted this YOA in producing a positive return on capacity. The syndicate is also expected to produce a positive return on
capacity for the 2024 underwriting year, despite suffering losses on Hurricane Helene and Beryl. Looking ahead to 2025, the
syndicate will look to build on previous successes.
C C J Wong
Chief Financial Officer
5 March 2025
www.beazley.com
Beazley | Syndicate 5623 Annual report 2024 03
The managing agent presents its report for the year ended 31 December 2024.
This annual report is prepared using the annual basis of accounting as required by Statutory Instrument No 1950 of 2008, the
Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and applicable United Kingdom
Accounting Standards, including Financial Reporting Standard 102: The Financial Reporting Standard applicable in the United
Kingdom and Republic of Ireland and Financial Reporting Standard 103: Insurance Contracts.
Principal activity
The principal activity of Syndicate 5623 is the underwriting of market facilities follow-only business at Lloyd’s. The syndicate
was granted full syndicate status by Lloyd's from 1 January 2023 and began writing business directly from that date. Previously
the syndicate had been a special purpose reinsurance vehicle for Syndicate 3623 on the 2022 year of account and prior.
Business review
A review of the syndicate’s activities and future outlook is included in the strategic report.
Risk governance and reporting
BFL’s Board of Directors (the 'Board') has the responsibility for defining and monitoring the risk appetite within which BFL and
the syndicates (collectively, ‘Beazley’) operate, with key individuals and committees accountable for day-to-day management of
risks and controls. Regular reporting by the risk management team in Board meetings and senior management committees
ensures that risks are monitored and managed as they arise. Beazley is actively "future proofing" its structure across its three
platforms. One of these platforms is its London Wholesale platform which the managing agent governs. This platform focus will
allow strengthening of the managing agent’s leadership and further enhance platform-specific and entity governance, while
continuing to bolster its risk management structure. The managing agent continues to evolve its structure to deliver on this
governance framework.
Climate change/Responsible business
Led by Beazley plc’s Board and supported by the Boards of BFL, Beazley Insurance dac, and Beazley Insurance Company Inc,
sustainability issues and climate-related risks have become regular agenda items throughout 2024. In March 2021 we
launched our first Responsible Business Strategy. This document, and the subsequent update which is published alongside the
Beazley plc annual report and accounts ('ARA'), sets out the goals and targets across a wider range of sustainability issues,
including climate change.
In addition to the summary Responsible Business report, Beazley plc discloses its compliance with the Task Force on Climate-
Related Disclosures' ('TCFD') Recommendations and Recommended Disclosures at the consolidated Group level in the Beazley
plc annual report and accounts produced annually. The 2024 Beazley plc ARA was published on the Group's website in March
2025.
Although not specifically listed in the risk categorises detailed further in this report, the Board of BFL deems climate risk to be
inherently embedded within all risks managed across the syndicate.
Risk management
Beazley prides itself on understanding the drivers of risk across the syndicate. The risk management function supports and
challenges management in effectively managing those risks. During the year, Beazley continued to enhance, roll out and embed
elements of the risk management framework. Beazley has continued working with our colleagues across the first and second
lines of defence to support the syndicate strategy, including challenging the oversight of climate-related risks (covering physical,
transition and litigation) and journey in digitisation. The details of the performance of the risk management framework are
considered further in this report.
Managing agent’s report
4
Beazley | Syndicate 5623 Annual report 2024 www.beazley.com
Risk management oversight and framework
The Board delegates direct oversight of the risk management function and framework to its Risk Committee. The Board
delegates executive oversight of the risk management function and framework to the Beazley plc executive Committee, which
fulfils this responsibility primarily through its risk and regulatory Committee.
The risk management framework establishes the approach to identifying, measuring, mitigating, monitoring, and reporting on
principal risks. The risk management framework supports Beazley's strategy and objectives.
Beazley has adopted a ‘three lines of defence’ model, in which the risk management function is part of the second line of
defence. Ongoing communication and collaboration across the three lines of defence ensures that Beazley identifies and
manages risks effectively.
The Board approves the company’s risk appetite statements at least annually and receives updates on monitoring against risk
appetites throughout the year. This includes an assessment of principal risks.
A suite of reports from the risk management function support senior management and the Board in discharging their oversight
and decision-making responsibilities throughout the year. The risk management function's reports include updates on risk
appetite, risk profiles, stress and scenario testing (including reverse stress testing) and analysis, emerging and heightened
risks, and the Own Risk and Solvency Assessment (ORSA) report for BFL.
The business operates a control environment which supports mitigating risks to stay within risk appetite. The risk management
function reviews and challenges the control environment through various risk management activities (e.g. risk opinions, risk
reviews etc). In addition, the risk management function works with the capital modelling and exposure management teams,
particularly in relation to validation of the internal model, preparing parts of the ORSA, monitoring risk appetite and the business
planning process.
The risk management plan considers, among other inputs, the inherent and residual risk scores for the risks in the risk
registers. The risk management function also incorporates results from internal audits and other assurance activities into its
risk assessment process. The internal audit function considers the risk management framework in its audit universe to derive a
risk-based audit plan.
The approach to identifying, managing and mitigating emerging risks includes inputs from across the business, analysis of
lessons learned following incidents and industry thought leadership. The approach considers the potential materiality and
likelihood of impacts, which helps prioritise emerging risks which the company monitors or undertakes focused work on. Key
emerging risks in 2024 included geopolitical and conflict escalation, artificial intelligence, systemic cyber attack, political and
social unrest, supply chain risk and climate change. The Board carries out a robust assessment of the emerging risks at least
annually.
Principal risks
Principal risks are under continuous review with ongoing risk assessments. Whilst the risk profile has remained broadly stable
in 2024, Beazley continues to focus on operational and regulatory risks, to ensure that the control environment keeps pace with
business change and growth initiatives. The table below summarises the principal risks the company faces, and the control
environment, governance and oversight that mitigate these risks. The approach to managing the risks arising from climate
change are set out within the TCFD section of Beazley plc’s annual Report.
Legend for principal risks table below
Risk outlook
Increasing Stable Decreasing
www.beazley.com
Beazley | Syndicate 5623 Annual report 2024 05
Managing agent’s report continued
Insurance
Risk of loss arising from uncertainties and deviations of the
occurrence, frequency, amount and timing of insurance
premium and claim liabilities relative to the assumptions at
the time of underwriting. This includes risk from
underwriting such as market cycle, catastrophe,
reinsurance and reserves.
• Market cycle: potential systematic mispricing of medium-
or long-tailed business that does not support revenue to
invest and cover future claims;
• Catastrophe: one or more large events caused by nature
(e.g. hurricane, windstorm, earthquake and/or wildfire) or
mankind (e.g. coordinated cyber-attack, global pandemic,
losses linked to an economic crisis, an act of terrorism
or an act of war and/or a political event) impacting a
number of policies, and therefore giving rise to multiple
losses;
• Reinsurance arrangements: reinsurance may not be
available or purchases do not support the business
underwritten (e.g. mismatch); and
• Reserving: reserves may not be sufficiently established
to reflect the ultimate paid losses.
Insurance risk is principally managed through pricing tools, analysis of
macro trends and claim frequency/severity and ensures exposure is well
diversified and not overly concentrated in any one area, or line of
business.
Our strategic approach to exposure management and a comprehensive
internal and external reinsurance programme helps to reduce volatility of
profits in addition to managing net exposure through the transfer of risk.
Our prudent and comprehensive approach to reserving ensures
adequate provisions are made for the payment of all valid claims. High
calibre claims and underwriting professionals deliver expert service and
claims handling to insureds, ensuring good customer outcomes.
Beazley carries out periodic analysis to identify significant areas of
concentration risk across its business.
Beazley makes extensive use of modelling, including catastrophe
modelling, the use of our Solvency II model and stress and scenario
testing to ensure insurance risk is within our risk appetite.
Insurance risk outlook continues to be stable as BFL manages the
market cycle across all the lines of business.
Credit
The risk of loss resulting from default in obligations due or
changes in the credit standing of either issuers of
securities, counterparties or any debtors which the
company is exposed to. Exposure to credit risk largely
emanates from the use of reinsurers, brokers, and
coverholders and our investments, of which reinsurance
asset is the largest exposure for the syndicate.
Beazley maintains long-term partnerships with strategic reinsurance
partners to support it throughout the insurance cycle and during
potential catastrophic claim events. Beazley uses a range of traditional
and alternative reinsurance mechanisms to diversify reinsurance credit
risk. All reinsurers must meet stringent internal approval criteria,
overseen by the Reinsurance Security Committee. Credit risk from
brokers and coverholders remains low.
The credit risk outlook therefore remains stable, as Beazley manages
reinsurance, broker, coverholder and investment credit risks,
maintaining low levels of aged and/or bad debt.
Market
The risk of loss resulting from fluctuations in the level and
in the volatility of market prices of assets, liabilities and
financial instruments. Investment assets may be impacted
by adverse movements in financial markets, interest rates,
exchange rates, or external market forces.
Beazley operates a conservative investment strategy with a view to
limiting investment losses that would impact the syndicate’s financial
results. We employ robust policies and tools to manage market risk,
ensuring alignment with regulatory requirements and industry best
practices. Interest rate and foreign exchange risks are managed using
natural hedges and financial instruments, minimising potential volatility.
The Investment Committee regularly reviews market risk exposures to
ensure that our risk management capabilities remain agile and effective
in responding to evolving market dynamics.
Despite the global and political economic uncertainties, we maintain a
stable market risk outlook, driven by clear political outcomes and steady
growth in the United States, where most of our asset exposures are
concentrated.
Group
The contagion risk that an action or inaction of one part of
the Beazley Group adversely affect an area of the
syndicate. This also includes a deterioration in culture
which leads to inappropriate behaviour, actions and/or
decisions including dilution of culture or negative impact on
the brand.
Risk culture is grounded in principles of transparency, accountability,
and awareness. An effective risk culture reflects a mature risk
management function, encourages prudent risk-taking, and fosters
awareness of existing and emerging risks. The Executive Committee and
the Board oversee Group risk, with regular monitoring conducted by the
Risk Management function and overseen by the Risk Committee.
Our Group risk outlook remains stable, with the Executive Committee
continuously managing and improving our risk culture through ongoing
monitoring and enhancements.
Principal risks and summary descriptions Mitigation and monitoring
6
Beazley | Syndicate 5623 Annual report 2024 www.beazley.com
Principal risks and summary descriptions Mitigation and monitoring
Liquidity
Investments and/or other assets are not available or
adequate in order to settle financial obligations when they
fall due.
By actively managing its liquidity needs, Beazley maximizes flexibility in
handling its financial assets and investment strategy. This proactive
approach ensures that clients and creditors are financially protected.
Beazley regularly evaluates the liquidity position of the syndicate, under
the oversight of the Risk Committee.
Our liquidity risk outlook remains stable as we consistently maintain
more than adequate levels of liquidity.
Regulatory and legal
Non-compliance with regulatory and legal requirements,
failing to operate in line with the relevant regulatory
framework in the territories where the syndicate operates.
This may lead to financial loss (fines, penalties), sanctions,
reputational damage, loss of confidence from regulators,
regulatory intervention, inability to underwrite or pay claims.
Beazley maintains active ongoing dialogue with its principal regulators. A
suite of compliance controls are in place to support the nature, scale
and complexity of the business which are overseen by the Risk and
Regulatory Committee. The Company wants to have a trusting and
transparent relationship with regulators, ensuring coordinated
communication and the following of robust processes, policies and
procedures in the business. In addition, key staff, particularly those who
hold defined roles with regulatory requirements, are experienced and
maintain regular dialogue with regulators.
Beazley is implementing a horizon scanning service to support in-house
activity to identify relevant regulatory and legal matters and emerging
policy so the business can consider their potential impacts on the
business.
Considering the needs of our clients in everything our business does is
of utmost importance to Beazley. We deliver good customer outcomes to
our clients throughout the product lifecycle. The Conduct Review Group
oversees this risk.
The Company has a very low appetite for regulatory and legal risk,
therefore maintaining strong and open relationships with our regulators
is of paramount importance. The outlook for this is increasing as
throughout 2024 and into 2025, we have seen increased engagement
with our regulators as the regulatory environment becomes more
complex and Beazley grows.
www.beazley.com
Beazley | Syndicate 5623 Annual report 2024 07
Managing agent’s report continued
Principal risks and summary descriptions Mitigation and monitoring
Operational
Failures of people, processes and systems or the impact of
an external event on operations (e.g., a cyber-attack having
a detrimental impact on operations) including
transformation and change related risks.
Beazley attracts and nurtures talented colleagues who champion
diversity of thought, fostering a culture of empowerment, collaboration,
and innovation. This commitment creates an environment of employee
wellbeing, where high-calibre, motivated, loyal, and productive individuals
are empowered to perform their duties competently.
Beazley continues investing in technology and re-engineering processes
to support our operations, overseen by the Operations Committee. Our
business continuity, disaster recovery, and incident response plans
ensure the stability of our processes and systems, enabling our team to
consistently deliver optimal outcomes for our clients.
We expect technology and cyber resilience to continue being key focus
areas. We are dedicated to collaborating with external agencies, and
maintaining robust controls over information security, data, and
operational resilience. We regularly review incident response plans and
continue to invest in cybersecurity training for our employees.
While maintaining a low appetite for operational risk, we observed an
increased frequency of reported risk incidents during 2024, coinciding
with an increasingly complex operating environment. The risk
management function continues to work with first line teams to ensure
that controls and processes in place remain appropriate as the
operating landscape evolves.
Our risks and controls are formally monitored and reported through a
risk and control self-assessment process and the use of quantifiable
Key Risk Indicators.
The outlook for this risk is increased as we continue to strengthen
operationally and realise the benefits of ongoing initiatives to modernise
our systems and processes.
Strategic
The risk of loss resulting from ineffective strategic direction
and implementation that leads to inadequate profitability,
insufficient capital, financial loss and/or reputational
damage for BFL.
Pervasive risks impacting multiple areas of Beazley (e.g.,
reputation, and sustainability) occurring through real or
perceived action, or inaction, by a regulatory body, market
and/or third-party provider.
A negative change to Beazley’s reputation would have a
detrimental impact to the syndicate's performance and
public perception.
Beazley consistently addresses key strategic opportunities and
challenges, striving to be the highest performing and most sustainable
specialist insurer. We ensure that we recognise, understand, discuss,
and develop action plans for significant strategic priorities in a timely
manner, while maintaining operational effectiveness and brand
reputation.
Beazley creates an environment that attracts, retains and develops high
performing talent with diverse perspectives, encouraging exploration,
creation, and innovation. By investing in understanding the complexities
of the risks our clients face and deploying our expertise where it adds
value, we thrive. The Executive Committee and the Board oversee these
risks.
We maintain coverage above regulatory capital to meet our business
plan and strategic objectives in the short, medium, and long term.
Our commitment is to create a sustainable business for our people,
partners, and planet through responsible business goals. We embed
sustainability principles and ambitions, focusing on reducing our carbon
footprint (refer to the Group's TCFD report for more details on climate-
related risks and mitigations), contributing to our social environment,
and practicing good governance. While we consider market
developments, we evaluate each on its individual merits, weighing both
potential opportunities and risks.
As we consolidate and embed our achievements from 2024, our
strategic risk outlook remains stable.
8
Beazley | Syndicate 5623 Annual report 2024 www.beazley.com
Directors
A list of Directors of the managing agent who held office during the year can be found on page 58 of this syndicate annual
report.
Syndicate annual general meeting
In accordance with the Syndicate Meetings (Amendment No. 1) Byelaw (No. 18 of 2000) the managing agent does not propose
to hold a syndicate annual meeting this year. Members may object to this proposal within 21 days of this notice. Any objections
must be made in writing to the managing agent.
Disclosure of information to the auditor
The Directors of the managing agent who held office at the date of approval of this Managing agent’s report confirm that, so far
as they are each aware, there is no relevant audit information of which the syndicate’s auditor is unaware; and each Director
has taken all the steps that they ought to have taken as a Director to make themselves aware of any relevant audit information
and to establish that the syndicate’s auditor is aware of that information.
Auditor
Pursuant to Section 14(2) of Schedule 1 of the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts)
Regulations 2008, the auditor will be deemed to be reappointed and Ernst & Young LLP will therefore continue in office.
On behalf of the Board
C C J Wong
Chief Financial Officer
5 March 2025
www.beazley.com
Beazley | Syndicate 5623 Annual report 2024 09
Statement of managing agent’s responsibilities
The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 requires the Directors of the
managing agent to prepare their syndicate annual accounts for each financial year. Under that law they have elected to prepare
the annual accounts in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting
Practice), including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland.
Under the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 the Directors of the
managing agent must not approve the annual accounts unless they are satisfied that they give a true and fair view of the state
of affairs of the syndicate and of the statement of comprehensive income of the syndicate for that period. In preparing these
financial statements, the Directors of the managing agent are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and
explained in the annual accounts;
• assess the syndicate’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern;
and
• use the going concern basis of accounting unless they either intend to cease trading, or have no realistic alternative but to do
so.
The Directors of the managing agent are responsible for keeping adequate accounting records that are sufficient to show and
explain the syndicate’s transactions and disclose with reasonable accuracy at any time the financial position of the syndicate
and enable them to ensure that the financial statements comply with the Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008. They are responsible for such internal control as they determine is necessary to enable
the preparation of financial statements that are free from material misstatement, whether due to fraud or error and have
general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the company and to
prevent and detect fraud and other irregularities.
The Directors of the managing agent are responsible for the maintenance and integrity of the syndicate and financial
information included on the syndicate’s website. Legislation in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
The Directors of the managing agent are required to comply with the requirements of Section 1 of the Lloyd’s Syndicate
Accounts Instructions version 2.1 as modified by the Frequently Asked Questions version 1.1 issued by Lloyd’s (the Syndicate
Accounts Instructions).
The Directors of the managing agent are responsible for the preparation and review of the iXBRL tagging that has been applied
to the syndicate accounts in accordance with the instructions issued by Lloyd's, including designing, implementing and
maintaining systems, processes and internal controls to result in tagging that is free from material non-compliance with the
instructions issued by Lloyd's, whether due to fraud or error.
On behalf of the Board
C C J Wong
Chief Financial Officer
5 March 2025
10
Beazley | Syndicate 5623 Annual report 2024 www.beazley.com
Independent auditor’s report to the
members of Syndicate 5623
Opinion
We have audited the syndicate annual accounts of Syndicate 5623 (‘the syndicate’) for the year ended 31 December 2024
which comprise the Statement of Comprehensive Income, the Statement of changes in Members’ Balances, the Balance Sheet,
the Cash Flow statement and the related notes 1 to 25, including a summary of significant accounting policies. The financial
reporting framework that has been applied in their preparation is applicable law including The Insurance Accounts Directive
(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, United Kingdom Accounting Standards including FRS 102 “The
Financial Reporting Standard applicable in the UK and Republic of Ireland” and FRS 103 “Insurance Contracts” (United Kingdom
Generally Accepted Accounting Practice), and Section 1 of the Lloyd’s Syndicate Accounts Instructions version 2.1 as modified
by the Frequently Asked Questions version v1.1 issued by Lloyd’s (the Syndicate Accounts Instructions).
In our opinion, the syndicate annual accounts:
• give a true and fair view of the syndicate’s affairs as at 31 December 2024 and of its profit for the year then ended;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements of The Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008 and the Syndicate Accounts Instructions.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)), The Insurance Accounts
Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, the Syndicate Accounts Instructions, and other
applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the syndicate annual accounts section of our report. We are independent of the syndicate in accordance with the ethical
requirements that are relevant to our audit of the syndicate annual accounts in the UK, including the FRC’s Ethical Standard as
applied to other entities of public interest, and we have fulfilled our other ethical responsibilities in accordance with these
requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the syndicate annual accounts, we have concluded that the managing agent’s use of the going concern basis of
accounting in the preparation of the syndicate annual accounts is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the syndicate’s ability to continue as a going concern for a period of 12
months from when the syndicate annual accounts are authorised for issue.
Our responsibilities and the responsibilities of the managing agent with respect to going concern are described in the relevant
sections of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee
as to the syndicate’s ability to continue as a going concern.
Other information
The other information comprises the information included in the annual report and accounts other than the syndicate annual
accounts and our auditor’s report thereon. The Directors of the managing agent are responsible for the other information
contained within the annual report and accounts.
Our opinion on the syndicate annual accounts does not cover the other information and, except to the extent otherwise explicitly
stated in this report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the syndicate annual accounts or our knowledge obtained in the course of the audit or otherwise appears to
be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the syndicate annual accounts themselves. If, based on the
work we have performed, we conclude that there is a material misstatement of the other information, we are required to report
that fact.
We have nothing to report in this regard.
www.beazley.com Beazley | Syndicate 5623 Annual report 2024
11
Independent auditor’s report to the
members of Syndicate 5623 continued
Opinions on other matters prescribed by The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate
Accounts) Regulations 2008
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the managing agent’s report for the financial year in which the syndicate annual accounts are
prepared is consistent with the syndicate annual accounts; and
• the managing agent’s report has been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the syndicate and its environment obtained in the course of the audit, we
have not identified material misstatements in the managing agent’s report.
We have nothing to report in respect of the following matters where The Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008 requires us to report to you, if in our opinion:
• the managing agent in respect of the syndicate has not kept adequate accounting records; or
• the syndicate annual accounts are not in agreement with the accounting records; or
• certain disclosures of the managing agents’ emoluments specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of the managing agent
As explained more fully in the Statement of Managing Agent’s Responsibilities set out on page 10, the managing agent is
responsible for the preparation of the syndicate annual accounts and for being satisfied that they give a true and fair view, and
for such internal control as the managing agent determines is necessary to enable the preparation of the syndicate annual
accounts that are free from material misstatement, whether due to fraud or error.
In preparing the syndicate annual accounts, the managing agent is responsible for assessing the syndicate’s ability to continue
in operation, disclosing, as applicable, matters related to its ability to continue in operation and using the going concern basis
of accounting unless the managing agent either intends to cease to operate the syndicate, or has no realistic alternative but to
do so.
Auditor’s responsibilities for the audit of the syndicate annual accounts
Our objectives are to obtain reasonable assurance about whether the syndicate annual accounts as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these syndicate annual accounts.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due
to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through collusion.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below. However, the
primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the managing
agent and management.
Our approach was as follows:
• We obtained a general understanding of the legal and regulatory frameworks that are applicable to the syndicate and
determined that the most significant are direct laws and regulations related to elements of Lloyd’s Byelaws and
Regulations, and the financial reporting framework (UK GAAP), and requirements referred to by Lloyd’s in the Syndicate
Accounts instructions. Our considerations of other laws and regulations that may have a material effect on the syndicate
annual accounts included permissions and supervisory requirements of Lloyd’s of London, the Prudential Regulation
Authority (‘PRA’) and the Financial Conduct Authority (‘FCA’).
• We obtained a general understanding of how the syndicate is complying with those frameworks by making enquiries of
management, internal audit, and those responsible for legal and compliance matters of the syndicate. In assessing the
effectiveness of the control environment, we also reviewed significant correspondence between the syndicate, Lloyd’s of
London and other UK regulatory bodies; reviewed minutes of the Board and Risk Committee of the managing agent; and
gained an understanding of the managing agent’s approach to governance.
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• For direct laws and regulations, we considered the extent of compliance with those laws and regulations as part of our
procedures on the related syndicate annual accounts’ items.
• For both direct and other laws and regulations, our procedures involved: making enquiries of the Directors of the managing
agent and senior management for their awareness of any non-compliance of laws or regulations, enquiring about the
policies that have been established to prevent non-compliance with laws and regulations by officers and employees,
enquiring about the managing agent’s methods of enforcing and monitoring compliance with such policies, and inspecting
significant correspondence with Lloyd’s, the FCA and the PRA.
• The syndicate operates in the insurance industry which is a highly regulated environment. As such the Senior Statutory
Auditor considered the experience and expertise of the engagement team to ensure that the team had the appropriate
competence and capabilities, which included the use of specialists where appropriate.
• We assessed the susceptibility of the syndicate’s annual accounts to material misstatement, including how fraud might
occur, by considering the controls that the managing agent has established to address risks identified by the managing
agent, or that otherwise seek to prevent, deter or detect fraud. We also considered areas of significant judgement, complex
transactions, performance targets, economic or external pressures and the impact these have on the control environment.
Where this risk was considered to be higher, we performed audit procedures to address each identified fraud risk,
including:
· Reviewing accounting estimates for evidence of management bias. Supported by our Actuaries, we assessed if there
were any indicators of management bias in the valuation of insurance liabilities and the recognition of estimated
premium income.
· Evaluating the business rationale for significant and/or unusual transactions.
• These procedures included testing manual journals and were designed to provide reasonable assurance that the syndicate
annual accounts were free from fraud or error.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report
Other matters
Our opinion on the syndicate annual accounts does not cover the iXBRL tagging included within these syndicate annual
accounts, and we do not express any form of assurance conclusion thereon.
Use of our report
This report is made solely to the syndicate’s members, as a body, in accordance with The Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008. Our audit work has been undertaken so that we might state to the
syndicate’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the syndicate and the
syndicate’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Niamh Byrne (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
5 March 2025
www.beazley.com Beazley | Syndicate 5623 Annual report 2024
13
Statement of comprehensive income
for the year ended 31 December 2024
| 2024 | 2023 | ||
Notes | $'000 | $'000 | |
| Gross premiums written | 3 | | |
| Outward reinsurance premiums | ( | ( | |
| Premiums written, net of reinsurance | | | |
Change in unearned premium | |||
Change in the gross provision for unearned premiums | 17 | ( | ( |
Change in the provision for unearned premiums, reinsurers’ share | 17 | | |
| Net change in the provision for unearned premiums | ( | ( | |
| Earned premiums, net of reinsurance | | | |
| Allocated investment return transferred from the non-technical account | 7 | | |
Claims paid | |||
Gross amount | 17 | ( | ( |
Change in the provision for claims | |||
Gross amount | 17 | ( | ( |
| Reinsurers' share | 17 | ( | |
Net change in provision for claims | ( | ( | |
| Claims incurred, net of reinsurance | ( | ( | |
Net operating expenses | 4 | ( | ( |
| Balance on the technical account - general business | | | |
| Investment income | 7 | | |
| Investment expenses and charges | 7 | ( | ( |
Realised gain/(loss) on investments | 7 | | ( |
| Unrealised gain on investments | 7 | | |
Total investment return | | | |
| Allocated investment return transferred to general business technical account | ( | ( | |
| Loss on foreign exchange | ( | ( | |
| Total comprehensive income for the financial year | | |
There were no other comprehensive gains or losses in the year.
The notes on pages 18 to 42 form part of these financial statements.
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Balance sheet
as at 31 December 2024
2024 2023
*restated
Notes
$'000 $'000
Assets
Financial investments
9
Reinsurers' share of technical provisions
Provision for unearned premiums
17 11,847 6,466
Claims outstanding 17 10,006 11,966
Debtors
Debtors arising out of direct insurance operations
11
Debtors arising out of reinsurance operations
12
Other debtors 13 122,151 219,289
Other assets
Cash at bank and in hand 14 58,909 30,760
Prepayments and accrued income
Deferred acquisition costs 15 58,748 46,888
Other prepayments and accrued income 3,321 1,370
Total assets
Capital and reserves
Members' balances
Liabilities
Technical Provisions
Provision for unearned premiums 17 247,420 210,829
Claims outstanding 17 504,928 349,885
Creditors
Creditors arising out of direct insurance operations 18 417 116
Creditors arising out of reinsurance operations 19 4,328 1,685
Other creditors 20 35,630 1,238
Accruals and deferred income 9,892 5,455
Total liabilities
Total liabilities, capital and reserves
*Certain balances have been restated due to a voluntary change in accounting policy. Refer to note 24.
The notes on pages 18 to 42 form part of these financial statements.
The syndicate annual accounts on pages 14 to 42 were approved and signed by the Board of Beazley Furlonge Limited on
5 March 2025 on its behalf by:
P J Bantick C C J Wong
Director Chief Financial Officer
www.beazley.com Beazley | Syndicate 5623 Annual report 2024
15
Statement of changes in members’ balances
for the year ended 31 December 2024
2024 | 2023 | |
*restated | ||
| $'000 | $'000 | |
| Members’ balances brought forward at 1 January | | |
| Total comprehensive income for the financial year | | |
| Payments of profit to members' personal reserve funds | ( | ( |
| Member agent fees | ( | ( |
| Other | ( | ( |
Members’ balances carried forward at 31 December | | |
*Certain balances have been restated due to a voluntary change in accounting policy. Refer to note 24.
The notes on pages 18 to 42 form part of these financial statements.
Members participate in syndicates by reference to year of account ('YOA') and their ultimate result, assets and liabilities are
assessed with reference to policies incepting in that YOA in respect of their membership of a particular year.
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Cash flow statement
for the year ended 31 December 2024
| 2024 | 2023 | ||
*restated | |||
Notes | $'000 | $'000 | |
Cash flows from operating activities | |||
| Total comprehensive income | | | |
Adjustments for: | |||
Increase in gross technical provisions | 17 | | |
Increase in reinsurers' share of gross technical provisions | 17 | ( | ( |
| Decrease/(increase) in debtors | | ( | |
| Movement in other assets/liabilities | ( | ( | |
| Increase in creditors | | | |
Investment return | 7 | ( | ( |
| Foreign exchange | | | |
Net cash inflows from operating activities | | | |
Cash flows from investing activities | |||
| Purchase of equity and debt securities | ( | ( | |
| Sale of equity and debt securities | | | |
| Investment income received | | | |
Net cash outflows from investing activities | ( | ( | |
Cash flows from financing activities | |||
| Profit distribution | ( | ( | |
| Other | ( | ( | |
Net cash outflows from financing activities | ( | ( | |
Net increase/(decrease) in cash and cash equivalents | | | |
| Cash and cash equivalents at the beginning of the year | | | |
| Foreign exchange on cash and cash equivalents | ( | ( | |
Cash and cash equivalents at the end of the year | 14 | | |
*Certain balances have been restated due to a voluntary change in accounting policy. Refer to note 24.
The notes on pages 18 to 42 form part of these financial statements.
www.beazley.com Beazley | Syndicate 5623 Annual report 2024
17
1 Accounting policies
Basis of preparation
Syndicate 5623 (the ‘syndicate’) comprises a group of members of the Society of Lloyd’s that underwrites insurance business
in the London Market. The managing agent of the syndicate is Beazley Furlonge Limited ('BFL'), whose registered address and
principal place of business is 22 Bishopsgate, London, EC2N 4BQ. The ultimate controlling party of BFL is Beazley plc, a
company incorporated in England and Wales.
The syndicate annual accounts 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 2.1 as modified by the Frequently Asked Questions version
1.1 issued by Lloyd’s.
The financial statements have been prepared on the historic cost basis except for financial assets at fair value through profit or
loss ('FVTPL') which are measured at fair value. The principal accounting policies applied in the preparation of these financial
statements are set out below. The policies have been consistently applied to all periods presented, unless otherwise stated. All
amounts presented are stated in US dollars, being the syndicate’s functional currency, and in thousands, unless noted
otherwise. Previously, these financial statements were presented in millions of US dollars. The change from presenting in
millions to presenting in thousands has been applied for the first time in these financial statements for the year ended 31
December 2024.
Going concern
The financial statements of the syndicate have been prepared on a going concern basis. The syndicate’s business activities,
together with the factors likely to affect its future development, performance and position, are set out in the Strategic report of
the managing agent (refer to pages 2 - 3). In addition, Note 2 includes the syndicate’s risk management objectives and the
entity’s objectives, policies and processes for managing its capital. The syndicate has sufficient capital for each year of account
in its Funds at Lloyd’s (FAL). There is no intention to cease underwriting or cease the operations of the syndicate.
In assessing the syndicate’s going concern position as at 31 December 2024 the managing agent has considered a number of
factors, including the current statement of financial position and the syndicate’s strategic and financial plan. The assessment
concluded that, for the foreseeable future, the syndicate has sufficient capital and liquidity for the 12 months from the date the
financial statements are authorised for issue.
Use of estimates and judgements
The preparation of financial statements requires the use of estimates and judgements that affect the reported amounts of
assets, liabilities, income and expenses. Actual results may differ from those on which management’s estimates are based.
Estimates and assumptions are continually evaluated and are based on historical experience and other factors. For example,
estimates which are sensitive to economic, regulatory and geopolitical conditions could be impacted by significant changes in
the external environment such as the volatile macroeconomic environment, climate change, international conflicts, and
significant changes in legislation. Any revisions to accounting estimates are recognised in the period in which the estimate is
revised and in any future periods affected.
Specific to climate change, since responses to it are still developing, it is not possible to consider all possible future outcomes
when determining asset and liability valuations, and timing of future cash flows, as these are not yet known. Nevertheless, the
current management view is that reasonably possible changes arising from climate risks would not have a material impact on
asset and liability valuations at the year-end date.
(a) Valuation of insurance contract liabilities
The most critical estimate included within the syndicate’s balance sheet is the estimate for insurance losses incurred but not
reported (‘IBNR’), which is included within total technical provisions and reinsurers’ share of technical provisions in the balance
sheet and note 17. This estimate is critical as it outlines the current liability for future expenses expected to be incurred in
relation to claims. If this estimation was to prove inadequate then an exposure would arise in future years where a liability has
not been provided for.
The best estimate of the most likely ultimate outcome is used when calculating notified claims. This estimate is based upon the
facts available at the time, in conjunction with the claims manager’s view of likely future developments. The total estimate of
gross IBNR as at 31 December 2024 included within claims outstanding is $388,884k (2023: $281,632K).
Notes to the syndicate annual accounts
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1 Accounting policies continued
(b) Premium estimates
Premium written is initially based on the estimated premium income (‘EPI’) of each contract. Judgement is involved in
determining the ultimate estimates in order to establish the appropriate premium value and, ultimately, the cash to be received.
EPI estimates are updated to reflect changes in an underwriter's expectation through consultation with brokers, coverholders
and internal counterparty views, changes in market conditions, historic experience and to reflect actual cash received for a
contract.
Due to the nature of Lloyd’s business and the settlement patterns of the underlying business it is also not uncommon for some
contracts to take a number of years to finalise and settle, and a receivable on the balance sheet remains.
Significant accounting policies
The financial statements have been prepared on an annual basis of accounting, whereby the incurred cost of claims,
commissions and related expenses are charged against the earned proportion of premiums, net of reinsurance as follows:
(a) Premiums written
Gross premiums written comprise premiums on contracts incepted during the financial year together with adjustments to
premiums written in previous accounting periods and estimates for premiums from contracts entered into during the course of
the year. Gross written premiums are stated before the deduction of brokerage, taxes, duties levied on premiums and other
deductions.
(b) Unearned premiums
A provision for unearned premiums (gross of reinsurance) represents the part of the gross premiums written that is estimated to
be earned in the following financial periods. It is calculated using the daily pro-rata method, under which the premium is
apportioned over the period of risk.
(c) Claims provisions and related reinsurance recoveries
Claims represent the cost of claims and claims handling expenses paid during the financial year, together with the movement in
provisions for outstanding claims, claims IBNR and future claims handling provisions. The provision for claims outstanding
comprises amounts set aside for claims advised and IBNR.
The IBNR amount is based on estimates calculated using widely accepted actuarial techniques (e.g. chain ladder) which are
reviewed quarterly by the group actuary and annually by the independent syndicate reporting actuary. The techniques generally
use projections, based on past experience of the development of claims over time, to form a view on the likely ultimate claims
to be experienced. For more recent underwriting, regard is given to the variations in the business portfolio accepted and the
underlying terms and conditions. Thus, the critical assumptions used when estimating claims provisions are that the past
experience is a reasonable predictor of likely future claims development and that the rating and other models used to analyse
current business are a fair reflection of the likely level of ultimate claims to be incurred.
A provision is made at the year-end for the estimated cost of claims incurred but not settled at the balance sheet date,
including the cost of claims incurred but not yet reported to the managing agent. The managing agent takes all reasonable
steps to ensure that it has appropriate information regarding its claims exposures. However, given the uncertainty in
establishing claims provisions, it is likely that the final outcome will prove to be different from the original liability established.
(d) Liability adequacy testing
At each reporting date, liability adequacy tests are performed to ensure the adequacy of the claims liabilities net of deferred
acquisition costs and unearned premium reserves. In performing these tests, current best estimates of future contractual cash
flows, claims handling and administration expenses as well as investment income from the assets backing such liabilities are
used.
Any deficiency is subsequently charged to the statement of comprehensive income and subsequently by establishing an
unexpired risk provision for losses arising from liability adequacy tests
(e) Acquisition costs
Acquisition costs comprise brokerage, premium levies, and staff related costs of the underwriters acquiring the business. The
proportion of acquisition costs in respect of unearned premiums is deferred at the balance sheet date and recognised in later
periods when the related premiums are earned.
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1 Accounting policies continued
(f) Foreign currencies
Foreign currency transactions are translated into the functional currency using average exchange rates applicable to the period
in which the transactions take place and where the syndicate considers these to be a reasonable approximation of the
transaction rate. Foreign exchange gains and losses resulting from the settlement of such transactions and from translation at
the period end of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of
comprehensive income.
(g) Investment return
Investment return comprises all investment income, realised investment gains and losses and movements in unrealised gains
and losses, net of investment expenses, charges and interest.
Realised gains and losses on investments carried at market value are calculated as the difference between sale proceeds and
the original cost of the investment. Movements in unrealised gains and losses on investments represent the difference between
the valuation at the balance sheet date, and the valuation at the previous period end or purchase value during the period.
Investment return is initially recorded in the non-technical account. A transfer is made from the non-technical account to the
general business technical account to reflect the investment return on funds supporting underwriting business.
(h) Ceded reinsurance
These are contracts entered into by the syndicate with reinsurers under which the syndicate is compensated for losses on
contracts issued by the syndicate and that meet the definition of an insurance contract. Insurance contracts entered into by the
syndicate under which the contract holder is another insurer (inwards reinsurance) are included with insurance contracts.
Any benefits to which the syndicate is entitled under its reinsurance contracts held are recognised as reinsurance assets. These
consist of balances due from reinsurers relating to claims and also includes the provision for unearned premiums, reinsurers’
share. Balances due relating to the reinsurers' share of claims are based on calculated amounts of outstanding claims
recoveries and projections for IBNR, net of estimated irrecoverable amounts having regard to the reinsurance programme in
place for the class of business, the claims experience for the period and the current security rating of the reinsurer involved.
Reinsurance liabilities are primarily premiums payable for reinsurance contracts and are recognised as an expense when due.
Reinsurance assets are assessed for impairment at each reporting date. If there is objective evidence of impairment, then the
carrying amount is reduced to its recoverable amount and the impairment loss is recognised in the statement of comprehensive
income.
(i) Financial instruments
Recognition and derecognition
Financial instruments are recognised on the balance sheet at such time that the syndicate becomes a party to the contractual
provisions of the financial instrument. A financial asset is derecognised when:
• the contractual rights to receive cash flows from the financial assets expire;
• the financial assets have been transferred, together with substantially all the risks and rewards of ownership; or
• despite having retained some, but not substantially all, risks and rewards of ownership, control of the asset is transferred to
another party and the other party has the practical ability to sell the asset in its entirety to an unrelated third party.
Financial liabilities are derecognised if the syndicate’s obligations specified in the contract expire, are discharged or cancelled.
Financial assets and liabilities measurement
On acquisition of a financial asset or liability, the company will measure the asset or liability at transaction price, except for
those financial assets and liabilities at fair value through profit or loss (‘FVTPL’), which are initially measured at fair value. The
exception to this is when the arrangement constitutes a financing transaction however, the company does not make use of any
such arrangements.
Except for derivative financial investments, all financial investments are designated as FVTPL upon initial recognition because
they are managed and their performance is evaluated on a fair value basis. Information about these financial instruments is
provided internally on a fair value basis to key management. The investment strategy is to invest and evaluate their performance
with reference to their fair values.
Fair value measurement
Fair value is the price at which an orderly transaction to sell an asset or to transfer a liability would take place between market
participants at the measurement date. Fair value is a market-based measure and in the absence of observable market prices in
an active market, it is measured using the assumptions that market participants would use when pricing the asset or liability.
Notes to the syndicate annual accounts continued
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1 Accounting policies continued
The best evidence of the fair value of a financial instrument at initial recognition is the transaction price, i.e., the fair value of
the consideration given or received, unless the fair value of that instrument is evidenced by comparison with other observable
current market transactions in the same instrument (i.e., without modification or repackaging) or based on a valuation technique
whose variables include only data from observable markets.
When transaction price provides the best evidence of fair value at initial recognition, the financial instrument is initially
measured at the transaction price and any difference between this price and the value initially obtained from a valuation model
is subsequently recognised in the statement of comprehensive income depending on the individual facts and circumstances of
the transaction but not later than when the valuation is supported wholly by observable market data or the transaction is closed
out.
Upon initial recognition, attributable transaction costs relating to financial instruments at FVTPL are recognised in the statement
of comprehensive income when incurred. Financial assets at FVTPL are continuously measured at fair value, and changes
therein are recognised in the statement of comprehensive income. Net changes in the fair value of financial assets at FVTPL
exclude interest and dividend income, as these items are accounted for separately.
(j) Insurance 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. For information on reinsurance debtors and creditors, refer to Section (h) above.
(k) Other debtors
Other debtors principally consist of intercompany debtor balances and sundry debtors and are carried at amortised cost less
any impairment losses.
(l) Other creditors
Other creditors principally consist of amounts due to related entities and are stated at amortised cost determined using the
effective interest rate method
(m) 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 (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 US federal income tax payable on underwriting results or investment earnings. Any
payments on account made by the syndicate during the year have been included in the balance sheet under the heading ‘other
debtors’. No provision has been made for any other overseas tax payable by members on underwriting results.
(n) Profit commission
For the 2022 YOA a profit commission is charged by the ceding syndicate 3623 as a percentage of profit after an expense
allowance on a YOA basis subject to the operating of a two-year deficit clause. This is charged to the syndicate as incurred but
does not become payable until after the appropriate YOA closes at 36 months. For the 2023 & 2024 YOA the syndicate incurs
a profit commission at a rate of 20% which is payable to the managing agent. It is based on a percentage of profit on the YOA,
subject to to a two-year deficit clause. It does not become payable until the YOA closes at 36 months of development.
(o) Cash and cash equivalents
Cash and cash equivalents are comprised of cash at bank and in hand, in addition to deposits held at call with banks and other
short-term highly liquid investments with maturities of three months or less from the acquisition date. Only cash at bank and in
hand is presented separately on the face of the balance sheet, while cash equivalents are included within the 'financial
investments' line. Cash and cash equivalents are shown in aggregate on the cash flow statement and at note 14. These are
carried at amortised cost less impairment losses.
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1 Accounting policies continued
(p) Impairment of financial assets
Assessment is made at each reporting date whether there is objective evidence that a financial asset or group of financial
assets measured at amortised cost is impaired. A financial asset or group of financial assets is impaired and impairment
losses are incurred only if there is objective evidence of impairment as a result of one or more events that have occurred after
the initial recognition of the assets and that event has an impact on the estimated cash flows of the financial asset or group of
financial assets that can be reliably estimated.
If there is objective evidence that impairment exists, the amount of the loss is measured as the difference between the assets
carrying amount and the value of the estimated future cash flows discounted at the financial asset’s original effective interest
rate. Where a loss is incurred this is recognised in the statement of comprehensive income.
(q) Derivative financial instruments
Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently
remeasured at their fair value. The best evidence of fair value of a derivative at initial recognition is the transaction price. Fair
values are obtained from quoted market prices in active markets, recent market transactions, and valuation techniques which
include discounted cash flow models. All derivatives are carried as assets when fair value is positive and as liabilities when fair
value is negative.
Derivative assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable
right to set off the recognised amounts and the parties intend to settle on a net basis, or realise the assets and settle the
liability simultaneously. Derivative assets are included within Financial investments in the Balance Sheet. Derivative liabilities
are included within Other creditors.
(r) Pension costs
Pension contributions relating to staff who act on behalf of the syndicate are charged to the syndicate and included within net
operating expenses.
2 Risk management
The managing agent has identified the risks arising from its activities and has established policies and procedures to manage
these items in accordance with its risk appetite. The sections below outline the syndicate’s risk appetite and explain how the
managing agent defines and manages each category of risk. The risk management framework is discussed in the managing
agent's report.
2.1 Insurance risk
The syndicate’s insurance business assumes the risk of loss from persons or organisations that are directly exposed to an
underlying loss. Insurance risk arises from this risk transfer due to inherent uncertainties about the occurrence, amount and
timing of insurance liabilities. The four key components of insurance risk are underwriting, reinsurance, claims management and
reserving. Each element is considered below:
(a) Underwriting risk
Underwriting risk comprises four elements that apply to all insurance products offered by the syndicate:
• cycle risk – the risk that business is written without full knowledge as to the (in)adequacy of rates, terms and conditions;
• event risk – the risk that individual risk losses or catastrophes lead to claims that are higher than anticipated in plans and
pricing;
• pricing risk – the risk that the level of expected loss is understated in the pricing process; and
• expense risk – the risk that the allowance for expenses and inflation in pricing is inadequate.
The annual business plans for each underwriting team reflect the syndicate’s underwriting strategy, and set out the classes of
business, the territories and the industry sectors in which business is to be written. These plans are approved by the Board of
BFL and monitored by the underwriting committee.
The managing agent’s underwriters calculate premiums for risks written based on a range of criteria tailored specifically to each
individual facility. These factors include but are not limited to the financial exposure, loss history, risk characteristics, limits,
deductibles, terms and conditions and acquisition expenses.
Notes to the syndicate annual accounts continued
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The managing agent also recognises that insurance events are, by their nature, random, and the actual number and size of
events during any one year may vary from those estimated using established statistical techniques. To address this, the
managing agent sets out the exposure that it is prepared to accept in certain territories to a range of events such as natural
catastrophes and specific scenarios which may result in large industry losses. This is monitored through regular calculation of
Realistic Disaster Scenarios. The aggregate position is monitored at the time of underwriting a risk, and reports are regularly
produced to highlight the key aggregations to which the syndicate is exposed.
The managing agent uses a number of modelling tools to monitor its exposures against the agreed risk appetite set and to
simulate catastrophe losses. Stress and scenario tests are also run using these models. The range of scenarios considered
includes natural catastrophe, cyber, marine, liability, political, terrorism and war events.
One of the largest types of event exposure relates to natural catastrophe events such as windstorm or earthquake. With the
increasing risk from climate change impacting the frequency and severity of natural catastrophes, the managing agent continues
to monitor its exposure. Where possible the managing agent measures geographic accumulations and uses its knowledge of
the business, historical loss behaviour and commercial catastrophe modelling software to assess the expected range of losses
at different return periods. The key gross exposures are calculated on the basis of extreme events at a range of return periods.
To manage underwriting exposures, the managing agent has developed limits of authority and business plans which are binding
upon all staff authorised to underwrite and are specific to underwriters, classes of business and industry.
These authority limits are enforced through a comprehensive sign-off process for underwriting transactions including dual sign-
off for all line underwriters and peer review for all risks exceeding individual underwriters authority limits. Exception reports are
also run regularly to monitor compliance.
Binding authority contracts
A proportion of the syndicate’s insurance risks are transacted by third parties under delegated underwriting authorities. Each
third party is thoroughly vetted by the managing agent's coverholder approval group before it can bind risks, and is subject to
rigorous monitoring to maintain underwriting quality and confirm ongoing compliance with contractual guidelines.
(b) Reinsurance risk
Reinsurance risk to the syndicate arises where reinsurance contracts put in place to reduce gross insurance risk do not perform
as anticipated, result in coverage disputes or prove inadequate in terms of the vertical or horizontal limits purchased. Failure of
a reinsurer to pay a valid claim is considered a credit risk which is detailed separately below.
The syndicate’s reinsurance programmes complement the underwriting team business plans and seek to protect syndicate
capital from an adverse volume or volatility of claims on both a per risk and per event basis. In some cases the syndicate
deems it more economic to hold capital than purchase reinsurance. These decisions are regularly reviewed as an integral part
of the business planning and performance monitoring process.
(c) Claims management risk
Claims management risk may arise within the syndicate in the event of inaccurate or incomplete claims reporting for facilities
underwritten. As a follow syndicate which delegates claims authority to approved brokers, consortia or coverholders, the
syndicate relies on accurate claims reporting from third parties.
The managing agent's claims teams are focused on delivering quality, reliability and speed of service to both internal and
external clients. Their aim is to adjust and process claims in a fair, efficient and timely manner, in accordance with the policy’s
terms and conditions, the regulatory environment, and the business’s broader interests. Case reserves are set for all known
claims liabilities, including provisions for expenses, as soon as a reliable estimate can be made of the claims liability.
(d) Reserving and ultimate reserves risk
Reserving and ultimate reserves risk occurs within the syndicate where established insurance liabilities are insufficient through
inaccurate forecasting, or where there is inadequate allowance for expenses and reinsurance bad debt in provisions.
To manage reserving and ultimate reserves risk, the managing agent's actuarial team uses a range of recognised techniques to
project gross premiums written, monitor claims development patterns and stress test ultimate insurance liability balances. An
external independent actuary also performs an annual review to produce a statement of actuarial opinion for the syndicate.
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The objective of the syndicate’s reserving policy is to produce accurate and reliable estimates that are consistent over time and
across classes of business. The estimates of gross premiums written and claims prepared by the actuarial department are
used through a formal quarterly peer review process to independently test the integrity of the estimates produced by the
underwriting teams for each class of business. These meetings are attended by senior management, senior underwriters,
actuarial, claims, and finance representatives.
The syndicate monitors its exposure to insurance risk by location. The geographical breakdown of written premiums is disclosed
in note 3.
A set increase or decrease in total claims liabilities would have the following impact on profit and members' balances:
Sensitivity to insurance risk (claims reserves)
Impact on profit and members' balances
2024 2023
$'000 $'000
Claims outstanding - gross of reinsurance
504,928 349,885
Claims outstanding - net of reinsurance
494,922
337,919
5% increase in gross claims reserve
(25,246)
(17,494)
5% decrease in gross claims reserve
25,246
17,494
5% increase in net claims reserve
(24,746)
(16,896)
5% decrease in net claims reserve
24,746
16,896
2.2 Market risk
Market risk arises where the value of assets and liabilities changes as a result of movements in foreign exchange rates and
interest rates.
Foreign exchange risk
The functional and presentational currency of the syndicate is the US dollar. The effect of this on foreign exchange risk is that
the syndicate is exposed to fluctuations in exchange rates for non-dollar denominated transactions and net assets.
The syndicate has four main settlement currencies: US dollars, sterling, Canadian dollars and euro. Transactions in all
currencies are converted to US dollars on initial recognition and revalued at the reporting date. Remaining foreign exchange risk
is actively managed as described below.
The syndicate’s assets are broadly matched by currency to the principal underlying settlement currencies of its insurance
liabilities. This helps mitigate the risk that future movements in exchange rates would materially impact the syndicate’s assets
required to cover its insurance liabilities.
The following table summarises the carrying value of total assets and total liabilities categorised by currency:
CAD $ EUR € UK £ AUD $ Other Subtotal US $ Total
31 December 2024 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Investments 19,551 — — 3,993 4,304 27,848 411,811 439,659
Reinsurers' share of
technical provisions
— — — — — — 21,853 21,853
Debtors (1,608) 16,874 21,955 — — 37,221 266,421 303,642
Other assets 326 1,771 1,264 — — 3,361 55,548 58,909
Prepayments and accrued
income
12 1,482 3,314 — — 4,808 57,261 62,069
Total assets
18,281 20,127 26,533 3,993 4,304 73,238 812,894 886,132
Technical provisions (17,210) (38,072) (73,009) — — (128,291) (624,057) (752,348)
Creditors (23) (59) (2,450) — — (2,532) (37,843) (40,375)
Accruals and deferred
income
— — (9,700) — — (9,700) (192) (9,892)
Total liabilities
(17,233) (38,131) (85,159) — — (140,523) (662,092) (802,615)
Total Capital and Reserves
1,048 (18,004) (58,626) 3,993 4,304 (67,285) 150,802 83,517
Notes to the syndicate annual accounts continued
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CAD $ EUR € UK £ AUD $ Other
Subtotal US $ Total
31 December 2023 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Investments 10,191 — — 895 1,711 12,797 140,942 153,739
Reinsurers' share of
technical provisions
— — — — — — 18,432 18,432
Debtors* 5,110 18,492 29,480 — — 53,082 313,035 366,117
Other assets 42 1,844 2,871 — — 4,757 26,003 30,760
Prepayments and accrued
income
— 1,065 2,057 — — 3,122 45,136 48,258
Total assets
15,343 21,401 34,408 895 1,711 73,758 543,548 617,306
Technical provisions (13,644) (24,545) (48,532) — — (86,721) (473,993) (560,714)
Creditors (48) — — — — (48) (2,991) (3,039)
Accruals and deferred
income
— — (4,491) — — (4,491) (964) (5,455)
Total liabilities
(13,692) (24,545) (53,023) — — (91,260) (477,948) (569,208)
Total Capital and Reserves
1,651 (3,144) (18,615) 895 1,711 (17,502) 65,600 48,098
*Certain balances have been restated due to a voluntary change in accounting policy. Refer to note 24.
Sensitivity analysis - foreign exchange risk
In 2024, the managing agent managed the syndicate's foreign exchange risk by periodically assessing its non-dollar exposures
and hedging these to a tolerable level while targeting net assets to be entirely US dollar denominated. As part of this hedging
strategy, exchange rate derivatives were used to rebalance currency exposure. Details of foreign currency derivative contracts
entered into with external parties are disclosed in note 9. On a forward looking basis an assessment is made of expected future
exposure development and appropriate currency trades put in place to reduce risk.
Fluctuations in the syndicate’s trading currencies against the US dollar would result in a change to profit and members'
balances. The table below gives an indication of the impact on profit and members' balances of a percentage change in relative
strength of US dollar against the value of sterling, Canadian dollar and euro, simultaneously. The analysis is based on the
current information available and an assumption that the impact of foreign exchange on non-monetary items will be nil and is
presented net of the impact of the exchange rate derivatives referenced above.
Impact on profit and members' balances
2024 2023
Change in exchange rate of sterling, Canadian dollar, Australian dollar and euro relative to US dollar
$'000 $'000
Dollar weakens 10% against other currencies 683 (1,862)
Dollar strengthens 10% against other currencies (683) 1,862
Interest rate risk
Some of the syndicate’s financial instruments, including financial investments and cash and borrowings, are exposed to
movements in market interest rates.
The managing agent manages interest rate risk by primarily investing in short duration financial investments and cash. The
Investment Committee monitors the duration of these assets on a regular basis.
The following table shows the average duration at the reporting date of the financial instruments that are exposed to
movements in market interest rates. Duration is a commonly used measure of volatility and gives a better indication than
maturity of the likely sensitivity of the portfolio to changes in interest rates.
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Duration
<1 yr
1-2 yrs 2-3 yrs 3-4 yrs 4-5 yrs 5-10 yrs >10 yrs Total
Debt securities and other fixed income
securities
155,311 81,694 86,565 26,722 10,918 1,254 —
362,464
Participation in investment pools 25,330 — — — — — — 25,330
Shares and other variable yield
securities and unit trusts*
— — — 21,299 — — — 21,299
Other investments 11,902 — — — — — — 11,902
Cash at bank and in hand 58,909 — — — — — — 58,909
Derivative assets 28 — — — — — — 28
Total
251,480 81,694 86,565 48,021 10,918 1,254 —
479,932
*Excludes equity instruments
Duration
<1 yr
1-2 yrs 2-3 yrs 3-4 yrs 4-5 yrs 5-10 yrs >10 yrs Total
Debt securities and other fixed income
securities
35,333 77,976 13,581 4,246 — 5,533 —
136,669
Participation in investment pools 12,777 — — — — — — 12,777
Other investments 4,286 — — — — — — 4,286
Cash at bank and in hand 30,760 — — — — — — 30,760
Derivative assets 7 — — — — — — 7
Total
83,163 77,976 13,581 4,246 — 5,533 —
184,499
Sensitivity analysis - interest rate risk
The syndicate holds financial assets and liabilities that are exposed to interest rate risk. Changes in interest yields, with all
other variables constant, would result in changes in the capital value of debt and derivative financial instruments. This will affect
reported profits and members' balances as indicated in the below table.
Impact on profit for the year
ended
Impact on members' balances
2024 2023 2024 2023
Shift in yield (basis points) $'000 $'000 $'000 $'000
50 basis point increase (3,275) (1,107) (3,275) (1,107)
50 basis point decrease 3,275 1,107 3,275 1,107
Price risk
Financial assets and derivatives that are recognised on the balance sheet at their fair value are susceptible to losses due to
adverse changes in prices. This is referred to as price risk.
Financial assets include fixed and floating rate debt securities and derivative financial assets. The fixed income securities are
well diversified across high quality, liquid securities. The price risk associated with these securities is predominantly interest,
foreign exchange and credit risk related.
Impact on profit for the year
ended
Impact on members' balances
2024 2023 2024 2023
Change in fair value of equity linked funds $'000 $'000 $'000 $'000
5% increase in fair value 932 — 932 —
5% decrease in fair value (932) — (932) —
Notes to the syndicate annual accounts continued
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2 Risk management continued
2.3 Credit risk
Credit risk arises from the failure of another party to perform its financial or contractual obligations to the syndicate or host
syndicate in a timely manner. The primary sources of credit risk for the syndicate are:
• reinsurers – whereby reinsurers may fail to pay valid claims against a reinsurance contract held by the syndicate;
• brokers and coverholders – whereby counterparties fail to pass on premiums or claims collected or paid on behalf of the host
syndicate;
• investments – whereby issuer default results in the host syndicate losing all or part of the value of a financial instrument and
derivative financial instrument; and
• cash at bank and in hand
The syndicate’s core business is to accept significant insurance risk and the appetite for other risks is low. This protects the
syndicate’s capital from erosion so that it can meet its insurance liabilities.
The managing agent limits exposure to a single counterparty or a group of counterparties and analyses the geographical
locations of exposures when assessing credit risk.
An approval system also exists for all new brokers, and broker performance is carefully monitored. Regular exception reports
highlight trading with non-approved brokers, and the syndicate’s credit control function frequently assesses the ageing and
collectability of debtor balances. Any large, aged items are prioritised and where collection is outsourced, incentives are in place
to support these priorities.
The Investment Committee has established comprehensive guidelines for the syndicate’s investment managers regarding the
type, duration and quality of investments acceptable to the syndicate. The performance of investment managers is regularly
reviewed to confirm adherence to these guidelines.
The managing agent has developed processes to formally examine all reinsurers before entering into new business
arrangements. New reinsurers are approved by the Reinsurance Security Committee, which also reviews arrangements with all
existing reinsurers at least annually. Vulnerable or slow-paying reinsurers are examined more frequently.
The following tables summarise the syndicate’s concentrations of credit risk:
AAA AA A BBB Other
Not rated Total
31 December 2024
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Financial investments
Shares and other variable yield
securities and unit trusts
– – – – 21,299 18,636 39,935
Debt securities and other fixed income
securities
1,705 172,780 135,401 52,578 – – 362,464
Participation in investment pools – – 25,330 – – 25,330
Derivative assets – – – – – 28 28
Other investments – – 11,902 – – – 11,902
Total financial investments 1,705 172,780 172,633 52,578 21,299 18,664 439,659
Reinsurers’ share of claims outstanding 965 4,281 4,760 – – – 10,006
Debtors arising out of direct insurance
operations
– – – – – 168,903 168,903
Debtors arising out of reinsurance
operations
– – – – – 12,588 12,588
Cash at bank and in hand 108 – 58,801 – – – 58,909
Other debtors and accrued interest 100,201 1,152 904 350 – 22,865 125,472
Total
102,979 178,213 237,098 52,928 21,299 223,020 815,537
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2 Risk management continued
AAA AA A BBB Other
Not rated Total
31 December 2023
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Financial investments
Debt securities and other fixed income
securities
88,684 3,208 30,319 14,458 – – 136,669
Participation in investment pools – – 12,777 – – – 12,777
Derivative assets – – – – – 7 7
Other investments – – 4,286 – – 4,286
Total financial investments 88,684 3,208 47,382 14,458 – 7 153,739
Reinsurers’ share of claims outstanding 549 2,740 4,515 – – 4,162 11,966
Debtors arising out of direct insurance
operations
– – – – – 107,822 107,822
Debtors arising out of reinsurance
operations
– – – – – 39,006 39,006
Cash at bank and in hand 3,389 27,371 – 30,760
Other debtors and accrued interest* 211,441 – – – – 9,218 220,659
Total 304,063 5,948 79,268 14,458 – 160,215 563,952
*Certain balances have been restated due to a voluntary change in accounting policy. Refer to note 24.
Based on all evidence available, debtors arising out of insurance operations and other debtors have not been impaired and no
impairment provision has been recognised in respect of these assets.
An analysis of the carrying amounts of past due or impaired debtors is presented in the table below:
Neither past due
nor impaired
Past due but not
impaired
Gross value of
impaired assets
Impairment
allowance Total
31 December 2024 $'000 $'000 $'000 $'000 $'000
Financial investments
Shares and other variable yield securities
and unit trusts
39,935 – – – 39,935
Debt securities and other fixed income
securities
362,464 – – – 362,464
Participation in investment pools 25,330 – – – 25,330
Derivative assets 28 – – – 28
Other Investments 11,902 – – – 11,902
Total financial investments 439,659 – – – 439,659
Cash at bank and in hand 58,909 – – – 58,909
Debtors arising out reinsurance operations 12,588 – – – 12,588
Reinsurers’ share of outstanding claims 10,006 – – – 10,006
Debtors arising out of direct insurance
operations
168,903 – – – 168,903
Other debtors and accrued interest 125,472 – – – 125,472
Total
815,537 – – – 815,537
Notes to the syndicate annual accounts continued
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2 Risk management continued
Neither past due
nor impaired
Past due but not
impaired
Gross value of
impaired assets
Impairment
allowance Total
31 December 2023 $'000 $'000 $'000 $'000 $'000
Financial investments
Debt securities and other fixed income
securities
136,669 – – – 136,669
Participation in investment pools 12,777 – – – 12,777
Derivative assets 7 – – – 7
Other Investments 4,286 – – – 4,286
Total financial investments 153,739 – – – 153,739
Cash at bank and in hand 30,760 – – – 30,760
Debtors arising out reinsurance operations 39,006 – – – 39,006
Reinsurers’ share of outstanding claims 11,966 – – – 11,966
Debtors arising out of direct insurance
operations
107,822 – – – 107,822
Other debtors and accrued interest* 220,659 – – – 220,659
Total
563,952 – – – 563,952
*Certain balances have been restated due to a voluntary change in accounting policy. Refer to note 24.
There are no impairment allowances or past due but not impaired balances.
2.4 Liquidity risk
Liquidity risk arises where cash may not be available to pay obligations when due at a reasonable cost. The syndicate is
exposed to daily calls on its available cash resources, principally from claims arising from its insurance business. In the majority
of the cases, these claims are settled from the premiums received.
The syndicate’s approach is to manage its liquidity position so that it can reasonably survive a significant individual or market
loss event. This means that the syndicate maintains sufficient liquid assets, or assets that can be translated into liquid assets
at short notice and without any significant capital loss, to meet expected cash flow requirements. These liquid funds are
regularly monitored using cash flow forecasting to ensure that surplus funds are invested to achieve a higher rate of return.
The maturity analysis presented in the table below shows the remaining contractual maturities for the syndicate’s insurance
contracts and financial instrument liabilities. For insurance and reinsurance contracts, the contractual maturity is the estimated
date when the gross undiscounted contractually required cash flows will occur. For financial liabilities, it is the earliest date on
which the gross undiscounted cash flows (including contractual interest payments) could be paid assuming conditions are
consistent with those at the reporting date.
Maturity
Carrying
amount
No maturity
stated 0-1 yrs 1-3 yrs 3-5 yrs >5yrs Total
31 December 2024
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Claims outstanding 504,928 – 155,641 204,117 90,929 54,241 504,928
Derivative liabilities 1,605 – 1,605 – – – 1,605
Creditors 38,770 16,600 22,170 – – – 38,770
Other liabilities 9,892 – 9,892 – – – 9,892
Total 555,195 16,600 189,308 204,117 90,929 54,241 555,195
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2 Risk management continued
Maturity
Carrying
amount
No maturity
stated 0-1 yrs 1-3 yrs 3-5 yrs >5yrs Total
31 December 2023 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Claims outstanding 349,885 – 109,555 139,200 63,463 37,667 349,885
Creditors 3,039 1,265 1,774 – – – 3,039
Other Liabilities 5,455 – 5,455 – – – 5,455
Total 358,379 1,265 116,784 139,200 63,463 37,667 358,379
2.5 Capital management
Capital framework at Lloyd's
The Society of Lloyd’s is a regulated undertaking and subject to the supervision of the Prudential Regulation Authority under the
Financial Services and Markets Act 2000.
Within this supervisory framework, Lloyd’s applies capital requirements at a member level and centrally to ensure that Lloyd’s
complies with Solvency II, and beyond that to meet its own financial strength, license and ratings objectives. Although, as
described below, the Lloyd’s capital setting processes use a capital requirement set at a syndicate level as a starting point, the
requirement to meet Solvency II and Lloyd’s capital requirements apply at an overall and member level respectively, not at a
syndicate level. Accordingly the capital requirement in respect of Syndicate 5623 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.
A syndicate comprises one or more underwriting members of Lloyd’s. Each member is liable for its own share of underwriting
liabilities on the syndicate(s) on which it participates 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, license and ratings objectives. The capital uplift
applied for 2024 was 35% (2023: 35%) of the member’s SCR to ultimate.
Provision of capital by members
Each member may provide capital to meet its ECA either by assets held in trust by Lloyd’s specifically for that member (funds at
Lloyd’s), held within and managed within a syndicate (funds in syndicate) and/or as the member’s share of the solvency II
members’ balances on each syndicate on which it participates.
Accordingly all of the assets less liabilities of the syndicate, as represented in the members’ balances reported on the balance
sheet on page 15, represent resources available to meet members’ and Lloyd’s capital requirements.
Notes to the syndicate annual accounts continued
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3 Analysis of underwriting result
Gross premiums
written
Gross premiums
earned
Gross claims
incurred
Net operating
expenses
Reinsurance
balance
Underwriting
result
2024
$'000 $'000 $'000 $'000 $'000 $'000
Direct insurance
Third party liability
158,376 140,855 (81,791) (50,102) (2,917) 6,045
Marine, aviation and transport
197,099 183,919 (94,646) (56,234) (19,927) 13,112
Fire and other damage to property
65,428 54,674 (32,643) (18,363) (4,253) (585)
Credit and suretyship 22,992 22,877 (10,765) (8,765) (480) 2,867
Total direct insurance
443,895 402,325 (219,845) (133,464) (27,577) 21,439
Reinsurance acceptances
47,885 52,756 (9,784) (21,459) (2,649) 18,864
Total direct and reinsurance
accepted
491,780 455,081 (229,629) (154,923) (30,226) 40,303
Gross premiums
written
Gross premiums
earned
Gross claims
incurred
Net operating
expenses
Reinsurance
balance
Underwriting
result
2023
$'000 $'000 $'000 $'000 $'000 $'000
Direct insurance
Third party liability
102,821 46,107 (29,038) (17,716) (1,951) (2,598)
Marine, aviation and transport
38,118 16,995 (10,884) (7,325) (780) (1,994)
Fire and other damage to property
165,894 81,782 (53,028) (19,213) (4,373) 5,168
Credit and suretyship 18,734 8,527 (4,030) (3,090) (358) 1,049
Total direct insurance
325,567 153,411 (96,980) (47,344) (7,462) 1,625
Reinsurance accepted
64,514 161,276 (82,173) (50,907) (1,105) 27,091
Total direct and reinsurance
accepted
390,081 314,687 (179,153) (98,251) (8,567) 28,716
All business was concluded in the UK. No gains or losses were recognised in profit or loss during the year on buying reinsurance
(2023: nil). The gross premiums written by destination of risk is presented in the table below:
2024 2023
$'000 $'000
United Kingdom 67,916 41,347
US 13,317 5,209
European Union member states 87,003 41,673
Rest of world 275,659 237,338
Total gross premiums written
443,895 325,567
4 Net operating expenses
2024 2023
$'000
$'000
Acquisition costs
118,951 87,123
Change in deferred acquisition costs (12,146) (17,299)
Administrative expenses 33,182 6,544
Members’ standard personal expenses 10,035 8,234
Reinsurance commission and profit participation 4,901 13,649
154,923 98,251
Included within administrative expenses are profit commissions payable to the managing agent of $16,586k (2023: $860k).
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31
4 Net operating expenses continued
Acquisition costs include commissions for direct insurance business as shown below:
2024 2023
$'000 $'000
Total commission for direct insurance business
107,167 63,978
Administrative expenses include:
2024 2023
$'000 $'000
Fees payable to the syndicate’s auditor for the audit of these syndicate annual accounts 99 94
Fees payable to the syndicate’s auditor and its associates in respect of other services pursuant to
legislation
249 216
Total
348 310
Fees payable to the syndicate's auditor in relation to other services pursuant to legislation primarily relate to the review and
audit of syndicate regulatory returns along with the statement of actuarial opinion.
5 Key management personnel compensation
The Directors of BFL received the following aggregate remuneration charged to Syndicate 5623 and included within net
operating expenses:
2024 2023
$'000 $'000
Directors' emoluments 585 385
Total
585 385
The active underwriter received the following aggregate remuneration charged to Syndicate 5623:
2024 2023
$'000 $'000
Emoluments 1,182 836
1,182 836
6 Staff numbers and costs
The syndicate has no employees. All staff are employed by Beazley Management Limited ('BML'), a related company to the
managing agent, both of which operate within the Beazley Group. The average number of persons employed by BML and working
for the syndicate in some capacity are as follows.
Number of employees
2024 2023
Administration and finance 870 799
Underwriting 239 234
Claims 88 75
Investments 8 8
Total
1,205 1,116
The following amounts were recharged to the syndicate in respect of staff costs:
2024 2023
$'000
$'000
Wages and salaries 3,785 2,099
Social security 1,379 652
Pension costs 1,137 537
Short term incentive payments 3,644 1,411
Total
9,945 4,699
Notes to the syndicate annual accounts continued
32
Beazley | Syndicate 5623 Annual report 2024 www.beazley.com
7 Investment return
2024 2023
$'000
$'000
Interest and similar income
From financial instruments designated at fair value through profit or loss
Interest and similar income 15,730 11,168
From financial instruments classified at amortised cost
Interest on cash at bank 1,205 487
Other income from investments
From financial instruments designated at fair value through profit or loss
Gains on the realisation of investments 1,256 140
Losses on the realisation of investments (485) (759)
Unrealised gains on investments 5,285 1,528
Unrealised losses on the investments (1,529) (53)
Investment management expenses (47) (21)
Total investment return 21,415 12,490
Transferred to the technical account from the non-technical account
21,415 12,490
Impairment losses on debtors recognised in administrative expenses
— —
8 Distribution and open years of account
A distribution of $37,707k to members will be proposed in relation to the closing year of account 2022 (2023: distribution of
$24,965k profit for year of account 2021).
9 Financial investments
Carrying value Cost
2024 2023 2024 2023
$'000 $'000 $'000 $'000
Shares and other variable yield securities and units in unit
trusts
39,935 — 37,820 —
Debt securities and other fixed income securities
362,464 136,669 360,160 135,194
Participation in investment pools
25,330 12,776 25,055 13,049
Derivative assets
28 7 — —
Other investments
11,902 4,287 11,850 4,335
Total financial investments
439,659 153,739 434,885 152,578
The table below presents an analysis of financial investments by their measurement classification.
2024 2023
$'000 $'000
Financial assets measured at fair value through profit or loss 439,659 153,739
Total financial investments
439,659 153,739
Overseas deposits are held as a condition of conducting underwriting business in certain countries and are disclosed under
Other investments.
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33
9 Financial investments continued
Foreign exchange forward contracts
The syndicate entered into over-the-counter foreign exchange forward agreements in order to economically hedge the foreign
currency exposure resulting from transactions and balances held in currencies that are different to the functional currency of the
syndicate.
Valuation hierarchy
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair
value hierarchy described as follows, based on the lowest level input that is significant to the fair value measurement as a
whole. If the inputs used to measure the fair value of an asset or a liability could be categorised in different levels of the fair
value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the
lowest level input that is significant to the entire measurement.
Level 1 – Valuations based on quoted prices in active markets for identical instruments. An active market is a market in which
transactions for the instrument occur with sufficient frequency and volume on an ongoing basis such that quoted prices reflect
prices at which an orderly transaction would take place between market participants at the measurement date.
Level 2 – Valuations based on quoted prices in markets that are not active, or based on pricing models for which significant
inputs can be corroborated by observable market data, directly or indirectly (e.g. interest rates, exchange rates). Level 2 inputs
include:
• Quoted prices similar assets and liabilities in active markets;
• Quoted prices for identical or similar assets and liabilities in markets that are not active, the prices are not current, or price
quotations vary substantially either over time or among market makers, or in which little information is released publicly;
• Inputs other than quoted prices that are observable for the asset or liability (for example, interest rates and yield curves
observable at commonly quoted intervals, implied volatilities and credit spreads); and
• Market corroborated inputs. Included within level 2 are government bonds and treasury bills.
Level 3 – Valuations based on inputs that are unobservable or for which there is limited market activity against which to
measure fair value. The availability of financial data can vary for different financial assets and is affected by a wide variety of
factors, including the type of financial instrument, whether it is new and not yet established in the marketplace, and other
characteristics specific to each transaction. To the extent that valuation is based on models or inputs that are unobservable in
the market, the determination of fair value requires more judgement. Accordingly the degree of judgement exercised by
management in determining fair value is greatest for instruments classified in level 3. The syndicate uses prices and inputs that
are current as of the measurement date for valuation of these instruments.
Valuation approach
The valuation approach for fair value assets and liabilities classified as level 2 is as follows:
• For the level 2 debt securities, our fund administrator obtains the prices used in the valuation from independent pricing
vendors. The independent pricing vendors derive an evaluated price from observable market inputs. These inputs are verified
in their pricing assumptions such as weighted average life, discount margins, default rates, and recovery and prepayments
assumptions for mortgage securities.
The table below shows the fair values of financial instruments at 31 December 2024 and 31 December 2023 including their
levels in the fair value hierarchy.
Notes to the syndicate annual accounts continued
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Beazley | Syndicate 5623 Annual report 2024 www.beazley.com
9 Financial investments continued
Level 1 Level 2 Level 3
Assets held at
amortised cost
Total
2024 $'000 $'000 $'000 $'000
$'000
Shares and other variable yield securities and units in unit
trusts
39,935 – – – 39,935
Debt securities and other fixed income securities 263,396 99,068 – – 362,464
Participation in investment pools 25,330 – – – 25,330
Derivative assets 28 – – – 28
Other investments 11,902 – – – 11,902
Total financial investments
340,591 99,068 – – 439,659
Derivative financial liabilities (1,605) – – – (1,605)
Total
338,986 99,068 – – 438,054
Level 1 Level 2 Level 3
Assets held at
amortised cost
Total
2023 $'000 $'000 $'000
$'000 $'000
Debt securities and other fixed income securities 109,662 27,007 – – 136,669
Participation in investment pools 12,777 – – – 12,777
Derivative assets 7 – – – 7
Other investments 4,286 – – – 4,286
Total financial investments
126,732 27,007 – – 153,739
Derivative financial liabilities
– – – – –
Total
126,732 27,007 – – 153,739
Transfers between levels in the fair value hierarchy are determined by assessing the categorisation at the end of the reporting
period. The following transfers between levels 1 & 2 for the year ended 31 December 2024 reflect the level of trading activities
including frequency and volume derived from market data obtained from an independent external valuation tool. There were no
transfers into or out of level 3 in the year ended 31 December 2024 (2023: nil).
Level 1 Level 2
31 December 2024 vs 31 December 2023 transfer from level 1 to level 2 $'000 $'000
Debt securities and other fixed income securities
(29,616) 29,616
Level 1 Level 2
31 December 2024 vs 31 December 2023 transfer from level 2 to level 1 $'000 $'000
Debt securities and other fixed income securities
22,776 (22,776)
10 Derivative financial instruments
Derivative financial instruments relate to foreign exchange forward contracts. In 2024 and prior, the syndicate entered into over-
the-counter and exchange traded derivative contracts. The syndicate had the right and intention to settle each contract on a net
basis.
2024 2023
Notional contract amount Fair value Notional contract amount Fair value
Derivative financial instruments
$'000 $'000 $'000 $'000
Foreign exchange forward contract - assets 82,699 28 7,568 7
Foreign exchange forward contract - liabilities 69,341 1,605 7,568 —
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35
11 Debtors arising out of direct insurance operations
2024 2023
$'000 $'000
Due within one year 168,903 107,822
Due after one year — —
168,903 107,822
12 Debtors arising out of reinsurance operations
2024 2023
$'000 $'000
Due within one year 12,588 39,006
Due after one year — —
12,588 39,006
13 Other debtors
2024 2023 *restated
$'000 $'000
Amount due from syndicate 3623 100,189 211,441
Inter-syndicate balance 100,189 211,441
Amounts due from members — —
Other related party balances (non-syndicate) 17,878 7,301
Other 4,084 547
122,151 219,289
*Certain balances have been restated due to a voluntary change in accounting policy. Refer to note 24.
The balances listed above are due within one year.
14 Cash and cash equivalents
2024 2023
$'000 $'000
Cash at bank and in hand 58,909 30,760
Short term deposits presented within financial investments 25,330 12,777
84,239 43,537
15 Deferred acquisition costs
2024 2023
Gross Reinsurance Net
Gross Reinsurance Net
$'000 $'000 $'000 $'000 $'000 $'000
Balance at 1 January 46,888 — 46,888 34,692 — 34,692
Incurred deferred acquisition costs
118,951
— 118,951 87,382 — 87,382
Amortised deferred acquisition costs
(106,805)
— (106,805) (75,247) — (75,247)
Foreign exchange movements
(286) —
(286) 61 — 61
Balance at 31 December
58,748 — 58,748
46,888 — 46,888
Notes to the syndicate annual accounts continued
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Beazley | Syndicate 5623 Annual report 2024 www.beazley.com
16 Analysis of net debt
All amounts in $'000
At 1 January
2024
Cash flows Acquired
Fair value and
exchange
movements
Non-cash
changes
At 31
December
2024
Cash at bank and in hand 30,760 28,157 — (8) — 58,909
Short term deposits 12,777 13,241 — (688) — 25,330
Cash and cash equivalents 43,537 41,398 — (696) — 84,239
Derivative financial liabilities — — — — (1,605) (1,605)
Total
43,537 41,398 — (696) (1,605) 82,634
All amounts in $'000
At 1 January
2023
Cash flows Acquired
Fair value and
exchange
movements
Non-cash
changes
At 31
December
2023
Cash at bank and in hand 23,401 7,801 — (442) — 30,760
Short term deposits — 12,924 — (147) — 12,777
Cash and cash equivalents 23,401 20,725 — (589) — 43,537
Total
23,401 20,725 — (589) — 43,537
17 Technical Provisions
The table below shows the changes in the insurance contract liabilities and assets from the beginning of the period to the end
of the period.
2024 2023
Gross Provisions Reinsurance assets Net
Gross
Provisions Reinsurance assets Net
Claims outstanding
$'000
$'000
$'000
$'000
$'000
$'000
Balance at 1 January 349,885 (11,966) 337,919 225,946 — 225,946
Claims paid during the year (73,495) — (73,495)
(56,375) —
(56,375)
Expected cost of current year claims 276,908 (4,490) 272,418
195,417 (11,972)
183,445
Change in estimates of prior year
provisions
(47,279) 6,493 (40,786) (16,264) — (16,264)
Effects of movements in exchange rate (1,091) (43) (1,134) 1,161 6 1,167
Balance at 31 December
504,928 (10,006) 494,922 349,885 (11,966) 337,919
2024 2023
Gross Provisions
Reinsurance
assets Net
Gross
Provisions
Reinsurance
assets Net
Unearned premiums
$'000 $'000 $'000 $'000 $'000 $'000
Balance at 1 January 210,829 (6,466) 204,363 135,245 — 135,245
Premium written during the year 491,780 (33,604) 458,176 390,081 (27,005) 363,076
Premiums earned during the year (455,081) 28,223 (426,858) (314,687) 20,539 (294,148)
Effect of movements in exchange rate (108) — (108) 190 — 190
Balance at 31 December
247,420 (11,847) 235,573 210,829 (6,466) 204,363
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37
17 Technical Provisions continued
The following tables illustrate the development of the estimates of ultimate cumulative claims incurred, including claims notified
and IBNR, for each successive underwriting year, illustrating how amounts estimated have changed from the first estimates
made.
2018 2019 2020 2021 2022 2023 2024 Total
Gross amounts
$'000
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Total
12 months
10,168 26,721 63,920 123,501 206,536 264,262 320,459
24 months
7,950 31,381 64,400 108,454 174,505 203,082
36 months
7,500 32,190 55,536 89,540 164,285
48 months
7,182 30,977 49,492 81,448
60 months
7,716 27,020 47,872
72 months
7,457 25,897
84 months
8,052
Total ultimate losses
8,052 25,897 47,872 81,448 164,285 203,082 320,459 851,095
Less paid claims
(5,996) (15,718) (22,644) (28,156) (63,833) (36,747) (1,521) (174,615)
Gross claims reserves
(unearned)
2,056 10,179 25,228 53,292 100,452 166,335 318,938 676,480
Less unearned portion of
ultimate losses
(4,716) (166,836) (171,552)
Gross claims reserves (earned)
2,056 10,179 25,228 53,292 100,452 161,619 152,102 504,928
2018 2019 2020 2021 2022 2023 2024 Total
Net amounts
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Total
12 months
10,168 26,721 63,920 123,501 206,536 246,689 313,861
24 months
7,950 31,381 64,400 108,454 174,505 202,247
36 months
7,500 32,190 55,536 89,540 164,285
48 months
7,182 30,977 49,492 81,448
60 months
7,716 27,020 47,872
72 months
7,457 25,897
84 months
8,052
Total ultimate losses
8,052 25,897 47,872 81,448 164,285 202,247 313,861 843,662
Less paid claims
(5,996) (15,718) (22,644) (28,156) (63,833) (36,746) (1,521) (174,614)
Net claims reserves
(unearned)
2,056 10,179 25,228 53,292 100,452 165,501 312,340 669,048
Less unearned portion of
ultimate losses
(5,279) (168,847) (174,126)
Net claims reserves (earned)
2,056 10,179 25,228 53,292 100,452 160,222 143,493 494,922
18 Creditors arising out of direct insurance operations
2024 2023
$'000 $'000
Due within one year
417 116
Due after one year
— —
417 116
Notes to the syndicate annual accounts continued
38
Beazley | Syndicate 5623 Annual report 2024 www.beazley.com
19 Creditors arising out of reinsurance operations
2024 2023
$'000 $'000
Due within one year
4,328 1,685
Due after one year
— —
4,328 1,685
20 Other creditors
2024 2023
$'000 $'000
Due to syndicate 623 4,270 225
Due to syndicate 2623 11,261 1,013
Due to syndicate 4321 1,068 —
Total inter-syndicate balances 16,599 1,238
Profit commission payable
17,426 —
Derivative liabilities 1,605 —
35,630 1,238
The above other creditors balances are payable within one year, except for profit commission payable which is due in more than
one year.
21 Related parties transactions
For the 2022 YOA the business written by Syndicate 5623 is ceded from Syndicate 3623, for which Syndicate 5623 pays a
profit commission. This profit commission payable is disclosed in note 4 and the overrider commission is included within
operating expenses. The proportion of overrider commission in respect of unearned premium is deferred at the balance sheet
date and recognised in later periods when the related premiums are earned.
Certain Directors of BFL have shareholdings in Beazley plc which provides capacity for syndicates 2623, 3622, 3623, 4321,
5623 and 623. Beazley Underwriting Limited provides the underwriting capacity to the syndicate at 18% for the 2023 and at
20% for 2024 YOA. Profit related remuneration for Beazley Group is charged to the syndicate for the 2023 & 2024 YOA.
At the balance sheet date, the syndicate has amounts due to the managing agent of $9,880k (2023: $7,540k). In addition to
this amount, the syndicate is also has a profit commission payable to the managing agent which is visible in note 20.
The managing agent recharged expenses and fees of $26,631k (2023: $14,171k) to the syndicate during the year. Both
Beazley Management Limited and BFL, the managing agent of the syndicate, are ultimately controlled by Beazley plc.
The intercompany positions with other syndicates managed by BFL at 31 December 2024 are disclosed above in note 13 and
note 20.
BFL as the managing agent of the syndicate is responsible for settling intercompany balances with other managed syndicates
and net amounts due to/from other related entities.
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39
22 Subsequent events
The syndicate is impacted by the California wildfires which occurred in January 2025. The financial impact is not expected to be
material. The managing agent continues to monitor the impact.
The 2022 YOA has closed with a profit of $37.7m. It is the intention that these funds will be distributed to the members
reserve funds in May 2025.
23 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 Prudential
Regulatory Authority requirements and resource criteria. The determination of FAL has regard to a number of factors including
the nature and amount of risk to be underwritten by the member and the assessment of the reserving risk in respect of
business that has been underwritten. Since FAL is not under the management of the managing Agent, no amount has been
shown in these Financial Statements by way of such capital resources. However, the managing Agent is able to make a call on
the Member’s FAL to meet liquidity requirements or to settle losses.
24 Changes in accounting policies - presentation
The 2023 syndicate accounts were prepared in line with the relevant accounting standards and regulatory requirements and
received an unqualified audit opinion from the Syndicate’s auditor. However, the managing agent has voluntarily elected to
enact certain changes in accounting policy relating to the presentation of various items in the financial statements for this
syndicate for the year ended 31 December 2024. The changes are intended to align the presentation of the syndicate’s
accounts with the proforma disclosures set out by Lloyd's during the year as part of their effort to rationalise and standardise
reporting across the Lloyd’s market. These changes have been applied on a retrospective basis and have no impact on the
measurement of assets or liabilities, reported profit or the combined ratio. Further details of each change have been included
below. This has impacted certain comparative notes also.
Members’ agent fees
Members agent fees are typically funded by the syndicate and then recouped at the time the YOA closes. Historically, the
syndicate has treated these as a separate receivable (recognised within Other debtors on the balance sheet), whereas the
managing agent now presents these as a deficit to members balances. This change in policy has no impact on the settlement
of a YOA and is entirely presentational.
Cash flow statement – presentation and classification
The managing agent has elected to change the presentation and classification of several lines within the cash flow statement in
order to align with the proforma disclosures set out by Lloyd’s. These changes can be summarised as follows:
• Several lines are now combined under a single heading (Movement in other assets/liabilities) where previously these were
presented separately.
• Purchases and sales of equities are now presented separately where historically these have been combined.
• Foreign exchange amounts have been reclassified from investing to operating activities and presented separately.
• Transfer from/to members in respect of underwriting operations has been disaggregated where previously the total movement
was presented under one line.
Notes to the syndicate annual accounts continued
40
Beazley | Syndicate 5623 Annual report 2024 www.beazley.com
24 Changes in accounting policies - presentation continued
Balance sheet
Previously disclosed
Adjustment
Restated
Members’ agent fees
$'000 $'000 $'000
Other debtors
221,411 (2,122) 219,289
Total assets
619,428 (2,122) 617,306
Members' balances
50,220 (2,122) 48,098
Total capital and reserves
50,220 (2,122) 48,098
Total liabilities
569,208 — 569,208
Statement of changes in members' balances
Previously disclosed
Adjustment
Restated
Members’ agent fees
$'000 $'000 $'000
Members' balances brought forward at 1 January
20,156 (1,616) 18,540
Payments of profit to members' personal reserve funds
(10,507) 487 (10,020)
Member agent fees
— (964) (964)
Other
— (29) (29)
Members' balances carried forward at 31 December
50,220 (2,122) 48,098
www.beazley.com Beazley | Syndicate 5623 Annual report 2024
41
24 Changes in accounting policies - presentation continued
Statement of cash flows
Adjustment
Previously disclosed
Cash flow statement
Restated
31-Dec-23
$'000 $'000 $'000
(Increase)/decrease in debtors, prepayments and accrued
income
(45,020) 1,875 (43,145)
Increase/(decrease) in net technical provisions
181,091 (181,091) —
Increase/(decrease) in gross technical provisions
— 199,523 199,523
(Increase)/decrease in reinsurers' share of gross
technical provisions
— (18,432) (18,432)
(Increase)/decrease in deferred acquisition costs
(12,196) 12,196 —
Increase/(decrease) in creditors, accruals and deferred
income
7,181 (5,381) 1,800
Purchases and sales of equity
—
Movement in other assets/liabilities
— (8,184) (8,184)
Foreign exchange
— 589 589
Net cash flows from operating activities
159,137 1,095 160,232
Net purchase of investments
(138,920) 138,920 —
Purchase of equity and debt securities
— (201,984) (201,984)
Sale of equity and debt securities
— 62,475 62,475
Total impact on net cash flow from investing activities
— — —
Net cash flows from investment activities
(127,905) (589) (128,494)
Transfer to/from members in respect of underwriting
participations
(10,507) 10,507 —
Profit distribution
— (10,020) (10,020)
Other
— (993) (993)
Net cash flows from financing activities
(10,507) (506) (11,013)
Net increase/(decrease) in cash and cash equivalents
20,725 — 20,725
Cash and cash equivalents at the end of the year
43,537 — 43,537
25 Foreign exchange rates
The syndicate used the following exchange rates to translate foreign currency assets, liabilities, income and expenses into US
dollars, being the syndicate’s presentational currency:
| 2024 | 2023 | |||||
| Start of period | Average | End of period | Start of period | Average | End of period | |
| Sterling | | | | | | |
| Euro | | | | | | |
| US dollar | | | | | | |
| Canadian dollar | | | | | | |
| Australian dollar | | | | | | |
Notes to the syndicate annual accounts continued
42
Beazley | Syndicate 5623 Annual report 2024 www.beazley.com
2022 underwriting
year of account for
Syndicate 5623
44
Managing agent's report
45
Statement of managing agent’s responsibilities
46
Independent auditor’s report to the members of
Syndicate 5623 – 2022 closed year of account
49
Profit or loss account
50
Statement of changes in members' balances
51
Balance sheet
52
Cash flow statement
53
Notes to the 2022 underwriting year of account
57
Five year summary of closed year results at 31
December 2024
58
Managing agent's corporate information
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43
Managing agent’s report
The syndicate underwriting year accounts have been prepared under the Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008 (the ‘Lloyd’s Regulations’) and in accordance with the Syndicate Accounting Byelaw
(No.9 of 2005), including Financial Reporting Standard 102 (FRS 102) and Insurance Contracts 103 (FRS 103) in accordance
with the provisions of Schedule 3 of the Large and Medium-size Companies and Groups (Accounts and Reports) Regulations
relating to insurance companies.
Members participate on a syndicate by reference to a year of account ('YOA') and each syndicate YOA is a separate annual
venture. These accounts relate to the 2022 YOA which has been closed by reinsurance to close at 31 December 2024;
consequently the balance sheet represents the assets and liabilities of the 2022 YOA and the profit or loss account reflects the
transactions for that YOA during the 36 months period until closure. The 2022 closed YOA profit of $37.7m includes a
reinsurance to close profit from the 2021 YOA of $4.2m (note 6). This profit on the 2022 YOA represents a return on capacity
of 14.5% and includes the impact of personal members expenses of $0.7m. Return on capacity excluding these expenses
would be 14.7%.
Principal activity
Please refer to the Managing agent’s report in Syndicate 5623 annual accounts for details around the principal activities of the
syndicate.
Directors
A list of Directors of the managing agent who held office during the current year can be found on page 58 of this document.
Disclosure of information to the auditor
The Directors of the managing agent who held office at the date of approval of this managing agent’s report confirm that, so far
as they are each aware, there is no relevant audit information of which the syndicate’s auditor is unaware; and each Director
has taken all the steps that they ought to have taken as a Director to make themselves aware of any relevant audit information
and to establish that the syndicate’s auditor is aware of that information.
Auditor
Pursuant to Section 14(2) of Schedule 1 of the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts)
Regulations 2008, the auditor will be deemed to be reappointed and Ernst & Young LLP will therefore continue in office.
On behalf of the Board
C C J Wong
Chief Financial Officer
5 March 2025
44
Beazley | Syndicate 5623 Annual report 2024 www.beazley.com
Statement of managing agent’s responsibilities
The Directors of the managing agent are responsible for preparing the syndicate underwriting year accounts in accordance with
the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and the Lloyd’s Syndicate
Accounting Byelaw. They have elected to prepare the accounts in accordance with FRS 102 The Financial Reporting Standard
applicable in the UK and Republic of Ireland.
Under Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 the Directors of the
managing agent must not approve the underwriting year accounts unless they are satisfied that they give a true and fair view of
the result of the underwriting year at closure. In preparing these accounts, the Directors of the managing agent are required to:
• select suitable accounting policies and then apply them consistently and where there are items which affect more than one
YOA, ensure a treatment which is equitable between the members of the syndicate affected is used;
• 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 accounts;
• assess the syndicate’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern;
and
• use the going concern basis of accounting unless they either intend to cease trading, or have no realistic alternative but to do
so. As explained in note 1 the Directors of the managing agent have not prepared the underwriting year accounts on a going
concern basis.
The Directors of the managing agent are responsible for keeping adequate and proper accounting records that are sufficient to
show and explain the syndicate’s transactions and disclose with reasonable accuracy at any time the financial position of the
syndicate and enable them to ensure that the underwriting year accounts comply with the Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008. They are responsible for such internal control as they determine is
necessary to enable the preparation of accounts that are free from material misstatement, whether due to fraud or error, and
have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the company and
to prevent and detect fraud and other irregularities.
On behalf of the Board
C C J Wong
Chief Financial Officer
5 March 2025
www.beazley.com Beazley | Syndicate 5623 Annual report 2024
45
Independent auditor’s report to the members
of Syndicate 5623 2022 closed year of account
Opinion
We have audited the syndicate underwriting year accounts for the 2022 year of account of syndicate 5623 (‘the syndicate’) for
the three years ended 31 December 2024 which comprise the Statement of Comprehensive Income, the Statement of
Members’ Balances, Balance Sheet, the Statement of Cash Flows and the related notes 1 to 11, including a summary of
significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law
and United Kingdom Accounting Standards including FRS 102 “The Financial Reporting Standard applicable in the UK and
Republic of Ireland” and FRS 103 “Insurance Contracts” (United Kingdom Generally Accepted Accounting Practice).
In our opinion, the syndicate underwriting year accounts:
• give a true and fair view of the profit for the 2022 closed year of account;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements of The Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008 and have been properly prepared in accordance with the Lloyd’s Syndicate Accounting
Byelaw (no. 8 of 2005).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the syndicate
underwriting year accounts section of our report. We are independent of the syndicate in accordance with the ethical
requirements that are relevant to our audit of the syndicate underwriting year accounts in the UK, including the FRC’s Ethical
Standard as applied to other entities of public interest, and we have fulfilled our other ethical responsibilities in accordance
with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of matter – closure of the 2022 year of account
We draw attention to the Note 1 which explains that the 2022 year of account of syndicate 5623 has closed and all assets
and liabilities transferred to the 2023 year of account by reinsurance to close at 31 December 2024.
As a result, the syndicate underwriting year accounts for the 2022 year of account of syndicate 5623 have been prepared
under basis other than going concern.
Our opinion is not modified in respect of this matter.
Other information
The other information comprises the information included in the Underwriting Year report and accounts, other than the
syndicate underwriting year accounts and our auditor’s report thereon. The managing agent is responsible for the other
information contained within the Underwriting Year report and accounts.
Our opinion on the syndicate underwriting year accounts does not cover the other information and, except to the extent
otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the syndicate underwriting year accounts or our knowledge obtained in the course of the audit or otherwise
appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material misstatement in the syndicate underwriting year accounts
themselves. If, based on the work we have performed, we conclude that there is a material misstatement of the other
information, we are required to report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where The Lloyd’s Syndicate Accounting Byelaw (no. 8 of 2005)
requires us to report to you, if in our opinion:
• the managing agent in respect of the syndicate has not kept adequate accounting records; or
• the syndicate underwriting year accounts are not in agreement with the accounting records.
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Beazley | Syndicate 5623 Annual report 2024 www.beazley.com
Responsibilities of the managing agent
As explained more fully in the Statement of Managing Agent’s Responsibilities on page 45 , the managing agent is responsible
for the preparation of the syndicate underwriting year accounts in accordance with The Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008 and The Lloyd’s Syndicate Accounting Byelaw (no. 8 of 2005) and for
being satisfied that they give a true and fair view, and for such internal control as the managing agent determines is necessary
to enable the preparation of the syndicate underwriting year accounts that are free from material misstatement, whether due to
fraud or error.
In preparing the syndicate underwriting year accounts, the managing agent is responsible for assessing the syndicate’s ability
to realise its assets and discharge its liabilities in the normal course of business, disclosing, as applicable, any matters that
impact its ability to do so.
Auditor’s responsibilities for the audit of the syndicate underwriting year accounts
Our objectives are to obtain reasonable assurance about whether the syndicate underwriting year accounts as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK)
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these syndicate underwriting year accounts.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due
to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through collusion.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below. However, the
primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the managing
agent and management.
Our approach was as follows:
• We obtained a general understanding of the legal and regulatory frameworks that are applicable to the syndicate and
determined that the most significant are direct laws and regulations related to elements of Lloyd’s Byelaws and Regulations,
and the financial reporting framework (UKGAAP) and requirements referred to by Lloyd’s in the Instructions. Our
considerations of other laws and regulations that may have a material effect on the syndicate underwriting year accounts
included permissions and supervisory requirements of Lloyd’s of London, the Prudential Regulation Authority (‘PRA’) and the
Financial Conduct Authority (‘FCA’).
• We obtained a general understanding of how the syndicate is complying with those frameworks by making enquiries of
management, internal audit, and those responsible for legal and compliance matters of the syndicate. In assessing the
effectiveness of the control environment, we also reviewed significant correspondence between the syndicate, Lloyd’s of
London and other UK regulatory bodies; reviewed minutes of the Board and Risk Committee of the managing agent; and
gained an understanding of the managing agent’s approach to governance.
• For direct laws and regulations, we considered the extent of compliance with those laws and regulations as part of our
procedures on the related syndicate underwriting year accounts’ items.
• For both direct and other laws and regulations, our procedures involved: making enquiries of the directors of the managing
agent and senior management for their awareness of any non-compliance of laws or regulations, enquiring about the policies
that have been established to prevent non-compliance with laws and regulations by officers and employees, enquiring about
the managing agent’s methods of enforcing and monitoring compliance with such policies, and inspecting significant
correspondence with Lloyd’s, the FCA and the PRA.
• The syndicate operates in the insurance industry which is a highly regulated environment. As such the Senior Statutory
Auditor considered the experience and expertise of the engagement team to ensure that the team had the appropriate
competence and capabilities, which included the use of specialists where appropriate.
• We assessed the susceptibility of the syndicate’s underwriting year accounts to material misstatement, including how fraud
might occur by considering the controls that the managing agent has established to address risks identified by the managing
agent, or that otherwise seek to prevent, deter, or detect fraud. We also considered areas of significant judgement, complex
transactions, performance targets, economic or external pressures and the impact these have on the control environment.
Where this risk was considered to be higher, we performed audit procedures to address each identified fraud risk including,
– Reviewing accounting estimates for evidence of management bias. Supported by our Actuaries we assessed if there were
any indicators of management bias in the valuation of insurance liabilities and the recognition of estimated premium
income.
– Evaluating the business rationale for significant and/or unusual transactions.
• These procedures included testing manual journals and were designed to provide reasonable assurance that the syndicate
underwriting year accounts were free from fraud or error.
www.beazley.com Beazley | Syndicate 5623 Annual report 2024
47
Independent auditor’s report to the members
of Syndicate 5623 2022 closed year of account continued
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the syndicate’s members, as a body, in accordance with The Lloyd’s Syndicate Accounting Byelaw
(no. 8 of 2005) and The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008. Our audit
work has been undertaken so that we might state to the syndicate’s members those matters we are required to state to them
in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the syndicate and the syndicate’s members as a body, for our audit work, for this report, or
for the opinions we have formed.
Niamh Byrne (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
5 March 2025
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Beazley | Syndicate 5623 Annual report 2024 www.beazley.com
Profit or loss account
2022 year of account for the 36 months ended 31 December 2024
Notes
2022 year
of account
$m
Gross premiums written 252.5
Earned premiums, net of reinsurance
252.5
Allocated investment return transferred from the non-technical account 10.3
Reinsurance to close premiums received, net of reinsurance 4 101.1
Investment return and reinsurance adjusted premium
111.4
Reinsurance to close premiums payable, net of reinsurance
5
(183.2)
Gross claims paid (66.0)
Claims incurred, net of reinsurance
(249.2)
Net operating expenses 7 (76.5)
Balance on the technical account
38.2
Loss on foreign exchange (0.5)
Investment income 10.3
Allocated investment return transferred to the technical account (10.3)
Profit for the 2022 closed YOA
6
37.7
Syndicate allocated capacity (£m) 204.4
Profit for the 2022 closed YOA (£m)
29.6
Return on capacity 14.5%
There are no other comprehensive gains or losses in the accounting period.
www.beazley.com Beazley | Syndicate 5623 Annual report 2024
49
Statement of changes in members’ balances
for the 36 months ended 31 December 2024
2022 year
of account
$'m
Profit for the 2022 closed YOA 37.7
Amounts due to members' at 31 December 2024
37.7
Members participate in syndicates by reference to YOA and their ultimate result, assets and liabilities are assessed with
reference to policies incepting in that YOA in respect of their membership of a particular year.
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Beazley | Syndicate 5623 Annual report 2024 www.beazley.com
Balance sheet
closed at 31 December 2024
Notes
2022 year
of account
$m
Assets
Debtors 8 226.0
Prepayments and accrued income 0.5
Total assets
226.5
Members' balances and liabilities
Members' balances
Amounts due to members
9 37.7
Liabilities
Reinsurance to close premium payable to close the account – gross amount 5 183.5
Creditors 10 5.3
Total liabilities
226.5
The syndicate underwriting year accounts on pages 49 to 56 were approved by the Board of Directors of Beazley Furlonge
Limited on 5 March 2025 and were signed on its behalf by:
P J Bantick
Director
C C J Wong
Chief Financial Officer
www.beazley.com Beazley | Syndicate 5623 Annual report 2024
51
Cash flow statement
2022 year of account for the 36 months ended 31 December 2024
2022 year
of account
$m
Cash flows from operating activities
Total comprehensive income for 2022 YOA 37.7
Increase in gross technical provisions 183.5
(Increase) in debtors (226.0)
Increase in creditors 5.3
Movement in other assets/liabilities (0.5)
Investment return (10.3)
Net cash flow from operating activities
(10.3)
Cash flows from investing activities
Investment income received 10.3
Net cash flow from investing activities
10.3
Cash flows from financing activities
Net cash flow from financing activities
Net increase/(decrease) in cash and cash equivalents
—
Cash and cash equivalents at the beginning of the year 2022
—
Foreign exchange on cash and cash equivalents
—
Cash and cash equivalents at the end of the year 2022
—
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Beazley | Syndicate 5623 Annual report 2024 www.beazley.com
1 Accounting policies
Basis of preparation
These underwriting accounts have been prepared in accordance with the Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008 (‘the Regulations’) and applicable Accounting Standards in the United Kingdom,
including Financial Reporting Standard 102 (FRS 102) and Insurance Contracts (FRS 103). They have also been prepared in
accordance with Lloyd’s Syndicate Accounting Byelaw (N0.8 of 2005) and in accordance with the provisions of Schedule 3 of
the Large and Medium-size Companies and Groups (Accounts and Reports) Regulations relating to insurance companies.
Whilst the Directors of the managing agent have a reasonable expectation that the syndicate has adequate resources to
continue in operational existence for the foreseeable future, these financial statements represent the participation of members
in the 2022 YOA which closed on 31 December 2024. The accumulated profits of the 2022 YOA will be distributed shortly after
publication of these accounts. Therefore the 2022 YOA is not continuing to trade and, accordingly, the Directors have not
adopted the going concern basis in the preparation of these accounts. The amounts reported would be identical if the accounts
had been prepared on a going concern basis as the 2022 YOA will be closed by payment of a reinsurance to close premium, as
outlined in note (a) below, which is consistent with the normal course of business for a Lloyd’s Syndicate and with the approach
the managing agent has applied to earlier underwriting years.
The principal accounting policies applied in the preparation of these underwriting accounts are set out below. The policies have
been consistently applied to all periods presented, unless otherwise stated. All amounts presented are stated in US dollars,
being the syndicate’s functional currency, and in millions, unless noted otherwise.
Underwriting transactions
(a) The underwriting accounts for each YOA are normally kept open for three years before the result on that year is determined.
At the end of the three year period, outstanding liabilities can normally be determined with sufficient accuracy to permit the
YOA to be closed by payment of a reinsurance to close premium to the successor YOA.
(b) Gross premiums are allocated to YOA on the basis of the inception date of the policy. Commission and brokerage are
charged to the YOA to which the relevant policy is allocated. Policies written under binding authorities, lineslips or
consortium arrangements are allocated to the YOA into which the arrangement incepts. Additional and return premiums
follow the YOA of the original premium. Premiums in respect of reinsurance ceded are attributed to the same year as the
original risk being protected. Gross premiums are stated before the deduction of brokerage, taxes and duties levied on
them. Estimates are made for pipeline premiums, representing amounts due to the syndicate not yet notified.
(c) Gross claims paid are allocated to the same YOA as that to which the corresponding premiums are allocated and include
internal and external claims settlement expenses. Reinsurance recoveries are allocated to the YOA to which the claim was
charged.
(d) The reinsurance to close premium is determined by reference to outstanding liabilities, including claims incurred but not yet
reported, relating to the closed year and to all previous closed years reinsured therein. Although the estimate of net
outstanding liabilities is considered to be fair and reasonable, it is implicit in the estimation procedure that the ultimate
liabilities will be at variance from the premium so determined. The reinsurance to close premium includes a provision for
unearned premiums and unexpired risks at the balance sheet date, net of deferred acquisition costs.
(e) Please refer to note 1 Accounting policies in Syndicate 5623 annual accounts for details around measurement of insurance
contracts.
Comparatives
(f) Comparatives are not provided in these syndicate underwriting year accounts as each syndicate YOA is a separate annual
venture.
Investment return
(g) Investment return consists of the syndicates share of the host syndicate’s investment return. The investment return is
wholly allocated to the technical account.
Notes to the syndicate underwriting year accounts
closed at 31 December 2024
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53
1 Accounting policies continued
Syndicate operating expenses
(h) Costs are borne by the host syndicate and are charged to the syndicate via an overrider commission.
Taxation
(i) 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 income tax 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. It is the responsibility of members to agree and settle their
individual tax liabilities with the Inland Revenue.
(j) No provision has been made for any US federal income tax payable on the 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’.
(k) No provision has been made for any other overseas tax payable by members on underwriting results. Members resident
overseas for tax purposes are responsible for agreeing and settling any tax liabilities with the taxation authorities of their
country of residence.
Basis of currency translation
(l) The functional and presentational currency of the syndicate is US dollars. Non-USD denominated items going through the
profit or loss account are translated to US dollars at the three years’ average rates of exchange. Assets and liabilities
denominated in foreign currencies at the balance sheet date are retranslated to the functional currency at the foreign
exchange rate at that date.
2 Risk management
The 2022 YOA has closed and all assets and liabilities have been transferred to a reinsuring YOA. The risks that it is exposed
to in respect of the reported financial position and financial performance are significantly less than those relating to the open
YOA's as disclosed in the syndicate annual accounts. Accordingly, these underwriting year accounts do not have associated risk
disclosures as required by section 34 of FRS 102. Full disclosures relating to these risks are provided in the syndicate annual
accounts.
3 Analysis of underwriting result
All business was concluded in the UK and relates to reinsurance.
4 Reinsurance to close premiums received
2022 year
of account
$m
Gross reinsurance to close premiums received 101.1
Reinsurance to close premiums received, from 2021 and earlier, net of reinsurance
101.1
5 Reinsurance to close premiums payable
2022 year
of account
$m
Gross reinsurance to close premiums through profit and loss (183.2)
Foreign exchange
(0.3)
Reinsurance to close premiums payable to 2023 net of reinsurance
(183.5)
Reported IBNR Total
$m $m $m
Reinsurance to close premium payable
44.2 139.3 183.5
Reinsurance to close premiums payable
44.2 139.3 183.5
Notes to the syndicate underwriting year accounts
closed at 31 December 2024 continued
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Beazley | Syndicate 5623 Annual report 2024 www.beazley.com
6 Analysis of the 2022 YOA result
2022 year
of account
$m
Amount attributable to business allocated to the 2022 YOA 33.5
Surplus on the reinsurance to close for the 2021 YOA 4.2
37.7
7 Net operating expenses
2022 year
of account
$m
Acquisition costs 56.6
Reinsurance commissions and profit participation 19.2
Administrative expenses 0.7
76.5
Administrative expenses include:
$m
Audit services 0.1
8 Debtors
2022 year
of account
$m
Debtors arising out of direct insurance operations 106.8
Debtors arising out of reinsurance operations 11.2
Amounts due from syndicates 3623 100.2
Other debtors 7.8
226.0
These balances are due within one year.
9 Amounts due to members
2022 year
of account
$m
Profit for the 2022 closed YOA before standard personal expenses 38.4
Members standard personal expenses (0.7)
Amounts due to members at 31 December 2024
37.7
10 Creditors
2022 year
of account
$m
Amount due to syndicates 0.4
Other creditors 4.9
5.3
www.beazley.com Beazley | Syndicate 5623 Annual report 2024
55
11 Related parties transactions
Please refer to page 39 of the syndicate annual accounts for further details of related party transactions for the 2022 YOA.
For the 2022 YOA, the business written by syndicate 5623 is ceded from syndicate 3623, for which syndicate 5623 pays a
profit commission. This profit commission payable and the overrider commission is included within operating expenses.
Amounts due from other syndicates is disclosed within note 8.
As at the balance sheet date, the 2022 YOA has a receivable from Beazley Management Limited ('BML') of $2.8m, and this is
included in other debtors, disclosed within note 8. BML provides services to the managing agent, and by extension, to the
syndicate.
BFL, the managing agent of Syndicate 5623, is a wholly-owned subsidiary of Beazley plc.
BFL as the managing agent of the syndicate is responsible for settling intercompany balances with other managed syndicates
and net amounts due to/from other related entities.
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Beazley | Syndicate 5623 Annual report 2024 www.beazley.com
Five-year summary of closed year results
(unaudited)
at 31 December 2024
2022 2021 2020 2019 2018
Syndicate allocated capacity – £’m
204.4 144.2 83.5 63.1 22.5
Syndicate allocated capacity – $’m 282.1 178.8 106.1 83.3 29.3
Capacity utilised 69.5 % 62.7 % 78.3 % 42.8% 28.3%
Aggregate net premiums – $’m 196.1 112.0 83.1 35.7 8.3
Underwriting profit as a percentage
of gross premiums
24.4 % 28.1 % 27.3 % 8.6% 29.7%
Return on capacity 14.5 % 13.7 % 9.8 % 2.1% 3.2%
Results for an illustrative £10,000 share
$ $ $ $ $
Gross premiums – $'000 9.6 7.8 8.0 5.7 3.7
Net premiums 9.6 7.8 8.0 5.7 3.7
Reinsurance to close from an earlier account 4.9 4.1 2.4 0.5 –
Net claims (3.2) (2.5) (2.1) (1.5) (1.1)
Reinsurance to close the year of account (9.0) (7.0) (6.8) (4.2) (1.5)
Underwriting profit 2.3 2.4 1.5 0.5 1.1
Profit on foreign exchange (0.1) 0.2 0.1 – –
Syndicate operating expenses (0.3) (0.2) (0.2) (0.4) (0.7)
Balance on technical account 1.9 2.4 1.4 0.1 0.4
Gross investment return 0.5 0.1 (0.1) 0.2 0.1
Profit before personal expenses 2.4 2.5 1.3 0.3 0.5
Illustrative personal expenses (0.4) (0.5) – – –
Managing agent’s profit commission (0.2) (0.3) (0.2) – (0.1)
Profit after illustrative profit commission and personal expenses
($)
1.8 1.7 1.1 0.3 0.4
Profit after illustrative profit commission and personal expenses
(£)
1.4 1.4 1.0 0.2 0.3
Notes:
1 The illustrative profit commission and personal expenses are estimates of amounts which might be charged on an illustrative share of £10,000. The agency
agreements for 1991 and subsequent years of account only provide for the deduction of fees and profit commission on behalf of the managing agent.
2 The effect of any minimum charges on personal expenses or deficit clauses on profit commission have been ignored.
3 Internal claims settlement expenses have been included in ‘net claims’.
4 The above figures are stated before members’ agents’ fees.
5 Profit after illustrative profit commission and personal expenses is shown in dollars and converted to sterling at the closing rate.
6 Gross and net premium amounts shown above are net of brokerage expenses.
7 The summary of closed years results are on a 'pure year' basis.
www.beazley.com Beazley | Syndicate 5623 Annual report 2024
57
Managing agent's corporate information
Beazley Furlonge Limited has been the managing agent of Syndicate 5623 throughout the period covered by this report and the
registered office is 22 Bishopsgate, London, EC2N 4BQ, United Kingdom.
Directors
R A Stuchbery* - Chair
A P Cox - Chief Executive Officer
G P Blunden* - (resigned 31/03/2024)
C C R Bannister* - (resigned 31/03/2024)
A J Reizenstein*
N Wall*
L Santori*
R S Anarfi
R J Clark* - (appointed 23/05/2024)
P J Bantick - (appointed 07/06/2024)
C C J Wong - (appointed 17/09/2024)
S M Lake - (resigned 30/06/2024)
R E Quane - (resigned 04/10/2024)
*Non-Executive Director.
Active underwriter
W J Roscoe
Company secretary
R Yeoman
Managing agent’s registered office
22 Bishopsgate
London
EC2N 4BQ
United Kingdom
Registered number
01893407
Auditor
Ernst & Young LLP
25 Churchill Place
London
E14 5EY
Banker
Deutsche Bank AG
Winchester House
London
1 Great Winchester Street
EC2N 2DB
58
Beazley | Syndicate 5623 Annual report 2024 www.beazley.com
www.beazley.com Beazley | Syndicate 5623 Annual report 2024
59
Beazley Furlonge Limited
Syndicate 5623 at Lloyd’s
22 Bishopsgate
London
EC2N 4BQ
T +44 (0)20 7667 0623
info@beazley.com
www.beazley.com
Syndicate 5623
annual report 2024
investor.relations.beazley.com
