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Lloyd’s Syndicate

Syndicate 1955

Annual Report and Accounts for the year ended

31 December 2024

3

Contents

Directors and Administration....................................................................................................4

Managing Agent’s report..........................................................................................................5

Statement of Managing Agent’s responsibilities....................................................................17

Independent auditor’s report to the members of Syndicate 1955..........................................18

Statement of profit or loss and other comprehensive income:...............................................22

Balance sheet – Assets.........................................................................................................24

Balance sheet (cont’d) – Liabilities........................................................................................25

Statement of changes in members’ balances........................................................................26

Statement of cash flows.........................................................................................................27

Notes to the financial statements – (forming part of the financial statements).....................28

2022

Underwriting Year Accounts

Statement of Managing Agent’s responsibilities....................................................................66

Independent auditor’s report to the members of Syndicate 1955 – 2022 closed year...........67

Statement of profit or loss and other comprehensive income:...............................................71

Balance sheet – Assets.........................................................................................................73

Balance sheet (cont’d) – Liabilities........................................................................................

74

Notes to the financial statements – (forming part of the financial statements).....................

75

4

Directors and Administration

Directors of the Managing Agent (As at 6 March 2025)

K. Felisky

M. Hammer-Dahinden

J. Hine

P. Storey

H. Sturgess

K. Valder

Syndicate Secretary

S. Charlton

Managing Agent Registered Number

06948515

Managing Agent Registered Office

60 Great Tower Street

London

EC3R 5AZ

Principal Bankers

Bank of America Merrill Lynch

Citibank NA

Royal Trust Corporation of Canada

Independent Auditors

PricewaterhouseCoopers LLP

Chartered Accountants and Statutory Auditors

7 More London Riverside

London, SE1 2RT

Investment Manager

Payden & Rygel

1 Bartholomew Lane

London, EC2N 2AX

Website

www.insurance.archgroup.com/business/international/london-market

5

Managing Agent’s report

The Directors of Arch Managing Agency Limited (“AMAL” or “the Managing Agent”), a Company registered in England and Wales, present their annual report and audited financial statements of managed Syndicate 1955 (the “Syndicate”) for the year ended 31 December 2024.

A separate set of underwriting year accounts has been prepared on the traditional three-year accounting basis in accordance with the Lloyd’s Syndicate Accounting Byelaw (No.8 of 2005) for the closed 2022 year of account. Underwriting year accounts are not required until the closure of the year of account, typically at the 36-month stage.

Principal Activities

Syndicate 1955 currently underwrites general insurance, reinsurance and mortgage business in the Lloyd’s Market. The business within these segments includes Marine, Aviation and Transport, Energy, Property, Financial Lines, Accident & Health, Casualty, Specialty and Mortgage. The Syndicate’s insurance lines have operated an 80/20% split stamp agreement with Syndicate 2012 during 2024.

Ownership

As at 31 December 2024, the Syndicate was managed by AMAL and the ultimate parent company of AMAL is Arch Capital Group Ltd (“ACGL”), a publicly-listed Bermuda exempted company that writes insurance, reinsurance and mortgage insurance on a worldwide basis through its wholly-owned subsidiaries in Bermuda, the United States of America, Europe, Canada, and Australia. ACGL is listed on the Nasdaq Stock Market and its registered address is Waterloo House, Ground Floor, 100 Pitts Bay Road, Pembroke HM 08, Bermuda.

For 2022, 2023 and 2024 underwriting years the single largest corporate member of the Syndicate was Arch Syndicate Investments Ltd (“ASIL”). The Syndicate also had numerous third-party capital providers across each of the three underwriting years.

Directors

The Directors of the Managing Agent who held office during the year were as follows:

K. Felisky

Independent Non-Executive Director

M. Hammer-Dahinden

Group Non-Executive Director

J. Hine

Independent Non-Executive Director

J. Kittinger

Chief Financial Officer

(resigned 16 May 2024)

P. Storey

Independent Non-Executive Director and Chairman

H. Sturgess

President and Chief Executive Officer

K. Valder

Deputy Chief Executive Officer

The Directors are covered by third party indemnity insurance policies.

6

Managing agent’s report: (cont’d)

Review of the Business

Our insurance underwriting strategy is to operate in lines of business where our underwriting expertise can make a meaningful difference to operating results. We seek to operate profitably across all the product lines and, to do so, we aim to attract and retain underwriting talent. We underwrite predominantly in the London wholesale insurance markets and also in regional markets, both directly and on a selective delegated underwriting authority basis. To achieve our objectives, our insurance operating principles are to:

•capitalise on profitable underwriting opportunities;

•centralise responsibility for underwriting;

•maintain a disciplined underwriting philosophy using our experience and strategic analytics to drive decisions;

•provide superior claims management;

•promote and utilise an efficient distribution system;

•grow strategic partnerships, acquire or build strategic businesses in niche areas or lines of business; and

•create or acquire scalable and diversified underwriting platforms which can flex depending on the underwriting cycle.

Our underwriting philosophy is to generate an underwriting profit through prudent risk selection and adequate pricing across the underwriting cycle. To achieve this, we adhere to uniform underwriting standards across each product line focusing on 1) risk selection, 2) desired attachment point, 3) limits and retention management, 4) due diligence, including financial condition, claims history, management and exposure, 5) underwriting authority and approval limits, and 6) collaborative decision-making.

The focus for 2024 has been the continued growth of Syndicate 1955 through expansion of profitable lines of business including the split stamp arrangement for insurance lines with Syndicate 2012, which results in proportional growth in these lines of business on the 2024 underwriting year. The Board of Directors of the Managing Agency will continue to support disciplined growth and development of business.

The rating environment continued to improve during 2024, with firmer pricing for many of our lines of business, including Aviation War, Cyber, Satellite, Marine Liability, Warranty & Specialty Affinity and Healthcare. Reflecting the strengthened rating environment, the Syndicate’s underwriting strategy for 2024 was more offensive, actively seeking out new business and maximising the opportunities for growth in profitable lines of business while maintaining its underwriting discipline and executing its philosophy on superior risk selection. The Gross Written Premium increased by 26.2% to £745.6m (2023: £588.7m). Overall profit is higher this year at £128.5m (2023: £86.2m), this is primarily attributed to reduced catastrophe claim activity and consistent investment return gains.

Net assets of the Syndicate increased by £115.6m in 2024 to £177.4m. The majority of this increase is driven by a £128.5m profit for the year offset by a distribution of the 2021 Year of Account (“YOA”) profit to the capital providers of £12.9m.

The Syndicate recorded an underwriting profit before investment income of £79.1m (2023: £50.1m), mainly driven by an improvement in underwriting performance across all YOA in which the 2023 YOA contributed £53.6m to the underwriting result.

7

Managing agent’s report: (cont’d)

Key Performance Information and Metrics

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

2024

2023

Total written

SPA cession

Retained

Total written

SPA cession

Retained

£m

Gross premiums written

745.6

-

745.6

588.8

-

588.8

Gross premiums earned

690.7

-

690.7

558.3

-

558.3

Premiums earned, net of reinsurance

478.5

-

478.5

407.4

(2.4)

405.0

Claims incurred, net of reinsurance

(251.5)

-

(251.5)

(229.4)

-

(229.4)

Investment return

35.6

-

35.6

37.9

(1.2)

36.7

Operating expenses

(147.9)

-

(147.9)

(125.9)

0.4

(125.5)

114.7

-

114.7

90.0

(3.2)

86.8

Balance on the technical account for general business

Non-technical account FX

13.8

-

13.8

(1.1)

0.5

(0.6)

Result for the period

128.5

-

128.5

88.9

(2.7)

86.2

Net Claims ratio

52.5%

-

52.5%

56.3%

-

56.6%

Net Expense ratio

30.9%

-

30.9%

16.7%

31.0%

Net Combined ratio

83.4%

-

83.4%

87.2%

16.7%

87.6%

The SPA, Syndicate 6132, shown in 2023 closed its final YOA, 2021, as at 31 December 2023 and does not participate in any of the open years within the Syndicate.

Premiums written

In 2024, the Syndicate operated through three segments, Insurance, Reinsurance and Mortgage. These segments produced an aggregate of gross written premiums of £745.6m, 26.6% higher than 2023. During 2024 the Syndicate continued its strategy of capitalising on profitable underwriting opportunities and benefited from improved rate environment. The Syndicate opened no new lines of business in 2024 (2023: 12 classes). The Syndicate also saw growth across various established lines of business. This growth can be seen in Note 6.

8

Managing agent’s report: (cont’d)

Review of the Business: (cont’d)

Claims incurred

Gross claims increased due to the exposure to Baltimore Bridge and hurricanes Helene and Milton. Ceded claims also reflected these being largely recoverable resulting in a minimal net impact.

Operating Expenses

Net operating expenses, which include acquisition costs and other operating expenses, increased by £22.4m to £147.9m (2023: £125.5m). This increase is in line with the expected increase per the Syndicate Business Forecast and reflects the premium growth during the year.

Non-Technical Result

The total profit for the year of £128.5m due to the Syndicate has increased by £42.3m (2023: £86.2m) on the non-technical account, driven by its increase in underwriting results offset by a slight decrease in investment return of £1.1m.

Corporate and Social Responsibility

Our success is anchored by our culture of ethics and compliance. The Board recognises the pivotal role it plays in promoting ethical standards and integrity in the conduct of our business and is committed to maintaining a reputation for high standards of business conduct.

As part of Arch Capital Group Ltd (“ACGL”), we maintain a Code of Business Conduct (the “Code”) which sets expectations and provides guidance to our employees in key areas, including honest and fair dealing, anti-bribery and corruption, potential conflicts of interest, gifts, safety, harassment and discrimination prevention, antitrust and competition and document retention. Our Code applies to everyone, including the Board, and is reviewed regularly to remain current with changing laws, regulations and industry best practices. To reinforce our commitment to these standards, the Syndicate provides training to all employees on the Code and makes other resources available, including a 24-hour ethics hotline.

The Syndicate is committed to providing equal opportunities to potential and actual staff. Our policy states that all of our employment related decisions must be based on an individual’s job qualifications and performance and not based on any characteristic protected by law, such as age, gender assignment, marital status, being pregnant or on maternity leave, disability, race, religions, sex or sexual orientation, atypical cellular or blood trait, marital status, veteran status, membership in the armed services, political affiliation, or any other characteristic protected by applicable law.

Our success also depends on developing our employees so they can grow with the Syndicate. We provide high calibre learning and engagement programs to foster meaningful career development for all employees and encourage employees to execute a personal development plan with their managers.

The Syndicate operates within agreed business conduct guidelines and is focused on customer led outcomes. This includes ensuring products and services, price and value, consumer understanding and consumer support are at the core of our business strategy.

9

Managing agent’s report: (cont’d)

Risk Management Strategy and Risk Appetite

The Syndicate has a set of risk appetite statements that are appropriate for its individual business model and strategy. Risk appetite statements setting out clear descriptions detailing appropriate levels of risk are in place for each material area of risk. Each of these statements is supported by a set of key risk indicators for detailed monitoring which are regularly reviewed and escalated where appropriate through the governance structure to the Board. Key risk indicators are set at levels that ensure sufficient remedial actions are put in place to ensure the Syndicate responds early to emerging threats. Risk appetites are reviewed, at a minimum, annually by the Board to ensure that the Syndicate retains full coverage over its risks.

The table below sets out our strategic risk objectives and shows, at a high level, examples of corresponding appetite statements:

Strategic risk objective

Central Strategic Goal Risk Appetite

Maintain capital adequacy

Target capital level

Deliver stable earnings

Return on Capital

Ensure fair outcomes for customers

Conduct and customer

Maintain robust and effective operations

Operational resilience

Ensure employees behaviour aligns to Arch’s values

Culture

The aim of the risk framework is to provide a robust, proportionate, proactive and forward-looking process for risk management across the Syndicate. A central component of this framework is the Syndicate’s policies, which inform the business as to how it is required to conduct its activities and its risk management processes to remain within risk appetite. The Syndicate employs a number of risk tools to manage and monitor risk. The output of the syndicate’s risk management activities is thoroughly tested and reported upon both internally and externally. The policies cover all key risks to which the Syndicate is exposed.

The Syndicate incorporates the identification, assessment, management, control, reporting and mitigation of risk as part of the syndicate’s daily operations. The strengths of our risk framework are:

•Strong culture and risk leadership underpinned by training of our people;

•Engagement with the business;

•Embedded risk management processes;

•Balanced quantitative and qualitative approach to risk analysis through use of robust analytical models and holistic risk assessments;

•Regular risk assessment and management information; and

•Influencing decision-making and shaping behaviours, via the provision of accurate, timely and relevant risk challenge and reporting.

The Syndicate’s risk management, internal audit, and compliance processes are coordinated to ensure that their respective activities are effective and complementary.

10

Managing agent’s report: (cont’d)

Ukraine War

We continue to closely monitor the ongoing war in Ukraine. The Syndicate has exposure to the war in Ukraine, in particular from policies covering political violence and war. This exposure is protected by reinsurance where gross losses are expected to be covered by the reinsurance in place. The current estimate of potential losses included within our net reserves for the war in Ukraine for the year ended 31 December 2024 are £16.0m (2023: £12.3m). The Syndicate has been negatively impacted by adverse development, resulting in strengthening of specific reserves in relation to Ukraine losses during the calendar year, largely on 2021 year of account, on both gross and net basis.

The premium written on a number of classes of business have been impacted following the introduction of international sanctions in 2024.

Principal risks and uncertainties

The Syndicate writes products that are subject to a number of uncertainties and risks. It is a key role of the risk function to ensure that these risks have been identified, measured and considered throughout the business.

Principal risks and uncertainties: (cont’d)

Principal risks

Impact

Strategy, management and mitigation

Strategic risk

The economic climate could put at risk our ability to meet our strategic objectives in the areas of distribution, pricing, claims, costs, and international diversification ultimately causing the Syndicate not to meet its business plan.

The value of the Syndicate decreases, resulting in a lack of Members’ confidence.

The Syndicate’s strategic ambitions include management of strategic risk in accordance with the ACGL Group premium and profitability plans and targets. We do this through:

•Constant monitoring and management of agreed strategic targets;

•Monitoring of cost savings to ensure they remain on track; and

•Monitoring and reporting of capital levels.

Underwriting and pricing risk

We are subject to the risk that inappropriate business could be written (or not specifically excluded) and inappropriate prices charged.

This includes, but is not limited to, catastrophe risk arising from losses due to unpredictable natural and man-made events affecting multiple covered risks.

Adverse loss experience impacting current year and future year business performance.

Syndicate 1955’s insurance risk strategy is to maintain an acceptable level of underwriting exposure within preferred business lines, across a diverse range of distribution channels, products and geographies. We do this through:

•Underwriting guidelines for all business transacted, restricting the types and classes of business that may be accepted;

•Exception reports and underwriting monitoring tools;

•Internal quality assurance programmes;

•Pricing policies by product line;

•Analysis of comprehensive data to refine pricing;

•Quarterly line of business reviews to monitor performance and adequacy of pricing;

•Monthly monitoring and reporting of natural and man-made catastrophe risk against appetite;

•Purchase of reinsurance to limit exposures; and

•Analysis of all property portfolios to determine expected maximum losses.

11

Principal risks and uncertainties: (cont’d)

Principal risks

Impact

Strategy, management and mitigation

Reserving risk

Due to the uncertain nature and timing of the risks to which we are exposed, we cannot precisely determine the amounts that we will ultimately pay to meet the liabilities covered by the insurance policies written leading to a risk that reserves may not be adequate for the risks underwritten.

Adverse development in prior year reserves resulting in significant deviations in earnings.

Syndicate 1955’s reserve risk strategy is to book best estimate reserves being adequate compared to the independent actuaries’ best estimate. Technical reserves are estimated by:

•A range of actuarial and statistical techniques, with projections of ultimate claims cost involving assumptions across a range of variables, including estimates of trends in claims frequency and average claim amounts based on facts and circumstances at a given point in time;

•Making assumptions on other variable factors including; the legal, social, economic and regulatory environments. Other factors considered include business mix, consumer behaviour, market trends, underwriting assumptions, risk pricing models, inflation in medical care costs, future earnings inflation and other relevant forms of inflation, the performance and operation of reinsurance assets and future investment returns;

•Stress and scenario testing; and

•We assess the expected impact of inflation on the booked reserves using a multi-year cash flow approach. Our approach estimates the impact of economic inflation on the expected claims frequency and severity of the in-force business, recognising that different insurance classes are affected differently by economic inflation. The expected impact on reserves is compared to an independent actuarial review to ensure our reserve surplus versus said independent actuarial remains within our risk appetite.

Ceded reinsurance risk

The risk to the Syndicate arises where reinsurance contracts put in place to reduce gross insurance risk do not perform as anticipated.

Adverse impact on the financial results.

The Syndicate’s reinsurance programmes are determined from the underwriting team business plans and seek to protect Syndicate 1955’s capital from an adverse volume or volatility of claims on both per risk and per event basis.

•The Syndicate aims to establish appropriate retention levels, limits of protection with clear policy wordings that are consistent with keeping within the Board’s risk tolerance and achieving the target rates of return;

•Provide stable, sustainable core capacity for each product line with non-core reinsurance purchased when market conditions allow;

•ACGL security guidelines are in place to ensure that we deal with a panel of trusted reinsurers.

Operational risk

The risks of direct or indirect losses resulting from inadequate or failed internal processes, fraudulent claims or from systems and people, or from external events including changes in the competitor, regulatory or legislative environments.

Adverse events with potential financial, reputational, legal and customer impacts.

Syndicate 1955 recognises that certain operational risks are unavoidable and seeks to limit exposure to operational risks through ensuring that an effective infrastructure, robust systems and controls and appropriately experienced and qualified individuals are in place throughout the organisation.

•We have enhanced many of our operational processes. This includes enhancing our Risk Management framework to integrate risk, business and capital strategies;

•We maintain a robust internal control environment;

•We maintain a robust risk capture, management and reporting system; and

•We recognise the value of our human resources and have appropriate Human Resources (“HR”) policies to develop and retain our staff.

12

Principal risks and uncertainties: (cont’d)

Principal risks

Impact

Strategy, management and mitigation

Investment risk

Market risk – the risk of adverse financial impact due to changes in fair values of future cash flows of instruments held in the investment portfolio as a result of changes in interest rates, credit spread and foreign exchange rates.

Credit risk – the risk of exposure if another party fails to perform its financial obligations, including failing to perform them in a timely manner.

Liquidity risk – the risk of maintaining insufficient financial resources to meet business obligations as and when they fall due.

Adverse movements due to asset value reduction, mismatch in assets and liabilities, and default of third parties.

Inability to meet cash flows under stress.

Syndicate 1955’s investment strategy is to protect the value of capital, focusing on assets that we consider are capable of producing a consistent and recurring flow of income over time.

Syndicate 1955’s liquidity management ensures that a minimum percentage of consolidated investments are held in liquid, short-term money market securities, to ensure that there are sufficient liquid funds available to meet obligations to policyholders and other creditors as they fall due.

Our investment portfolio is managed and controlled through:

•The Investment Committee receives advice from external Investment Advisors;

•Investment strategy and guidelines are proposed to the Board by the Investment Committee and monitored by the Investment Committee;

•Diverse holding of types of assets including geographies, sectors and credit ratings; and

•Stress testing and scenario analysis.

Counterparty credit risk

We partner with many suppliers and the failure of any of these to perform their financial obligations or perform them in a timely manner could result in a financial loss.

The principal area of counterparty risk is our use of inter-company quota share reinsurance as a capital management tool.

Loss due to default of banks, reinsurers, brokers or other third parties.

Syndicate 1955’s strategy is to avoid risk of large losses from counterparty failures through prudent counterparty selection and review of credit exposures.

•Credit limits are set for counterparties, particularly reinsurers;

•Requirement for minimum credit ratings for reinsurers;

•Broker credit exposures are monitored by the business; and

•The credit risk arising out of the inter-company quota share is managed through use of a trust fund arrangement.

Regulatory and legal risk

Changes in law and regulations are not identified, understood, or are inappropriately and incorrectly interpreted, or adopted, or business practices are not efficiently modified.

Further, there is a risk that current legal or regulatory requirements are not complied with.

Customer impact, financial loss and regulatory censure. Regulatory sanction, legal action or revenue loss.

Syndicate 1955’s regulatory risk strategy is to comply with all laws and regulations.

•Continued focus on key regulatory issues, including pricing and reserving adequacy during both soft and hard market conditions;

•We have a constructive and open relationship with our regulators; and

•We continue to monitor all regulatory changes as and when they are required by our regulators.

Conduct risk

The risk of failing to deliver the appropriate treatment for our customers throughout all stages of the customer journey and that our people fail to behave with integrity.

Potential customer detriment, financial loss and regulatory censure and sanction.

Syndicate 1955’s conduct risk strategy is to ensure good customer outcomes:

•Our organisational culture prioritises a consistent approach towards customers, including vulnerable customers, and the interests of customers are at the heart of how we operate; and

•We have developed a robust customer conduct risk management framework to minimise our exposure to conduct risk.

Group and reputational risk

We are dependent on the strength of our Group, our reputation with customers and distributors in the sale of products and services. We have entered into various strategic partnerships that are important to the marketing, sale and distribution of our products.

Loss of Group value negatively impacts our ability to retain and write new business.

Syndicate 1955 derives benefits from being part of the ACGL Group. Group risk is primarily managed at the executive level, through building strong relationships with all parties.

Syndicate 1955’s reputational risk strategy is to protect our brand and reputation. We do this through:

•Our brand and reputation risk are regularly reviewed by various governance committees; and

•We seek to offer a superior service to customers and to treat customers fairly in line with Financial Conduct Authority (“FCA”) principles.

Principal risks and uncertainties: (cont’d)

13

Principal risks and uncertainties: (cont’d)

Principal risks

Impact

Strategy, management and mitigation

Principal risks and uncertainties: (cont’d)

Ukraine war risk

On 24 February 2022, the Ukraine war commenced. In particular the following areas are exposed to increased risk as a result of the war.

•Loss exposure and reserve adequacy.

•International Sanctions.

The Syndicate’s capital may be negatively impacted.

The Syndicate has evaluated / addressed these risks as follows:

•Continuous review of Ukraine war loss development and subsequent relevant developments; and

Consideration of any impact from sanctions and policy review completed.

Macro-economic risk

The volatility experienced within inflation, interest rates and foreign exchange rates during 2023 and 2024 exposed the Syndicate to increased risk as follows.

•Increased future claims costs

•Increased operational costs

•Valuation of the investment portfolio

•Impact to financial performance.

The Syndicate’s capital may be negatively impacted.

The Syndicate has evaluated and assessed the impact of inflation across all areas of the operation.

•Review of all future claims’ inflation exposure;

•Assessment of future operational costs included in revised forecasts;

•Investment portfolio and strategy reviewed amid financial market developments and volatility; and

•Review of currency and duration matching of the investment portfolio to the Syndicate technical provisions.

Outlook and Future Developments

The Syndicate has had a profit for the financial year, with a total profit of £128.5m (2023: £86.2m) and recorded an improved underwriting profit of £79.1m (2023: £50.1m). The increased non-technical profit was slightly offset by a decrease in investment income to £35.6m (2023: £36.7m). The Syndicate grew in existing lines of business in 2024 due to increased rates and as per the existing split stamp arrangement with Syndicate 2012.

Looking to 2025, we look to further capitalise on the increase in rates observed across the market with the aim of improving the combined ratio and maintain a positive return on capital for the Members of the Syndicate 1955. The Syndicate is anticipating to write a new line of business in 2025, Marsh Fast Track, as per the Lloyd’s approved syndicate business forecast.

Whilst growth continues to be a focus, the Syndicate’s governance and underwriting controls continue to place strong emphasis on risk selection and price adequacy, contributing to overall underwriting discipline with the aim of placing profitable business.

Environmental, Social and Governance (“ESG”)

ACGL introduced its group wide ESG strategic framework in 2019, detailing important goals for integrating ESG considerations into its businesses, including the Syndicate. The framework maps across five key impact areas that support and drive our ESG initiative: Business, Operations, Investments, People and Communities. Organized under these pillars, ACGL tracks sustainable progress across the enterprise. ESG considerations are integral to our business operations and daily operations. We take a measured approach to ESG as we strive to drive our purpose – Enable Possibility – across our business. We work with our clients to provide services and insurance coverage that help them safeguard their future in a world where uncertainty touches every aspect of their lives. Our business is built on long-term thinking and an established history of delivering reliable risk management expertise to our markets.

14

Managing agent’s report: (cont’d)

Outlook and Future Developments (cont’d)

Environmental, Social and Governance (“ESG”) (cont’d)

The Syndicate developed an ESG framework and associated policies in 2022 to: 1) incorporate the ESG framework into its existing management and committee structure; 2) embed decision making, with consistent application and appropriate reporting mechanisms; and 3) ensure alignment to ACGL’s ESG programme.

Among other things, the Syndicate’s ESG programme includes efforts to manage our impact on the environment. We support our clients with insurance products and investment solutions to help address climate change, and we provide a range of customer-oriented solutions. We seek to encompass Arch’s collaborative ESG successes and sustainability progress across our operations and to engage with stakeholders and help them plan, build and grow into a sustainable future.

The Syndicate’s ESG efforts are overseen by the ESG Committee, which is chaired by the CEO and which regularly reports to the management of the Syndicate and the Board of Directors of the Managing Agency.

In addition, the directors have made an assessment of the specific risk of climate change to the Syndicate and have identified potential risks relating to underwriting and investment risks, each of which has been set out in further detail below. The Syndicate has embedded management of climate change risks into its standard approach for risk management. In line with the PRA’s expectations in SS3/19 and PS11/19, a framework has been put in place considering governance, risk management, scenario analysis and disclosure of financial risks arising from climate change. This is a fast-changing area and both the Syndicate, and the wider insurance market will continue to develop approaches to better understand and manage potential risks from climate change.

The Syndicate manages the financial risks from climate change under the following categories, which are described further below:

1.Underwriting Risks (including Physical risks and Liability risks)

2.Investment risks (including transition risks)

Underwriting risks

The Syndicate has a well-established exposure management framework, used to measure and manage catastrophe loss probability. The exposed policies are modelled by country and peril to estimate loss probabilities from natural catastrophe events, such as cyclones, windstorms, earthquakes, floods, bushfires and other hazards.

The whole portfolio is reassessed on a quarterly basis and the assessment includes modelling of historic events and probabilistic extremes of events across relevant geographic regions. Climate change signals, such as warming of sea surface temperatures are incorporated into the parameterisation of the model used.

The Syndicate’s models are tested for sensitivity and stress tested against the Syndicate’s historic claims experience. The key metric used is the 1 in 250-year stress test performed on a gross and net basis, which are tracked quarterly.

15

Managing agent’s report: (cont’d)

Outlook and Future Developments (cont’d)

Underwriting risks (cont’d)

A number of investigations have been undertaken based on the Prudential Regulation Authority’s (“PRA”) Climate Biennial Exploratory Scenarios (CBES) exercise, which show that there could be a long-term impact to modelled losses relating to US Windstorm exposures and Wildfire exposures, although noted that the trends in these loss costs are relatively small year-on-year, and we are constantly able to update our underwriting approach in light of changing risk exposures. Therefore, it is anticipated that we would remain within current risk appetites.

As part of ACGL, the Syndicate benefits from extensive investment into research and validation of climate and hazard models that allows informed risk assessments using the latest scientific views.

Arch recognises the potential for new types of insurance loss to emerge as novel legal challenges are brought against companies, including our insureds (e.g., liability claims relating to the attribution of responsibility for climate change, or D&O claims relating to insured companies’ approach to energy transition and new disclosure requirements). The Syndicate includes consideration of these risk factors in its underwriting approach for relevant individual risks and lines of business and is continuing to develop its approaches to examine specific exposures.

The Managing Agency, on behalf of the Syndicate, is looking at all aspects of the potential new underwriting environment that may emerge with the advent of various aspects of climate change. Both first and third party underwriters are working to continually assess the impact of various climate change scenarios on the existing and future portfolio, including but not limited to changing weather pattern and changing sea levels and their impact on risk selection and aggregation; to novel litigation against various companies or their directors and officers for their alleged fault in enabling such change, which may impact risk selection and policy structure; to the opportunities generated by a changing economy. Arch is an underwriter of renewable energy business; of companies developing and manufacturing electric vehicles and insurers of various projects and research which both enable and profit from a new economy; this develops as the opportunity itself develops and has in itself challenges around pricing and policy form, in which we invest our own intellectual property.

Investment risk

The Syndicate has an investment portfolio worth £853.9m (2023: £674.8m) which the Syndicate continues to invest on a prudent basis. Funds are held in terms of cash deposits or invested by the Syndicate’s investment manager Payden and Rygel (“P&R”).

The Investment Committee, which has been delegated oversight of the Syndicate’s investment portfolio by the Board of Directors is aware of the importance of stewardship and sustainability alongside integrating ESG into the overall governance structure, which involves the inclusion of Environmental, Social and Governance factors into wider investment analysis. At the ACGL level, ESG scores are incorporated into the overall portfolio analysis on a regular basis, the outcome of which is made available to the Investment Committee.

Arch is fully cognisant of the emerging importance of climate change as a fundamental societal issue and is actively investigating opportunities in underwriting, investments and its operational organisation and supply chains to act responsibly and to support the trend towards a sustainable transition to the post-Carbon society.

16

Managing agent’s report: (cont’d)

Outlook and Future Developments: (cont’d)

Investment risks: (cont’d)

In line with the PRA’s expectations in SS3/19 and PS11/19, an initial plan has been put in place considering governance, risk management, scenario analysis and disclosure.

Donations

The Syndicate made no political or charitable contributions during the year (2023: £nil).

Financial Risk Management

The Syndicate’s mission is to generate positive contribution to the growth in the Tangible Book Value of our ultimate parent company and the third-party capital providers. We do this by maximising our return on equity within a defined ‘risk appetite’. It is essential that we understand the risks the Syndicate is exposed to, namely strategic risk, insurance risk, operational risk, market risk, credit risk, liquidity risk, counterparty risk, regulatory risk, conduct risk, reputation risk and capital risk. Note 4 expands on these risks, including the Syndicate’s management of these risks.

Independent Auditors

The independent auditors, PricewaterhouseCoopers LLP have indicated their willingness to continue in office and they will be re-appointed by the Directors of the Managing Agent for the forthcoming year.

Approved by the Board and signed on behalf of the Board by:

Hugh Sturgess

President and Chief Executive Officer

Arch Managing Agency Limited

6 March 2025

17

Statement of managing agent’s responsibilities

The Directors are responsible for preparing the Syndicate annual report and annual accounts in accordance with applicable law and regulations, including Financial Reporting Standard 102 “The Financial Reporting Standard Applicable in the UK and Republic of Ireland” (“FRS 102”), and Financial Reporting Standard 103 “Insurance Contracts” (“FRS 103”).

In accordance with The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, managing agents are required to prepare Syndicate annual accounts for each financial year which give a true and fair view of the state of affairs of the Syndicate and of its profit or loss for that year.

In preparing the Syndicate annual accounts, the Managing Agent is 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, including FRSs 102 and 103 have been followed, subject to any material departures disclosed and explained in the annual accounts; and

•Prepare the annual accounts on the basis that the Syndicate will continue to write future business, unless it is inappropriate to presume that the Syndicate will do so.

The Managing Agent confirms it has complied with the above requirements in preparing the annual accounts.

The Managing Agent is responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Syndicate and enable it to ensure that the Syndicate annual accounts comply with the 2008 Regulations. It is also responsible for safeguarding the assets of the Syndicate and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

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.

Statement of Disclosure of Information to Auditors

Each of the persons who are Directors of the Managing Agent at the date of approval of this report confirms that:

•So far as the Director is aware, there is no information relevant to the audit of the Syndicate’s annual accounts for the year ended 31 December 2024 of which the auditors are unaware; and

•Each Director has taken all the steps that they ought to have taken in their duty as a Director of the Managing Agent in order to make themselves aware of any relevant audit information and to establish that the Syndicate’s auditors are aware of that information.

18

Independent auditors’ report to the members of Syndicate 1955

Report on the audit of the syndicate annual accounts

Opinion

In our opinion, Syndicate 1955’s syndicate annual accounts:

●give a true and fair view of the state of the syndicate’s affairs as at 31 December 2024 and of its profit and cash flows for the year then ended;

●have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law); and

●have been prepared in accordance with the requirements of The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and the requirements within the Lloyd’s Syndicate Accounts Instructions 2.0 as modified by the Frequently Asked Questions issued by Lloyd’s version 1.1 (“the Lloyd’s Syndicate Instructions”).

We have audited the syndicate annual accounts included within the Annual Report and Accounts (the “Annual Report”), which comprise: the Balance Sheet as at 31 December 2024; the Statement of profit or loss and other comprehensive income: Technical account – General business, the Statement of profit or loss and other comprehensive income: Non-technical account – General business, the Statement of changes in members’ balances, and the Statement of cash flows for the year then ended; and the notes to the syndicate annual accounts, which include a description of the significant accounting policies.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”), The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, the Lloyd’s Syndicate Instructions and other applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the syndicate annual accounts section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We remained independent of the syndicate in accordance with the ethical requirements that are relevant to our audit of the syndicate annual accounts in the UK, which includes the FRC’s Ethical Standard, as applicable to other entities of public interest, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided.

Other than those disclosed in note 7, we have provided no non-audit services to the syndicate in the period under audit.

19

Conclusions relating to going concern

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the syndicate’s ability to continue as a going concern for a period of at least twelve months from when the syndicate annual accounts are authorised for issue.

In auditing the syndicate annual accounts, we have concluded that the Managing Agent’s use of the going concern basis of accounting in the preparation of the syndicate annual accounts is appropriate.

However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the syndicate's ability to continue as a going concern.

Our responsibilities and the responsibilities of the Managing Agent with respect to going concern are described in the relevant sections of this report.

Reporting on other information

The other information comprises all of the information in the Annual Report other than the syndicate annual accounts and our auditors’ report thereon. The Managing Agent is responsible for the other information. Our opinion on the syndicate annual accounts does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.

In connection with our audit of the syndicate annual accounts, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the syndicate annual accounts or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the syndicate annual accounts or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.

With respect to the Managing agent’s report (the “Managing Agent’s Report”), we also considered whether the disclosures required by The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 have been included.

Based on our work undertaken in the course of the audit, The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 requires us also to report certain opinions and matters as described below.

Managing Agent’s Report

In our opinion, based on the work undertaken in the course of the audit, the information given in the Managing Agent’s Report for the year ended 31 December 2024 is consistent with the syndicate annual accounts and has been prepared in accordance with applicable legal requirements.

In light of the knowledge and understanding of the syndicate and its environment obtained in the course of the audit, we did not identify any material misstatements in the Managing Agent’s Report.

20

Responsibilities for the syndicate annual accounts and the audit

Responsibilities of the Managing Agent for the syndicate annual accounts

As explained more fully in the Statement of Managing Agent’s Responsibilities, the Managing Agent is responsible for the preparation of the syndicate annual accounts in accordance with the applicable framework and for being satisfied that they give a true and fair view. The Managing Agent is also responsible for such internal control as they determine is necessary to enable the preparation of syndicate annual accounts that are free from material misstatement, whether due to fraud or error.

In preparing the syndicate annual accounts, the Managing Agent is responsible for assessing the syndicate’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless it is intended for the syndicate to cease operations, or it has no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the syndicate annual accounts

Our objectives are to obtain reasonable assurance about whether the syndicate annual accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these syndicate annual accounts.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Based on our understanding of the syndicate and industry, we identified that the principal risks of non-compliance with laws and regulations related to breaches of regulatory principles, such as those governed by the Prudential Regulation Authority and the Financial Conduct Authority, and those regulations set by the Council of Lloyd’s, and we considered the extent to which non-compliance might have a material effect on the syndicate annual accounts. We also considered those laws and regulations that have a direct impact on the syndicate annual accounts such as The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and the Lloyd’s Syndicate Instructions. We evaluated management’s incentives and opportunities for fraudulent manipulation of the syndicate annual accounts (including the risk of override of controls), and determined that the principal risks were related to posting of inappropriate journals and management bias in accounting estimates. Audit procedures performed by the engagement team included:

●discussions with the Audit Committee, management and internal audit, including consideration of known or suspected instances of non-compliance with laws and regulation and fraud;

●evaluation and testing of the operating effectiveness of management's controls designed to prevent and detect irregularities;

●reviewing, and challenging where appropriate, the assumptions and judgements made by management in their significant accounting estimates, in particular in relation to the estimation of gross (and net) outstanding claims reserves, and estimated premium income;

●identifying and testing journal entries based on selected fraud risk criteria, in particular journal entries with unusual account combinations;

21

●evaluating the business rationale for any significant transactions identified outside the normal course of business; and

●designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing.

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the syndicate annual accounts. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

A further description of our responsibilities for the audit of the syndicate annual accounts is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.

Use of this report

This report, including the opinions, has been prepared for and only for the syndicate’s members as a body in accordance with part 2 of The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Other required reporting

Under The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 we are required to report to you if, in our opinion:

●we have not obtained all the information and explanations we require for our audit; or

●adequate accounting records have not been kept by the Managing Agent in respect of the syndicate; or

●certain disclosures of Managing Agent remuneration specified by law are not made; or

●the syndicate annual accounts are not in agreement with the accounting records.

We have no exceptions to report arising from this responsibility.

Other matter

We draw attention to the fact that this report may be included within a document to which iXBRL tagging has been applied. This auditors’ report provides no assurance over whether the iXBRL tagging has been applied in accordance with section 2 of the Lloyd’s Syndicate Instructions 2.0.

Sean Forster (Senior statutory auditor)

for and on behalf of PricewaterhouseCoopers LLP

Chartered Accountants and Statutory Auditors

London

6 March 2025

A blue signature on a white background

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22

Statement of profit or loss and other comprehensive income:

Technical account – General business

For the year ended 31 December 2024

Note

2024

£000

2023

£000

Gross premiums written

6

745,614

588,777

Outwards reinsurance premiums

(226,303)

(167,830)

Premiums written, net of reinsurance

519,311

420,947

Changes in unearned premium

18

Change in the gross provision for unearned premiums

(55,213)

(30,397)

Change in the provision for unearned premiums reinsurers’ share

14,378

14,417

Net change in provisions for unearned premiums

(40,835)

(15,980)

Earned premiums, net of reinsurance

478,476

404,967

Allocated investment return transferred from the non-technical account

10

35,582

36,723

Claims paid

18

Gross amount

(180,154)

(136,089)

Reinsurers’ share

42,344

46,078

Net claims paid

(137,810)

(90,011)

Change in the provision for claims

18

Gross amount

(234,514)

(145,474)

Reinsurers’ share

120,874

6,131

Net change in provisions for claims

(113,640)

(139,343)

Claims incurred, net of reinsurance

(251,450)

(229,354)

Net operating expenses

7

(147,917)

(125,509)

Balance on the technical account – general business

114,691

86,827

23

Statement of profit or loss and other comprehensive income: (cont’d)

Non-technical account – General business

For the year ended 31 December 2024

All results are attributable to continuing operations.

There are no other comprehensive income or expense other than those reported in the Income Statement, thus no Statement of Comprehensive Income has been prepared.

The accompanying notes from page

28

to

64

form an integral part of these financial statements.

Note

2024£000

2023£000

Balance on the technical account – general business

114,691

86,827

Investment income

10

36,775

18,813

Realised gains/(losses) on investments

10

2,926

(22,186)

Unrealised gains/(losses) on investments

10

(3,572)

40,297

Investment expenses and charges

10

(547)

(201)

Total investment return

35,582

36,723

Allocated investment return transferred to the general business technical account

(35,582)

(36,723)

Gain/(loss) on foreign exchange

13,832

(620)

Profit for the financial year

128,523

86,207

Total comprehensive income for the year

128,523

86,207

24

Balance sheet – Assets

As at 31 December 2024

Note

2024£000

2023£000

Financial investments

12

853,885

644,780

Deposits with ceding undertakings

47

338

Investments

853,932

645,118

Provision for unearned premiums

43,261

30,145

Claims outstanding

453,520

345,358

Reinsurers’ share of technical provisions

18

496,781

375,503

Debtors arising out of direct insurance operations

13

104,471

79,942

Debtors arising out of reinsurance operations

14

192,702

133,071

Other debtors

15

16,452

6,413

Debtors

313,625

219,426

Cash at bank and in hand

23

4,459

2,967

Other

30,118

27,780

Other assets

34,577

30,747

Deferred acquisition costs

16

56,171

41,179

Other prepayments and accrued income

6,395

5,656

Prepayments and accrued income

62,566

46,835

Total assets

1,761,481

1,317,629

25

Balance sheet (cont’d) – Liabilities

As at 31 December 2024

Note

2024£000

2023£000

Members’ balances

177,399

61,761

Total capital and reserves

177,399

61,761

Provision for unearned premiums

270,780

216,348

Claims outstanding

1,156,332

912,625

Technical provisions

18

1,427,112

1,128,973

Creditors arising out of direct insurance operations

20

10,284

803

Creditors arising out of reinsurance operations

21

91,316

86,678

Other creditors including taxation and social security

22

17,060

19,766

Creditors

118,660

107,247

Accruals and deferred income

38,310

19,648

Total liabilities

1,584,082

1,255,868

Total liabilities, capital and reserves

1,761,481

1,317,629

The Syndicate financial statements on pages 23 to 27 were approved by the board of Arch Managing Agency Limited on 4 March 2025 and were signed on its behalf by;

Hugh Sturgess

President and Chief Executive Officer

Arch Managing Agency Limited

6 March 2025

26

Statement of changes in members’ balances

For the year ended 31 December 2024

2024£000

2023£000

Members’ balances brought forward at 1 January

61,761

(34,034)

Total comprehensive income/(loss) for the year

128,523

86,207

Payments of profit to members’ personal reserve funds

(12,885)

-

Losses collected in relation to distribution on closure of underwriting year

-

9,588

Members’ balances carried forward at 31 December

177,399

61,761

27

Statement of cash flows

For the year ended 31 December 2024

Note

2024£000

2023£000

Cash flows from operating activities

Profit for the financial year

128,523

86,207

Adjustments:

Increase in gross technical provisions

290,542

176,080

Decrease in reinsurers’ share of gross

technical provisions

(112,600)

(1,027)

Decrease in debtors

(106,895)

(18,955)

Increase in creditors

20,515

42,275

Movement in other assets/liabilities

(2,802)

(875)

Investment return

(35,582)

(36,723)

Other

9,906

(1,927)

Net cash flows from operating activities

191,607

245,055

Cash flows from investing activities

Purchase of equity and debt instruments

(899,148)

(821,003)

Sale of equity and debt instruments

699,748

588,768

Investment income received

2,926

(22,186)

Other

-

2,559

Net cash flows from investing activities

(196,474)

(251,862)

Cash flows from financing activities

Distribution of profit

(12,885)

9,588

Other

12,885

(9,588)

Net cash flows from financing activities

-

Net decrease in cash and cash equivalents

(4,867)

(6,807)

Cash and cash equivalents at the beginning of the year

2,967

9,963

Foreign exchange on cash and cash equivalents

6,359

(189)

Cash and cash equivalents at the end of the year

0

4,459

2,967

28

Notes to the financial statements – (forming part of the financial statements)

1.General Information

The Syndicate transacts in the underwriting of general insurance and reinsurance business at Lloyd’s with underwriting capacity being provided by ASIL and various third-party capital providers. The address of the Managing Agent registered office is 60 Great Tower Street, London, EC3R 5AZ.

2.Statement of Compliance

The financial statements have been prepared in accordance with The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, applicable Accounting Standards in the United Kingdom and the Republic of Ireland, including Financial Reporting Standard 102 (FRS 102), Financial Reporting Standard 103 (FRS 103) in relation to insurance contracts, and the Lloyd’s Syndicate Accounts Instructions Version 2.0 as modified by the Frequently Asked Questions Version 1.1 issued by Lloyd’s.

The Syndicate financial statements have been prepared in compliance with the provisions of The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations relating to insurance groups.

3.Significant accounting policies

The significant accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

A.Basis of Preparation

These financial statements are prepared on a going concern basis, under the historical cost convention, as modified by the revaluation of certain financial assets and liabilities measured at fair value through profit and loss.

The preparation of financial statements in conformity with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Syndicate’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 5.

B.Restatement of Comparative Information

During 2024, Lloyd's introduced changes to the syndicate accounts process to rationalise and standardise financial reporting across the market. As a result, certain comparative information has been restated to ensure consistency with current year presentation and compliance with the Lloyd's Syndicate Accounts Instructions. The changes comprise:

29

Notes to the financial statements: (cont’d)

Reclassification change

Certain financial statement line items have been reclassified whilst the underlying amounts remain unchanged. The principal changes the re-classification of overseas deposits previously shown as a separate balance sheet item, to form part of other assets, the comparatives in note 4 and 12 have also been re-presented to align with the current period presentation.

Aggregation changes

To align with Lloyd's reporting requirements whilst maintaining FRS 102 compliance, certain items have been aggregated or disaggregated within the financial statements and related notes. This includes:

•Aggregated the realised gains and losses on investments into one line on the Statement of profit or loss. The comparative balances in note 10 remain unchanged.

•Aggregated Shares and other variable yield securities, Debt securities and other fixed-income securities and Participation in investment pool into one-line Financial Investments on Balance Sheet Assets. The comparative balances in note 12 remain unchanged.

C.Going Concern

The Directors of the Managing Agent have assessed the Syndicate’s ability to continue as a going concern by considering, amongst other things, the Syndicate’s reserve strength, available capital, future business plan and any expected material changes to its operations. Based on the assessment, they continue to adopt the going concern basis in preparing the financial statements.

D.Insurance Contracts

i.Classification

Contracts under which the Syndicate accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder are classified as insurance contracts.

ii.Recognition and measurement Revenue

Premiums written relate to business incepted during the year, together with any differences between booked premiums for prior years and those previously accrued and include estimates of premiums incepted but not yet received or notified to the Syndicate. Premiums written are shown gross of commission payable to intermediaries, and exclude taxes and duties levied on premiums.

The earned proportion of premiums is recognised as revenue. Premiums are earned from the date of inception of risk mostly on a time apportionment basis. In the opinion of the Directors of the managing agent the resulting earned portion is not materially different from one based on the pattern of incidence of risk. For lines of business where the earned proportion would be materially different a pattern based on incidence of risk is applied.

30

Notes to the financial statements: (cont’d)

Outwards Reinsurance

Outward reinsurance premiums are accounted for in the same accounting year as the premiums for the related direct insurance or inwards reinsurance business. Reinsurance contracts that operate on a ‘losses occurring’ basis are accounted for in full over the year of coverage, whilst ‘risk attaching’ policies are expensed using the same earnings year as the underlying premiums on a daily pro rata basis. The reinstatement premium is contingent on the claim amount. If no insured event occurs, no reinstatement premium is charged.

Reinsurance commission income

Commissions on reinsurance premiums are earned in a manner consistent with the recognition of the costs of the reinsurance, generally on a pro-rata basis over the terms of the policies reinsured.

Unearned premium provision

Unearned premiums represent the proportion of premiums written in the year that relate to unexpired terms of policies in force at the balance sheet date calculated on a time apportionment basis. In the opinion of the Directors of the managing agent the resulting provision is not materially different from one based on the pattern of incidence of risk. For lines of business where the earned proportion would be materially different a pattern based on incidence of risk is applied.

Claims

Claims incurred comprise notified claims and related expenses in the year together with changes in the estimates of what we ultimately expect to pay on claims based on facts and circumstances known at the balance sheet date. The insurance reserves include the Syndicate’s total cost of claims incurred but not reported (“IBNR”).

Claims outstanding comprise provisions for the Syndicate’s best estimate of the ultimate cost of settling all claims incurred but unpaid at the reporting date whether reported or not, and related internal and external claims handling expenses. Claims outstanding are assessed by reviewing individual reported claims and making allowance for claims incurred but not yet reported, the effect of both internal and external foreseeable events, such as changes in claims handling procedures, inflation, judicial trends, legislative changes and past experience and trends. Provisions for claims outstanding are not discounted. Adjustments to claims provisions established in prior periods are reflected in the financial statements of the period in which the adjustments are made and are disclosed separately if material. The methods used, and the estimates made, are reviewed regularly.

The Syndicate’s reserving policy is to use recognised actuarial techniques appropriate to the loss experience that exists. Where there is limited loss experience our choice of method has primarily been the expected loss method.

We select the initial expected loss and loss adjustment expense ratios based on information derived from our underwriters and actuaries during the initial pricing of the business, supplemented by industry data where appropriate. These ratios consider, amongst other things, rate changes and changes in terms and conditions that have been observed in the market.

For a given underwriting year, additional weight is given to the historic paid and incurred loss development methods in the reserving process, assuming that case reserving practices are consistently applied over time. This reserving process makes some key assumptions that historical paid and reported development patterns are stable.

For catastrophe-exposed business, our reserving process also includes the use of catastrophe models for known events, a heavy reliance on analysis of individual catastrophic events and management judgement. The development of property losses can be unstable, especially for policies characterised by high severity, low frequency losses.

31

Notes to the financial statements: (cont’d)

Reinsurance recoveries in respect of estimated claims incurred but not reported are booked in line with the underlying programme, adjusted to reflect changes in the nature and extent of the Syndicate’s reinsurance programme over time. An assessment is also made of the recoverability of reinsurance recoveries having regard to market data on the financial strength of each of the reinsurance companies. Reinsurance liabilities are primarily premiums payable for reinsurance.

Unexpired risk provision

Provision is made for unexpired risks arising from contracts where the expected value of claims and expenses attributable to the unexpired periods of policies in force at the balance sheet date exceeds the unearned premiums provision in relation to such policies (after the deduction of any deferred acquisition costs). The provision for unexpired risks is calculated by reference to classes of business which are managed together, after taking into account the future investment return on investments held to back the unearned premiums and unexpired claims provisions.

iii.Reinsurance assets and liabilities

The Syndicate cedes reinsurance in the normal course of business for the purpose of limiting its net loss potential through the diversification of its risks. Assets, liabilities and income and expense arising from ceded reinsurance contracts are presented separately from the assets, liabilities, income and expense from the related insurance contracts because the reinsurance arrangements do not relieve the Syndicate of its direct obligations to its policyholders.

Amounts due to and from reinsurers are accounted for in a manner consistent with the insured policies and in accordance with the relevant reinsurance contract. For general insurance business, reinsurance premiums are expensed over the period that the reinsurance cover is provided based on the expected pattern of the reinsured risks. The unexpensed portion of ceded reinsurance premiums is included in reinsurance assets.

Reinsurance assets are assessed for impairment at each balance sheet date. A reinsurance asset is deemed impaired if there is objective evidence, as a result of an event that occurred after its initial recognition, that the Syndicate may not recover all amounts due, and that the event has a reliably measurable impact on the amounts that the Syndicate will receive from the reinsurer. Impairment losses on reinsurance assets are recognised in the comprehensive income for the period.

iv.Deferred acquisition costs

Acquisition costs which represent commission and other related underwriting expenses are deferred over the year in which the related premiums are earned. The deferred expenses relate to underwriter salaries, office costs, and marketing which are deferred based on a ratio between bound and quoted policies by line of business. To the extent that acquisition costs are deferred and considered irrecoverable against the related unearned premiums, they are written off to net operating expenses as incurred.

The deferred acquisition cost represents the proportion of acquisition costs which corresponds to the proportion of gross premiums written that is unearned at the balance sheet date. The acquisition costs are expensed from the date of inception of risk on mostly a time apportionment basis. For lines of business where using a time apportionment basis would lead to a materially different result to applying a pattern based on incident of risk, the risk-based earning pattern is applied.

32

Notes to the financial statements: (cont’d)

E.Acquisition costs

Costs incurred in acquiring general insurance contracts are deferred. Acquisition costs include direct costs such as brokerage and commission, and indirect costs such as administrative expenses connected with the processing of proposals and the issuing of policies. The deferred acquisition cost asset represents the proportion of acquisition costs which corresponds to the proportion of gross premiums written that is unearned at the balance sheet date.

F.Reinsurance

The Syndicate assumes and cedes reinsurance in the normal course of business. Premiums and claims on reinsurance assumed are recognised in the technical account along the same basis as direct business, taking into account the product classification. Reinsurance premiums ceded and reinsurance recoveries on claims incurred are included in the respective expense and income accounts. Premiums ceded and claims reimbursed are presented on a gross basis in the technical account and statement of financial position as appropriate.

Reinsurance outwards premiums are earned according to the nature of the cover. ‘Losses occurring during’ policies are earned evenly over the policy period. ‘Risks attaching’ policies are expensed on the same basis as the inwards business being protected.

G.Foreign currencies

i.Functional and presentational currency

The Syndicate’s functional and reporting currency is pounds sterling.

These financial statements are presented in pounds sterling (“pounds” or “GBP”), which is the functional currency of the Syndicate, and are rounded to the nearest thousand unless otherwise stated.

ii.Foreign currency

The results and financial positions of the non-functional currencies are retranslated into the functional currency as follows:

•monetary assets and liabilities are retranslated at the closing rate at the balance sheet date;

•income and expenses are retranslated at the average rate of exchange during the year; and

•all resulting exchange differences are recognised through the non-technical account.

H.Financial assets and liabilities

The Syndicate has accounted for financial instruments using Sections 11 and 12 of FRS 102.

i.Classification

The accounting classification of financial assets and liabilities determines the way in which they are measured and changes in those values are presented in the statement of profit or loss and other comprehensive income. Financial assets and liabilities are classified on their initial recognition.

33

Notes to the financial statements: (cont’d)

The initial classification of a financial instrument shall take into account contractual terms including those relating to future variations. Once the classification of a financial instrument is determined at initial recognition, re-assessment is only required subsequently when there has been a modification of contractual terms that is relevant to an assessment of the classification.

Financial assets and financial liabilities at fair value through profit and loss comprise financial assets and financial liabilities held for trading and those designated as such on initial recognition. Investments in shares and other variable yield securities, units in unit trusts, and debt and other fixed income securities are designated as at fair value through profit or loss on initial recognition, as they are managed on a fair value basis in accordance with the Syndicate’s investment strategy.

The Syndicate does not hold any non-derivative financial assets or financial liabilities for trading purposes although derivatives (assets or liabilities) held by the Syndicate are categorised as held for trading.

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

ii.Recognition

Financial instruments are recognised when the Syndicate becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Syndicate’s contractual rights to the cash flows from the financial assets expire or if the Syndicate transfers the financial asset to another party without retaining control of substantially all risks and rewards of the asset. A financial liability is derecognised when its contractual obligations are discharged, cancelled or expired.

Regular way purchases and sales of financial assets are recognised and derecognised, as applicable, on the trade date, i.e., the date that the Syndicate commits itself to purchase or sell the asset.

iii.Measurement

A financial asset or financial liability is measured initially at fair value plus, for a financial asset or financial liability not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issue.

Financial assets at fair value through profit or loss are measured at fair value with fair value changes recognised immediately in profit or loss. Net gains or net losses on financial assets measured at fair value through profit or loss includes foreign exchange gains/losses arising on their translation to the functional currency but excludes interest and dividend income.

Loans and receivables and non-derivative financial liabilities are measured at amortised cost using the effective interest method, except Syndicate Loans to the Central Fund which are measured at fair value through profit or loss.

iv.Identification and measurement of impairment

At each reporting date the Syndicate assesses whether there is objective evidence that financial assets not at fair value through profit or loss are impaired. Financial assets are impaired when objective evidence demonstrates that a loss event has occurred after the initial recognition of an asset, and that the loss event has an impact on the future cash flows on the asset that can be estimated reliably.

34

Notes to the financial statements: (cont’d)

Objective evidence that financial assets are impaired includes observable data that comes to the attention of the Syndicate about any significant financial difficulty of the issuer, or significant changes in the technological, market, economic or legal environment in which the issuer operates.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

An impairment loss recognised on an amortised cost asset reduces directly the carrying amount of the impaired asset. All impairment losses are recognised in profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost the reversal is recognised in profit or loss.

v.Off-setting

Financial assets and financial liabilities are offset, and the net amount presented in the balance sheet when, and only when, the Syndicate currently has a legal right to set off the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

I.Investment return

Investment return comprises investment income and movements in unrealised gains and losses on financial instruments at fair value through profit or loss, less investment management expenses, interest expense, realised losses and impairment losses. Investment income comprises interest income, dividends receivable and realised investment gains.

Dividend income is recognised when the right to receive income is established. Usually this is the ex-dividend date for equity securities. Interest income on financial assets measured at amortised cost is recognised using the effective interest method. For the purpose of separately presenting investment income and unrealised gains and losses for financial assets at fair value through profit or loss, interest income is calculated using the effective interest method excluding transaction costs that are expensed when incurred. For investments at fair value through profit or loss, realised gains and losses represent the difference between the net proceeds on disposal and the purchase price. For investments measured at amortised cost, realised gains and losses represents the difference between the net proceeds on disposal and the latest carrying value (or if acquired after the last reporting date, the purchase price).

Unrealised investment gains and losses represent the difference between the fair value at the balance sheet date and the fair value at the previous balance sheet date, or purchase price if acquired during the year. Movements in unrealised investment gains and losses comprise the increase/decrease in the reporting period in the value of the investments held at the reporting date and the reversal of unrealised investment gains and losses recognised in earlier reporting periods in respect of investment disposals of the current period.

Investment return is initially recorded in the non-technical account. The return is transferred in full to the general business technical account to reflect the investment return on funds supporting underwriting business.

35

Notes to the financial statements: (cont’d)

J.Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or less. Bank overdrafts that are repayable on demand and form an integral part of the Syndicate’s cash management are included as a component of cash and cash equivalents.

K.Taxation

Under Schedule 19 of the Finance Act 1993 managing agents are not required to deduct basic rate income tax from trading income. In addition, all UK basic rate income tax deducted from Syndicate investment income is recoverable by managing agents and consequently the distribution made to members 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 United States Federal Income Tax payable on underwriting results or investment earnings. Any payments on account made by the Syndicate during the year have been included in the balance sheet under the heading ‘Other Debtors’.

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

L.Profit commission

The syndicate has a contractual commitment, if profitable, to pay a profit commission on the closing YOA to the Managing Agent of 17.5% of total profit at 36 months. On this basis, the Syndicate books an accrual based on the current 3-year funded position of each of the 2022, 2023 and 2024 YOA with the 2022 YOA element being settled in the first quarter of 2025.

No 2024 accrual has been made due to uncertainty of losses for Californian Wildfires.

M.Deposits with ceding undertakings

Deposits with ceding undertakings are funds held by Lloyd’s Europe on behalf of the Syndicate to settle Part VII claims. These funds are held at fair value in the balance sheet.

4.Risk and capital management

Introduction and overview

The Syndicate’s core business is to take risk and our mission is to generate a positive contribution to the growth in the Tangible Book Value (TBV) of our Members. We do this through our objective of maximising return on equity within a defined ‘risk appetite’. It is therefore essential that we understand the significant exposures we face to manage the business well. It is also important that our knowledge of those risks underpins every important decision we make across the Syndicate. The risks from our core business of insurance represent our most significant exposures.

A.Strategic risk

This is the risk that the Syndicate’s strategy is inappropriate or that the Syndicate is unable to implement its strategy. Where events supersede the Syndicate’s strategic plan this is escalated at the earliest opportunity through the Syndicate’s monitoring tools and governance structure.

36

Notes to the financial statements: (cont’d)

On a day-to-day basis, the Syndicate’s management structure encourages organisational flexibility and adaptability, while ensuring that activities are appropriately coordinated and controlled. Staff, management and outsourced service providers are expected to excel in service and quality. Individuals and teams are also expected to transact their activities in an open and transparent way. These behavioural expectations reaffirm our low risk tolerance by aligning interests of all stakeholders.

B.Insurance risk

Insurance risk arises from the possibility of an adverse financial result due to actual claims experience being different from that expected when an insurance product was designed and priced. The actual performance of insurance contracts is subject to the inherent uncertainty in the occurrence, timing and amount of the final insurance liabilities.

a. Underwriting risk

The process of selecting and pricing insurance risks is addressed through a framework of policies, procedures and internal controls. Risk selection is our business, and our procedures are designed to ensure that the evaluation of risk is transparent and logical. We have a clearly defined appetite for underwriting risk, which dictates our business plan.

To ensure that our risk appetite is not exceeded, we maintain disciplined underwriting, which is reviewed through quarterly underwriting meetings, regularly monitor closely our exposures to and aggregations of risk in particular places and buy reinsurance to limit our losses from disasters. We adapt our business plan, target products and reinsurance programme to ensure our book of business is well diversified. The Syndicate’s long-term underwriting strategy is to seek a diverse and balanced portfolio of risks in order to limit volatility. This is achieved by accepting a spread of business over time, segmented between different classes of business and geography.

The quality of our underwriting models and our capability to accurately measure our aggregate exposure are key to managing this risk. Our underwriters are given incentives to make sound decisions that are aligned with the Syndicate’s overall strategic objectives and risk appetite. Clear limits are also placed on their authority. We regularly review our policy wordings in the light of legal developments to ensure the Syndicate’s exposure is restricted, as far as possible, to those risks identified in the policy at the time it was issued.

The Syndicate has large aggregate exposures to natural and man-made catastrophic events. These risks are inherently uncertain as it is difficult to predict the timing of such events with statistical certainty or estimate the amount of loss which any given occurrence will generate. The Syndicate regularly monitors its exposure to catastrophic events, including earthquake, wind and terrorism, using a catastrophe modelling tool (Property, Terrorism and Onshore Energy), both locally and at Arch Group level. Additionally, the Syndicate regularly monitors its exposure to man-made realistic disaster scenarios.

The Syndicate seeks to limit its loss exposure by purchasing reinsurance to limit exposure to certain extreme events. The Syndicate monitors concentration risk through limiting its loss exposure by geographical and line of business diversification.

37

Notes to the financial statements: (cont’d)

The Syndicate’s largest exposures to natural catastrophe 1 in 250-year stress events, gross and net basis at 31 December 2024 are:

In common with all insurers, the Syndicate is exposed to price volatility. However, the Syndicate is firm in its resolve to exit business that is unlikely to generate underwriting profit. Additionally, the Syndicate alters its appetite for the lines of business and the layers it writes within them in response to market conditions.

The Syndicate writes a significant amount of premium income through coverholder arrangements to whom binding authority is given to accept risks on behalf of the Syndicate. This delegation is strictly controlled through tight underwriting guidelines and limits, and extensive monitoring, review and audits.

b. Reserving and Claims Risk

The Syndicate’s claims teams are focused upon 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 Syndicate’s broader interests. Our objective is to set prompt and accurate case reserves for all known claims’ liabilities, including provisions for expenses.

The Syndicate operates to a prudent best estimate reserving philosophy. Reserve estimates are derived by the internal actuary after consultation with individual underwriters, claims team, actuarial analysis of the loss reserve development and comparison with market benchmarks. The objective is to produce reliable and appropriate estimates that are consistent over time and across classes of business. The internal actuary’s loss assessments are peer reviewed by ACGL actuaries, and the reserves also are subject to review by external actuaries. Where legal disputes are reflected in the book’s history, reserves are established taking these into account. Larger disputes are reviewed individually in conjunction with the claims team and legal advice received. Reserves are not discounted for the time value of money.

Territory

Peril

Gross £m

Net

£m

North America

Earthquake

206.6

62.9

Caribbean

Cyclone

71.9

49.0

North America

Cyclone

215.6

48.2

East Asia

Earthquake

71.8

18.3

Oceania

Earthquake

33.0

15.3

North America

Inland Flood

21.2

13.4

West Asia

Earthquake

27.7

11.1

South America

Earthquake

13.3

10.5

Caribbean

Earthquake

16.5

10.2

Europe

Cyclone

35.7

8.7

38

Notes to the financial statements: (cont’d)

c. Ceded Reinsurance Risk

Reinsurance risk to the Syndicate arises where reinsurance contracts put in place to reduce gross insurance risk do not perform as anticipated, resulting in coverage disputes or prove inadequate in terms of the vertical or horizontal limits purchased. The Syndicate’s reinsurance programmes are determined from 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 2024, the Syndicate bought a combination of proportional and non-proportional reinsurance treaties and facultative reinsurance to reduce the maximum net exposure. The Syndicate aims to establish appropriate retention levels and limits of protection that are consistent with keeping within the Board’s risk tolerance and achieving the target rates of return. The efficacy of protection sought is assessed against the cost of reinsurance, taking into consideration current and expected market conditions.

The Syndicate’s reinsurance philosophy is to:

•Provide stable, sustainable core capacity for each product line with non-core reinsurance purchased when market conditions allow;

•Reduce volatility;

•Achieve a broad spread of well rated security;

•Purchase reinsurance to limit exposure from maximum line sizes and accumulations with Catastrophe limits purchased up to our risk appetite;

•Utilise the standard catastrophe model throughout ACGL;

•Comply with the guidance from the ACGL Security Committees;

•Apply common standards throughout ACGL;

•Consider hard and soft factors such as ability to pay and willingness to pay;

•Set cession limits by reinsurer and by lines of business; and

•Strive for 100% of security rated A- or higher. When this is not the case, we aim to have these collateralized per Note 26.

i.Sensitivity to insurance risk

The liabilities established could be significantly lower or higher than the ultimate cost of settling the claims arising. This level of uncertainty varies between the classes of business and the nature of the risk being underwritten and can arise from developments in case reserving for large losses and catastrophes, or from changes in estimates of claims IBNR.

The following table presents the sensitivity of the value of insurance liabilities disclosed in the accounts to potential movements in the assumptions applied within the technical

provisions. Given the nature of the business underwritten by the Syndicate, the approach to calculating the technical provisions for each class can vary and as a result the sensitivity performed is to apply a beneficial and adverse risk margin to the total insurance liability.

39

Notes to the financial statements: (cont’d)

General insurance business sensitivities as at 31 December 2024

Sensitivity

+5.0%£000

-5.0%£000

Claims outstanding – gross of reinsurance

57,817

(57,817)

Claims outstanding – net of reinsurance

35,141

(35,141)

General insurance business sensitivities as at 31 December 2023

Sensitivity

+5.0%£000

-5.0%£000

Claims outstanding – gross of reinsurance

45,631

(45,631)

Claims outstanding – net of reinsurance

28,363

(28,363)

C.Operational risk

Management continually reviews potential operational risk factors and has enacted controls to meet these. They have been classified as follows:

Operational Risk Classification

Description

People

Loss of staff (underwriting and key non-underwriting) or inability to recruit; issues concerning integrity and competence of staff, including training; succession; manual inputting error; lack of management supervision; inadequate performance and or failure of escalation to management; and data protection breach or loss.

Processes

Inappropriate underwriting; inappropriate claims and reserve handling; inappropriate reinsurance purchasing; inadequate performance or failure of a third-party supplier; inadequate segregation of duties; inadequate management information; weak processing controls; processes are insufficiently resilient, customers do not receive good outcomes, and failure of corporate governance.

Systems (including Cyber Attack)

Hardware/software failure; network telecommunications software; IT third-party provider inadequate performance or failure; inadequate virus protection; inadequate system or security information; insufficient or untested business continuity processes; insufficient processing capacity; system breach defects; and systems error.

External events, including physical security and business continuity

Natural or man-made disasters leading to business continuity threat; external financial crime, including theft or fraud; changes to the regulatory environment; external security breach; and power outage.

Outsourcing, including delegated underwriting

Inadequate performance or failure of an outsourced service provider, including breach of agreement.

Financial crime, including Anti-Money Laundering

Internal or external fraud; electronic crime; money laundering; terrorist financing; bribery and corruption; market abuse; and insider dealing.

Regulatory and Legal

Risk of loss resulting from failure to comply with regulation and legislation as well as prudent ethical standards and contractual obligations. It also includes the exposure to litigation and regulatory censure from all aspects of the Syndicate’s activities.

40

Notes to the financial statements: (cont’d)

The operational risk profile is reviewed by the Executive Risk Committee and the controls to mitigate the risks are included in the Risk Register. Risk owners are required to report to the Executive Risk Committee and review the relevant risks and are responsible for identifying new, emerging or changing risks and any subsequent control changes required to realign the risks with the risk appetite. When measuring operational risk, both quantitative factors, in the form of the probable loss, and qualitative factors, in the form of an assessment of the likely reputational impact or the ability of the Syndicate to deliver its service, are taken into account and contribute to determining the risk tolerance.

D.Financial risk

The focus of financial risk management for the Syndicate is ensuring that the proceeds from its financial assets are sufficient to fund the obligations arising from its insurance contracts. The goal of the investment management process is to optimise the risk-adjusted investment income and risk-adjusted total return by investing in a diversified portfolio of securities, whilst ensuring that the assets and liabilities are managed on a cash flow and duration matching basis.

a.Credit risk

Exposure to credit risk arises from financial transactions with counterparties including debtors, borrowers, brokers, policyholders, reinsurers, banks and guarantors. The Syndicate uses the credit ratings assigned to particular counterparties to measure credit risk. To lessen the risk of the Syndicate’s exposure to any particular reinsurer, exposure limits are approved. On behalf of the Syndicate, ACGL has developed processes to formally examine all reinsurers before entering into new business arrangements.

With regard to premium debtor risk, the Syndicate ensures that all brokers are subject to a due diligence protocol and that they have terms of business agreements in place. An approval system also exists for new brokers, and broker performance is regularly reviewed. System exception reports highlight trading with non-approved brokers, and the Syndicate’s credit control team regularly monitors the ageing and collectability of debtor balances. The Syndicate monitors all key counterparties, including exposures to banking counterparties, on an ongoing basis, and bank credit ratings and concentrations are also monitored at the Investment Committee.

The largest single reinsurer counterparty is Arch Reinsurance Limited in respect of the whole account quota share reinsurance. The reinsured claims outstanding in the credit distribution of reinsurance receivables table on Page 41 are included within the balance that has a credit rating of ‘A+’.

The Syndicate has established guidelines for its investment managers regarding the type, duration and quality of investments within the Syndicate guidelines. The performance of investment managers is regularly reviewed to confirm adherence to these guidelines.

i.Management of credit risk

The Syndicate’s credit risk in respect of debt securities is managed by placing limits on its exposure to a single counterparty, by reference to the credit rating of the counterparty. Financial assets are graded according to current credit ratings issued by rating agencies such as Standard and Poor’s. The Syndicate has a policy of investing mainly in government issued and government backed debts. The Syndicate does not currently invest new monies in speculative grade assets (i.e., those rated below BBB).

41

Notes to the financial statements: (cont’d)

The Syndicate limits the amount of cash and cash equivalents that can be deposited with a single counterparty and maintains an authorised list of acceptable cash counterparties.

The Syndicate’s exposure to intermediaries and reinsurance counterparties is monitored by the individual business units as part of their credit control processes.

All intermediaries must meet minimum requirements established by the Syndicate. The credit ratings and payment histories of intermediaries are monitored on a regular basis.

The Syndicate assesses the creditworthiness of all reinsurers by reviewing public rating information and by internal investigations. The impact of reinsurer default is regularly assessed and managed accordingly.

ii.Exposure to credit risk

The carrying amount of financial assets and reinsurance assets represents the maximum credit risk exposure. The Syndicate does not hold any collateral as security or purchase any credit enhancements (such as guarantees, credit derivatives and netting arrangements that do not qualify for offset).

The following table analyses the credit rating by investment grade of financial investments, debt securities and derivative financial instruments, reinsurers’ share of claims outstanding, amount due from intermediaries, amounts due from reinsurers in respect of settled claims, cash and cash equivalents, and other debtors and accrued interest.

Year 2024

AAA£000

AA£000

A£000

BBB£000

Other£000

Not rated£000

Total£000

Shares and other variable yield securities and units in unit trusts

-

8,564

-

8,564

Debt securities and other fixed income securities

140,453

80,091

172,341

147,631

-

540,516

Participation in investment pools

22,834

28,794

94,527

113,520

41,570

-

301,245

Syndicate loans to central fund

-

3,560

Deposits with ceding undertakings

-

47

-

47

Reinsurers’ share of claims outstanding

-

433,225

1,048

-

19,247

453,520

Debtors arising out of direct insurance operations

-

104,471

-

104,471

Debtors arising out of reinsurance operations

-

11,097

24

180,240

1,341

192,702

Cash at bank and in hand

-

4,459

-

4,459

Other debtors and accrued interest

-

22,847

Total

163,287

108,885

724,260

262,223

326,281

46,995

1,631,931

42

Notes to the financial statements: (cont’d)

Year 2023

AAA£000

AA£000

A£000

BBB£000

Other£000

Not rated£000

Total£000

Shares and other variable yield securities and units in unit trusts

-

16,548

-

16,548

Debt securities and other fixed income securities

152,667

89,456

161,942

139,247

-

543,312

Participation in investment pools

19,308

4,666

16,630

23,914

15,956

-

80,474

Syndicate loans to central fund

-

4,447

Deposits with ceding undertakings

-

338

-

338

Reinsurers’ share of claims outstanding

-

307,255

2,890

-

35,213

345,358

Debtors arising out of direct insurance operations

-

79,942

-

79,942

Debtors arising out of reinsurance operations

-

35,722

154

91,870

5,325

133,071

Cash at bank and in hand

-

2,967

-

2,967

Other debtors and accrued interest

-

12,069

Total

171,975

94,122

541,402

166,205

187,768

57,054

1,218,526

iii.Financial assets that are past due or impaired

The Syndicate has debtors arising from direct insurance and reinsurance operations that are past due but not impaired at the reporting date.

The Syndicate has no debtors arising from direct insurance operations that are impaired at the reporting date.

These debtors have been individually assessed for impairment by considering information such as the occurrence of significant changes in the counterparty's financial position, patterns of historical payment information and disputes with counterparties.

43

Notes to the financial statements: (cont’d)

An analysis of the carrying amounts of past due or impaired debtors is presented in the table below;

Neither past due nor impaired assets

Past due but not impaired assets

Gross value of impaired assets

Impairment allowance

Total

2024

£000

Shares and other variable yield securities and units in unit trusts

8,564

-

8,564

Debt securities and other fixed income securities

540,516

-

540,516

Participation in investment pools

301,245

-

301,245

Syndicate loans to central fund

3,560

-

3,560

Deposits with ceding undertakings

47

-

47

Reinsurers' share of claims outstanding

453,520

-

453,520

Debtors arising out of direct insurance operations

74,807

29,664

-

104,471

Debtors arising out of reinsurance operations

180,886

11,816

-

192,702

Other debtors and accrued interest

-

22,847

-

22,847

Cash at bank and in hand

4,459

-

4,459

Total

1,567,604

64,327

-

1,631,931

Neither past due nor impaired assets

Past due but not impaired assets

Gross value of impaired assets

Impairment allowance

Total

2023

£000

Shares and other variable yield securities and units in unit trusts

16,548

-

16,548

Debt securities and other fixed income securities

543,312

-

543,312

Participation in investment pools

80,474

-

80,474

Syndicate loans to central fund

4,447

-

4,447

Deposits with ceding undertakings

338

-

338

Reinsurers' share of claims outstanding

345,358

-

345,358

Debtors arising out of direct insurance operations

69,251

10,691

-

79,942

Debtors arising out of reinsurance operations

93,268

39,803

-

133,071

Other debtors and accrued interest

-

12,069

-

12,069

Cash at bank and in hand

2,967

-

2,967

Total

1,155,963

62,563

-

1,218,526

44

Notes to the financial statements: (cont’d)

The table below sets out the age analysis of financial assets that are past due but not impaired at the balance sheet date:

b.Liquidity risk

The Syndicate is exposed to daily calls on its available cash resources, principally from claims arising from its insurance business. Liquidity risk arises where cash may not be available to pay obligations when due and maintain a liquidity position. The Syndicate’s approach is to manage its cash flows so that it can reasonably survive a significant 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 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. Regular cash flow monitoring ensures that maturing deposits are sufficient to meet cash calls.

We run stress tests to estimate the impact of a major catastrophe on our cash position in order to identify any potential issues. We also run scenario analyses that consider the impact on our liquidity should a number of adverse events occur simultaneously, such as an economic downturn and declining investment returns combined with unusually high insurance losses.

Our investment policy recognises the demands created by our underwriting strategy, so that some investments may need to be realised before maturity or at short notice. Hence a high proportion of our investments are in liquid assets, which reduces our risk of making losses because we may have to sell assets quickly.

The nature of the Syndicate’s exposures to liquidity risk and its objectives, policies and processes for managing liquidity risk have not changed significantly from the prior year.

Past due but not impaired

0-3 months past due

3-6 months past due

6-12 months past due

Greater than 1 year past due

Total

2024

£000

Debtors arising out of direct insurance operations

18,530

4,898

6,236

-

29,664

Debtors arising out of reinsurance operations

2,066

1,658

8,092

-

11,816

Other debtors and accrued interest

-

22,847

-

22,847

Total

20,596

29,403

14,328

-

64,327

Past due but not impaired

0-3 months past due

3-6 months past due

6-12 months past due

Greater than 1 year past due

Total

2023

£000

Debtors arising out of direct insurance operations

6,721

3,259

711

-

10,691

Debtors arising out of reinsurance operations

4,215

803

34,785

-

39,803

Other debtors and accrued interest

-

12,069

-

12,069

Total

10,936

16,131

35,496

-

62,563

45

Notes to the financial statements: (cont’d)

i.Management of liquidity risk

The Syndicate’s approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when they fall due, under both normal and stressed conditions.

The Syndicate’s approach to managing its liquidity risk is as follows:

•Forecasts are prepared and revised on a regular basis to predict cash outflows from insurance contracts over the short, medium and long term;

•The Syndicate purchases assets with durations not greater than its estimated insurance contract outflows;

•Assets purchased by the Syndicate are required to satisfy specified marketability requirements;

•The Syndicate maintains cash and liquid assets to meet daily calls on its insurance contracts;

•The Syndicate holds significant committed borrowing facilities from a range of highly rated banks to enable cash to be raised in a relatively short time-span; and

•The Syndicate regularly updates its contingency funding plans to ensure that adequate liquid financial resources are in place to meet obligations as they fall due in the event of reasonably foreseeable abnormal circumstances.

ii.Maturity analysis of syndicate liabilities

The maturity analysis presented in the table below shows the remaining contractual maturities for the Syndicate’s insurance contracts and financial instruments. 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.

6

000

Undiscounted net cash flows

Year 2024

No maturity stated£000

0-1 yrs£000

1-3 yrs£000

3-5 yrs£000

>5 yrs£000

Total£000

Claims outstanding

-

541,825

264,763

153,847

195,897

1,156,332

Creditors

-

118,660

-

118,660

Total

-

660,485

264,763

153,847

195,897

1,274,992

000

Undiscounted net cash flows

Year 2023

No maturity stated£000

0-1 yrs£000

1-3 yrs£000

3-5 yrs£000

>5 yrs£000

Total£000

Claims outstanding

-

427,322

207,554

124,317

153,432

912,625

Creditors

-

107,246

-

107,246

Total

-

534,568

207,554

124,317

153,432

1,019,871

46

Notes to the financial statements: (cont’d)

c.Market risk

Our investment results are subject to a variety of risks, including changes in the business, financial condition or results of operations of the entities in which we invest, as well as changes in general economic conditions and overall market conditions. Valuations of investments are also exposed to potential loss from various market risks, including changes in equity prices, interest rates, and exchange rates.

The Syndicate’s primary investment objective is to preserve capital and to ensure adequate liquidity for settling policyholder claims, while also providing a return that meets or exceeds the total return of the assigned benchmark for each portfolio. Technical funds, those funds held for reserves, are invested primarily in high quality bonds and cash. The high quality and short duration of these funds allows the Syndicate to meet its aim of paying valid claims quickly. These funds, as far as possible, are maintained in the currency of the original premiums for which they are set aside to reduce foreign exchange risk.

Market risk also encompasses the risk of default of counterparties, which is primarily with issuers of bonds in which we invest. The Syndicate has established guidelines for its investment managers regarding the type, duration and quality of investments that may be made. The performance of investment managers is regularly reviewed to confirm adherence to these guidelines.

The value of the Syndicate’s fixed-income securities is inversely correlated to movements in market interest rates. If market interest rates fall, the fair value of the fixed-income investments would tend to rise and vice versa, assuming that credit spreads remain constant.

The sensitivity of the price of a bond is also closely correlated to its duration. The longer the duration of a security, the greater its price volatility.

The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk. The nature of the Syndicate exposures to market risk and its objectives, policies and processes for managing market risk have not changed significantly from the prior year.

i.Management of market risks

For each of the major components of market risk the Syndicate has policies and procedures in place which detail how each risk should be managed and monitored. The management of each of these major components of major risk and the exposure of the Syndicate at the reporting date to each major risk are addressed below.

ii.Interest rate risk

Interest rate risk is the risk that the fair value and/or future cash flows of a financial instrument will fluctuate because of changes in interest rates.

The Syndicate is exposed to interest rate risk through its investment portfolio, borrowings and cash and cash equivalents.

The risk of changes in the fair value of these assets is managed by primarily investing in short-duration financial investments and cash and cash equivalents. The Investment Committee monitors the duration of these assets on a regular basis, targeting an investment portfolio duration that, in the event of changes in interest rates, always maintains the internal capital requirements.

47

Notes to the financial statements: (cont’d)

iii.Currency risk

The Syndicate is exposed to currency risk in respect of liabilities under insurance policies and reinsurance recoverable debtors under reinsurance policies, denominated in currencies other than sterling.

The Syndicate writes business primarily in Sterling, US dollar, Euro, Canadian dollar, Australian dollar and Japanese Yen and is therefore exposed to currency risk arising from fluctuations in these exchange rates.

The Syndicate seeks to mitigate the risk by matching the estimated foreign currency denominated liabilities with assets denominated in the same currency. Assets and liabilities are appropriately matched and as such, the impact to the net result of the Syndicate through movements in the exchange rates are mitigated.

iv.Asset Liability Matching

The Syndicate reviews currency asset and liability positions on a regular basis. The currency net assets / (liabilities) positions denote the Syndicate’s foreign exchange risk as a result of the translation of subordinated currency positions that are different to the reporting currency of the Syndicate. The main subordinate trading currencies are USD, AUD, EUR, CAD and JPY. The following table describes the net assets / (liabilities) positions at the year end.

The table below summarises the carrying value of the Syndicate’s assets and liabilities, at the reporting date:

Sterling

US dollar

Euro

Canadian dollar

Australian dollar

Japanese Yen

Total

2024

£000

Investments

110,404

697,037

93

46,396

2

-

853,932

Reinsurers' share of technical provisions

15,472

477,932

1,522

253

601

1,001

496,781

Debtors

34,025

263,004

2,634

1,193

8,482

4,287

313,625

Other assets

(94,667)

3,173

52,318

14,978

57,861

914

34,577

Prepayments and accrued income

15,529

38,329

3,493

1,980

2,746

489

62,566

Total assets

80,763

1,479,475

60,060

64,800

69,692

6,691

1,761,481

Technical provisions

(88,046)

(

1

,

1

3

4

,

5

1

5

)

(80,041)

(38,960)

(48,570)

(36,980)

(

1

,

4

2

7

,

1

2

)

Creditors

(155,904)

(90,603)

54,526

45,259

32,541

(4,479)

(118,660)

Accruals and deferred income

(29,139)

(8,871)

(48)

(36)

(148)

(68)

(38,310)

Total liabilities

(273,089)

(

1

,

2

3

,

9

8

9

)

(25,563)

6,263

(16,177)

(41,527)

(

1

,

5

8

4

,

0

8

2

)

Total capital and reserves

(192,326)

245,486

34,497

71,063

53,515

(34,836)

177,399

48

Notes to the financial statements: (cont’d)

Sterling

US dollar

Euro

Canadian dollar

Australian dollar

Japanese Yen

Total

2023

£000

Investments

29,155

518,126

42,956

39,085

15,796

-

645,118

Reinsurers' share of technical provisions

24,593

343,928

2,927

1,205

1,430

1,420

375,503

Debtors

23,053

179,081

4,898

499

6,790

5,105

219,426

Other assets

7,774

3,641

289

5,802

12,706

535

30,747

Prepayments and accrued income

14,570

26,060

2,859

1,401

1,499

446

46,835

Total assets

99,145

1,070,836

53,929

47,992

38,221

7,506

1,317,629

Technical provisions

(82,760)

(878,426)

(62,570)

(28,703)

(33,434)

(43,080)

(

1

,

1

2

8

,

9

7

3

)

Creditors

(53,203)

(70,813)

15,221

2,119

6,230

(6,801)

(107,247)

Accruals and deferred income

(13,510)

(6,067)

(62)

59

9

(77)

(19,648)

Total liabilities

(149,473)

(955,306)

(47,411)

(26,525)

(27,195)

(49,958)

(

1

,

2

5

,

8

6

8

)

Total capital and reserves

(50,328)

115,530

6,518

21,467

11,026

(42,452)

61,761

v.Sensitivity analysis to market risks

The analysis below is performed for reasonably possible movements in market indices on financial instruments with all other variables held constant, showing the impact on the result before tax due to changes in fair value of financial assets and liabilities (whose fair values are recorded in the profit and loss account) and members’ balances.

2024Impact on results before tax£000

2024Impact on

members’

balances£000

2023Impact on results before tax£000

2023Impact on

members’

balances£000

Interest rate risk

+ 50 basis points shift in yield curves

(9,890)

(10,097)

- 50 basis points shift in yield curves

9,853

10,062

A 50 basis point increase (or decrease) in yield curves have been selected on the basis that these are considered to be reasonably possible changes in these risk variables over the following year.

The sensitivity analysis demonstrates the effect of a change in a key variable while other assumptions remain unchanged. However, the occurrence of a change in a single market factor may lead to changes in other market factors as a result of correlations.

The sensitivity analyses do not take into consideration that the Syndicate’s financial investments are actively managed. Additionally, the sensitivity analysis is based on the Syndicate’s financial position at the reporting date and may vary at the time that any actual market movement occurs. As investment markets move past pre-determined trigger points, action would be taken which would alter the Syndicate’s position.

49

Notes to the financial statements: (cont’d)

E.Regulatory risk

This risk is affected by changes in law and regulations which are not identified, understood, or are inappropriately and incorrectly interpreted, or adopted, or business practices are not efficiently modified. Further, there is a risk that current legal or regulatory requirements are not complied with. We have a constructive and open relationship with our regulators.

F.Conduct risk

Conduct risk describes the Syndicate’s behaviour that aims to provide appropriate products to the right group of consumers that achieve fair outcomes. The Syndicate’s approach starts with our strong culture which means we consider and understand the needs of our customers and form an important cultural base to getting this right. From a risk management perspective, we facilitated the development of the conduct objective, the conduct risk appetite and the standards required to remain within this risk appetite. We are able to extract conduct-related controls from the risk register to provide the Board with assurance that the expected behaviours towards customers are being demonstrated.

G.Reputational risk

Reputational risk is the risk of negative publicity as a result of the Syndicate’s contractual arrangements, customers, products, services and other activities. Key sources of reputational risk include operation of a Lloyd’s franchise and reliance upon the Arch brand in the United States, Europe and Australia. The Syndicate’s preference is to minimise reputational risks, but where it is not possible or beneficial to avoid them, we seek to minimise their frequency and severity by management through public relations and communication channels.

H.Capital risk

The Syndicate uses an Internal Capital Model for setting economic capital along with a number of other uses. The Syndicate follows a risk-based approach to determine the amount of capital required to support its activities. Recognised stochastic modelling techniques are used to measure risk exposures, and capital to support business activities is allocated according to risk profile. Stress and scenario analysis is regularly performed, and the results are documented and reconciled to the Board’s risk appetite where necessary.

i.Capital framework at Lloyd’s

The Society of Lloyd’s (Lloyd’s) is a regulated undertaking and subject to supervision by the Prudential Regulatory Authority (PRA) under the Financial Services and Markets Act 2000, and in accordance with the Solvency II Framework.

Within this supervisory framework, Lloyd’s applies capital requirements at member level and centrally to ensure that Lloyd’s would comply with the Solvency II requirements, and beyond that to meet its own financial strength, licence and ratings objectives.

Although, as described below, Lloyd’s capital setting processes use a capital requirement set at syndicate level as a starting point, the requirement to meet Solvency II and Lloyd’s capital requirements apply at overall and member level only respectively, not at syndicate level. Accordingly, the capital requirement in respect of Syndicate 1955 is not disclosed in these financial statements.

50

Notes to the financial statements: (cont’d)

ii.Lloyd’s capital setting process

In order to meet Lloyd’s requirements, each Syndicate is required to calculate its Solvency Capital Requirement (SCR) for the prospective underwriting year. This amount must be sufficient to cover a 1 in 200 year loss, reflecting uncertainty in the ultimate run-off of underwriting liabilities (SCR ‘to ultimate’).

The Syndicate must also calculate its SCR at the same confidence level but reflecting uncertainty over a one year time horizon (one year SCR) for Lloyd’s to use in meeting Solvency II requirements. The SCRs of each Syndicate are subject to review by Lloyd’s and approval by the Lloyd’s Capital and Planning Group.

A syndicate may be comprised of one or more underwriting members of Lloyd’s. Each member is liable for its own share of underwriting liabilities on the Syndicates on which it is participating but not other members’ shares. Accordingly, the capital requirements 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 loss ‘to ultimate’ for that member. Over and above this, Lloyd’s applies a capital uplift to the member’s capital requirement, known as the Economic Capital Assessment (ECA). The purpose of this uplift, which is a Lloyd’s not a Solvency II requirement, is to meet Lloyd’s financial strength, licence and ratings objectives. The capital uplift applied for 2024 was 35% (2023: 35%) of the member’s SCR ‘to ultimate’.

iii.Provision of capital by members

Each member may provide capital to meet its ECA either by (i) assets held in trust by Lloyd’s specifically for that member (Funds at Lloyd’s “FAL”), (ii) assets held and managed within a syndicate (Funds in Syndicate “FIS”), or (iii) as the member’s share of the 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 26, represent resources available to meet members’ and Lloyd’s capital requirements.

iv.Capital management

The Board of AMAL has in place policies and procedures for managing compliance with regulatory capital requirements and its own capital management objective. This objective is to balance risk and return while maintaining economic and regulatory capital in accordance with risk appetite. The Board of AMAL has no appetite for the Syndicate failing to maintain sufficient capital. To this end, AMAL recalculates its ECA routinely at different points during the annual business cycle and may also recalculate the ECA on an ad hoc basis if the risk management framework identifies significant changes to the risk profile, or as required by the Board.

51

Notes to the financial statements: (cont’d)

I.Emerging risk

Identifying, planning for and controlling emerging risks is an important part of our risk management activity across all aspects of our business, including underwriting, operations and strategy. We make a significant effort to try to identify material emerging threats to the Syndicate. It is a core responsibility of each of our committees and we believe we take all reasonable steps to minimise the likelihood and impact of emerging risks and to prepare for them in case they occur.

5.Critical Accounting Judgements and Estimation Uncertainty

The preparation of the financial statements in conformity with the Generally Accepted Accounting Practice in the UK (“UK GAAP”), requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates and judgements.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. These disclosures supplement the commentary on insurance and financial risk management in the Outlook and Future Developments section.

i.Key sources of estimation uncertainty

The areas of the Syndicate’s business containing key sources of estimation uncertainty include the measurement of insurance and reinsurance assets and liabilities at the balance sheet date. The most significant of these involves the valuation of outstanding claims and, in particular, the provision for claims incurred but not reported.

The processes used to determine the assumptions on which the measurement of insurance contract provisions is based, actual assumptions used, the effects of changes in assumptions, and an analysis of sensitivity to changes in assumptions are described below.

ii.Process used to determine the assumptions for measuring insurance contracts

Claims Outstanding, i.e. loss reserves for the Syndicate are comprised of (1) estimated amounts for claims reported (“case reserves”) and (2) IBNR losses. Claims personnel determine whether to establish a case reserve for the estimated amount of the ultimate settlement of individual claims. The estimate reflects the judgement of claims personnel based on general corporate reserving practices, the experience and knowledge of such personnel regarding the nature and value of the specific type of claim and, where appropriate, advice of counsel. The Syndicate also contracts with a number of outside third-party administrators in the claims process who, in certain cases, have limited authority to establish case reserves. The work of such administrators is reviewed and monitored by our claims’ personnel.

52

Notes to the financial statements: (cont’d)

Loss Reserves are also established to provide for loss adjustment expenses and represent the estimated expense of settling claims, including legal and other fees and the general expenses of administering the claims adjustment process. Periodically, adjustments to the reported or case reserves may be made as additional information regarding the claims is reported or payments are made. IBNR reserves are established to provide for incurred claims which have not yet been reported to an insurer or reinsurer at the balance sheet date, as well as to adjust for any projected variance in case reserving. IBNR reserves are derived by subtracting paid losses and loss adjustment expenses and case reserves from estimates of ultimate losses and loss adjustment expenses. Actuaries estimate ultimate losses and loss adjustment expenses using various generally accepted actuarial methods applied to known losses and other relevant information. Like case reserves, IBNR reserves are adjusted as additional information becomes known or payments are made. The process of estimating reserves involves a considerable degree of judgement by management and, as of any given date, is inherently uncertain.

Ultimate losses and loss adjustment expenses are generally determined by extrapolation of claim emergence and settlement patterns observed in the past that can reasonably be expected to persist into the future. The Syndicate uses several methods for determining its reserves. These methods generally fall into one of the following categories or are hybrids of one or more of the following categories:

Expected loss methods – these methods are based on the assumption that ultimate losses vary proportionately with premiums. Expected loss and loss adjustment expense ratios are typically developed based upon the information derived by underwriters and actuaries during the initial pricing of the business, supplemented by industry data available from organisations, such as statistical bureau and consulting firms, where appropriate. These ratios consider, among other things, rate increases and changes in terms and conditions that have been observed in the market. Expected loss methods are useful for estimating ultimate losses and loss adjustment expenses in the early years of long-tailed lines of business, when little or no paid or incurred loss information is available and is commonly applied when limited loss experience exists for a syndicate.

Historical incurred loss development methods – these methods assume that the ratio of losses in one period to losses in an earlier period will remain constant in the future. These methods use incurred losses (i.e. the sum of cumulative historical loss payments plus outstanding case reserves) over discrete periods of time to estimate future losses. Historical incurred loss development methods may be preferable to historical paid loss development methods because they explicitly take into account open cases and the claims adjusters’ evaluations of the cost to settle all known claims. However, historical incurred loss development methods necessarily assume that case reserving practices are consistently applied over time. Therefore, when there have been significant changes in how case reserves are established, using incurred loss data to project ultimate losses may be less reliable than other methods.

Bornhuetter-Ferguson (“B-F”) paid and incurred loss methods – these methods utilise actual paid and incurred losses and expected patterns of paid and incurred losses, taking the initial expected ultimate losses into account to determine an estimate of expected ultimate losses. The B-F paid and incurred loss methods are useful when there are few reported claims and a relatively less stable pattern of reported losses.

53

Notes to the financial statements: (cont’d)

Additional analyses – other methodologies are often used in the reserving process for specific types of claims or events, such as catastrophic or other specific major events. These include vendor catastrophe models, which are typically used in the estimation of Loss Reserves at the early stage of known catastrophic events before information has been reported to an insurer or reinsurer, and analyses of specific industry events, such as large lawsuits or claims. The selection of a method to determine the Syndicate’s reserves is driven by not only the characteristics of the lines of business, but also by the development stage of the years of account and the availability, credibility and relevance (for future projection) of in-house or benchmark data. For short-tail lines of business, such as Property and Offshore Operating, reserves will mostly be calculated using the expected loss ratio method for the most recent year of account, unless early loss experience necessitates an upward deviation, before moving to the more data-driven methods for more mature years. For long-tail lines of business, typically the Casualty and D&O classes, reflecting slower loss emergence and settlement, the expected loss ratio method is usually applied for longer than 1 year, unless early loss experience necessitates an upward deviation, before allowing for benign claims experience using more data-driven methods.

Ukraine war – We continue to closely monitor the ongoing war in Ukraine. The Syndicate has exposure to the war in Ukraine, in particular from policies covering political violence and war. This exposure is protected by reinsurance where gross losses are expected to be covered by the reinsurance in place. The current estimate of potential losses included within our net reserves for the war in Ukraine for the year ended 31 December 2024 are £16.0m (2023: £12.3m). The Syndicate has been negatively impacted by adverse development, resulting in strengthening of specific reserves in relation to Ukraine losses during the calendar year, largely on 2021 year of account, on both gross and net basis.

The premium written on a number of classes of business have been impacted following the introduction of international sanctions in 2024.

Inflation risk – We assess the expected impact of inflation on the booked reserves using a multi-year cash flow approach. Our approach estimates the impact of economic inflation on the expected claims frequency and severity of the in-force business, recognising that different insurance classes are affected differently by economic inflation. The expected impact on reserves is compared to an independent actuarial review to ensure our reserve surplus versus said independent actuarial remains within our risk appetite.

iii.Estimated Premium Income

Premium estimates are made in respect of binder accruals and inwards reinsurance contracts. Estimates are used where reporting on actual written premiums has not been received on a timely basis. The estimate is based on a combination of previous years binders or contracts, adjusted for changes in market developments, higher or lower projections on ultimate premiums being written and discussions with the coverholder or insurer about how much additional premium is expected to be reported. These estimates are monitored on an ongoing basis by underwriting teams, actuarial and finance. Estimates are also used in respect of inwards reinsurance reinstatement premiums.

These are based on the loss reserves calculated on a loss event basis and the corresponding reinstatement rates within the line of business impacted.

The value of the premium in relation to inwards reinsurance contracts yet to be signed is £139.4m (2023: £106.6m).

54

Notes to the financial statements: (cont’d)

6.Analysis of underwriting result

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

2024

Gross premiums written£000

Gross premiums earned£000

Gross claims incurred£000

Gross operating expenses£000

Reinsurance balance£000

Underwriting result£000

Direct insurance

Accident and health

6,957

7,316

(3,661)

(3,021)

(194)

440

Marine, aviation, and transport

22,900

18,122

(12,078)

(10,436)

1,303

(3,089)

Fire and other damage to property

84,254

65,953

(27,648)

(38,562)

5,018

4,761

Third party liability

103,975

92,780

(46,768)

(36,196)

(7,306)

2,510

Credit and suretyship

10,961

10,944

(4,438)

(3,811)

(252)

2,443

Total direct insurance

229,047

195,115

(94,593)

(92,026)

(1,431)

7,065

Reinsurance acceptances

516,567

495,286

(320,075)

(68,900)

(34,266)

72,045

Total

745,614

690,401

(414,668)

(160,926)

(35,697)

79,110

The below is an additional disclosure for Lloyd’s reporting purposes and is included to facilitate the classification of the above segments into the Lloyd’s aggregate classes of business:

2024

Gross premiums written£000

Gross premiums earned£000

Gross claims incurred£000

Gross operating expenses£000

Reinsurance balance£000

Underwriting result£000

Additional analysis

Fire and damage to property of which is:

Specialities

71,724

53,844

(16,912)

(35,658)

4,320

5,594

Energy

12,530

12,109

(10,736)

(2,904)

698

(833)

Third party liability of which is:

Energy

103,975

92,780

(46,768)

(36,196)

(7,306)

2,510

2023

Gross premiums written£000

Gross premiums earned£000

Gross claims incurred£000

Gross operating expenses£000

Reinsurance balance£000

Underwriting result£000

Direct insurance

Accident and health

28,124

18,380

(9,155)

(9,232)

425

418

Marine, aviation, and transport

19,174

15,345

(8,582)

(6,128)

1,305

1,940

Fire and other damage to property

58,845

58,469

(33,083)

(19,412)

(6,783)

(809)

Third party liability

89,318

100,471

(50,051)

(38,016)

1,954

14,358

Credit and suretyship

10,774

7,579

(2,223)

(3,887)

411

1,880

Total direct insurance

206,235

200,244

(103,094)

(76,675)

(2,688)

17,787

Reinsurance acceptances

382,542

358,136

(178,469)

(66,486)

(80,864)

32,317

Total

588,777

558,380

(281,563)

(143,161)

(83,552)

50,104

55

Notes to the financial statements: (cont’d)

The below is an additional disclosure for Lloyd’s reporting purposes and is included to facilitate the classification of the above segments into the Lloyd’s aggregate classes of business:

2023

Gross premiums written£000

Gross premiums earned£000

Gross claims incurred£000

Gross operating expenses£000

Reinsurance balance£000

Underwriting result£000

Additional analysis

Fire and damage to property of which is:

Specialities

40,399

32,213

(16,579)

(13,881)

(2,168)

(415)

Energy

18,446

26,256

(16,504)

(5,531)

(4,615)

(394)

Third party liability of which is:

Energy

89,318

100,471

(50,051)

(38,016)

1,954

14,358

No gains or losses were recognised in profit or loss during the year on buying reinsurance (2023: £nil).

The gross premiums written for direct insurance by underwriting location of risk is presented in the table below:

2024£000

2023£000

United Kingdom

98,835

114,124

European Union Member States

20

-

US

79,272

59,903

Rest of the world

50,920

32,208

Total gross premiums written

229,047

206,235

7.Net operating expenses

2024£000

2023£000

Acquisition costs

129,301

97,112

Change in deferred acquisition costs

(14,785)

(10,312)

Administrative expenses

28,199

30,504

Members’ standard personal expenses

32,468

25,857

Reinsurance commissions and profit participation

(27,266)

(17,652)

Net operating expenses

147,917

125,509

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

2024£000

2023£000

Total commission for direct insurance business

42,628

31,673

56

Notes to the financial statements: (cont’d)

Administrative expenses include:

2024£000

2023£000

Auditors’ remuneration:

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

388

338

fees payable to the Syndicate’s auditor and its associates in respect of other services pursuant to legislation

158

145

8.Key management personnel compensation

The directors of Arch Managing Agency Limited received the following aggregate remuneration charged to the Syndicate:

2024£000

2023£000

Directors’ emoluments

2,488

2,315

The active underwriter received the following aggregate remuneration charged to the Syndicate.

9.Staff numbers and costs

The average number of persons employed by Arch Europe Insurance Services Ltd (“AEIS”) and Arch Underwriters Europe Ltd (“AUEL”), but working for the Syndicate during the year, analysed by category, was as follows:

Number of employees

2024

2023

Administration and finance

106

109

Underwriting

49

40

Claims

9

7

Total

164

156

The Managing Agent has a service and secondment agreement with AEIS and AUEL, whereby staff employed by AEIS and AUEL are provided to the Managing Agent.

2024£000

2023£000

Wages and salaries

23,431

16,686

Social security costs

2,383

2,118

Other pension costs

1,491

1,325

Total

27,305

20,129

2024£000

2023£000

Emoluments

288

277

57

Notes to the financial statements: (cont’d)

10.Investment return

2024£000

2023£000

Interest and similar income

From financial assets designated at fair value through profit or loss

Interest and similar income

39,423

18,400

Interest on cash at bank

1,176

888

Other income from investments

From financial assets designated at fair value through profit or loss

Gains on the realisation of investments

12,808

1,131

Losses on the realisation of investments

(9,882)

(23,317)

Unrealised gains on investments

(3,224)

43,507

Unrealised losses on the investments

(348)

(3,210)

Other relevant gains/(losses)

(3,824)

(475)

Investment management expenses

(547)

(201)

Total investment return

35,582

36,723

Transferred to the technical account from the non-technical account

35,582

36,723

The investment return was wholly allocated to the technical account.

11.Distribution and open years of account

A distribution of £54.7m to members will be proposed in relation to the closing year of account (

2022

) (2023: £12.9m in relation to the closing year of account (

2021

)).

12.Financial investments

Carrying value

Cost

2024£000

2023£000

2024£000

2023£000

Shares and other variable yield securities and units in unit trusts

8,564

16,548

8,564

16,548

Debt securities and other fixed income securities

540,516

543,312

531,093

546,130

Participation in investment pools

301,245

80,473

300,151

78,491

Syndicate loans to central fund

3,560

4,447

3,691

4,749

Total financial investments

853,885

644,780

843,499

645,918

58

Notes to the financial statements: (cont’d)

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

2024£000

2023£000

Financial assets measured at fair value through profit or loss

853,885

644,780

Total financial investments

853,885

644,780

The Syndicate classifies its financial instruments held at fair value in its balance sheet using a fair value hierarchy based on the inputs used in the valuation techniques as follows:

•Level 1 – financial assets that are measured by reference to published quotes in an active market. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’s length basis.

•Level 2 – financial assets measured using a valuation technique based on assumptions that are supported by prices from observable current market transactions. For example, assets for which pricing is obtained via pricing services but where prices have not been determined in an active market, financial assets with fair values based on broker quotes, investments in private equity funds with fair values obtained via fund managers and assets that are valued using the Syndicate’s own models whereby the significant inputs into the assumptions are market observable.

•Level 3 – financial assets measured using a valuation technique (model) based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data. Therefore, unobservable inputs reflect the Syndicate's own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). These inputs are developed based on the best information available, which might include the Syndicate’s own data.

The table below analyses financial instruments held at fair value in the Syndicate’s balance sheet at the reporting date by its level in the fair value hierarchy:

2024

Level 1£000

Level 2£000

Level 3£000

Assets held at amortised cost

Total£000

Shares and other variable yield securities and units in unit trusts

8,564

-

8,564

Debt securities and other fixed income securities

74,184

466,332

-

540,516

Participation in investment pools

301,245

-

301,245

Syndicate loans to central fund

-

3,560

-

3,560

Total financial investments

383,993

466,332

3,560

-

853,885

Total

383,993

466,332

3,560

-

853,885

59

Notes to the financial statements: (cont’d)

2023

Level 1£000

Level 2£000

Level 3£000

Assets held at amortised cost

Total£000

Shares and other variable yield securities and units in unit trusts

16,548

-

16,548

Debt securities and other fixed income securities

60,569

482,743

-

543,312

Participation in investment pools

80,473

-

80,473

Syndicate loans to central fund

-

4,447

-

4,447

Total financial investments

157,590

482,743

4,447

-

644,780

Total

157,590

482,743

4,447

-

644,780

13.Debtors arising out of direct insurance operations

2024£000

2023£000

Due within one year

104,471

79,942

Total

104,471

79,942

14.Debtors arising out of reinsurance operations

2024£000

2023£000

Due within one year

192,702

133,071

Total

192,702

133,071

15.Other debtors

2024£000

2023£000

Other related party balances (non-syndicate)

-

5,287

Amounts due from members

1,417

1,126

Other

15,035

-

Total

16,452

6,413

60

Notes to the financial statements: (cont’d)

16.Deferred acquisition costs

The table below shows changes in deferred acquisition costs assets from the beginning of the period to the end of the period:

2024

2023

Gross£000

Reinsurance£000

Net£000

Gross£000

Reinsurance£000

Net£000

Balance at 1 January

41,179

(6,333)

34,846

32,873

(3,547)

29,326

Incurred deferred acquisition costs

143,359

(33,436)

109,923

107,015

(25,323)

81,692

Amortised deferred acquisition costs

(128,574)

30,351

(98,223)

(96,703)

21,487

(75,216)

Foreign exchange movements

116

198

314

(2,556)

1,050

(1,506)

Other

91

-

91

550

-

550

Balance at 31 December

56,171

(9,220)

46,951

41,179

(6,333)

34,846

17.Claims development

The following tables illustrate the development of the estimates of earned ultimate cumulative claims incurred, including claims notified and IBNR, for each successive underwriting year, illustrating how amounts estimated have changed from the first estimates made.

As these tables are on an underwriting year basis, there is an apparent large increase from amounts reported for the end of the underwriting year to one year later as a large proportion of premiums are earned in the year of account’s second year of development.

Balances have been translated at exchange rates prevailing at 31 December 2024 in all cases.

Gross:

2019

2020

2021

2022

2023

2024

Total

Pure underwriting year

£000

Estimate of gross claims

at end of underwriting year

124,872

112,452

153,722

271,925

161,732

290,924

one year later

238,261

186,186

280,585

380,546

271,824

two years later

255,628

220,453

275,871

395,027

three years later

254,750

228,160

281,851

four years later

258,053

224,415

five years later

262,382

Estimate of gross claims reserve

262,382

224,415

281,851

395,027

271,824

290,924

1,726,423

Provision in respect of prior years

Less gross claims paid

(186,100)

(117,176)

(110,014)

(110,455)

(33,719)

(12,627)

(570,091)

Gross claims reserve

76,282

107,239

171,837

284,572

238,105

278,297

1,156,332

61

Notes to the financial statements: (cont’d)

Net:

2019

2020

2021

2022

2023

2024

Total

Pure underwriting year

£000

Estimate of net claims

at end of underwriting year

50,088

103,591

88,522

131,519

124,126

129,719

one year later

122,902

142,848

156,467

226,092

216,066

two years later

130,803

140,520

182,042

248,978

three years later

125,613

144,191

182,544

four years later

129,439

149,299

five years later

136,070

Estimate of net claims reserves

136,070

149,299

182,544

248,978

216,066

129,719

1,062,676

Provision in respect of prior years

Less net claims paid

(92,600)

(81,102)

(74,480)

(75,139)

(28,485)

(8,058)

(359,864)

Net claims reserve

43,470

68,197

108,064

173,839

187,581

121,661

702,812

18.Technical provisions

The table below shows changes in the insurance contract liabilities and assets from the beginning of the period to the end of the period.

2024

2023

Gross provisions£000

Reinsurance

Assets£000

Net£000

Gross provisions£000

Reinsurance

Assets£000

Net£000

Claims outstanding

Balance at 1 January

912,625

(345,358)

567,267

813,594

(376,115)

437,479

Claims paid during the year

(180,154)

42,344

(

1

3

7

,

8

1

0

)

(136,089)

46,078

(90,011)

Expected cost of current year claims

444,965

(163,219)

281,746

291,962

(52,208)

239,754

Change in estimates of prior year provisions

(30,298)

-

(30,298)

(10,400)

-

(10,400)

Foreign exchange movements

(19,864)

22,374

2,510

(72,970)

45,824

(27,146)

Other

29,058

(9,661)

19,397

26,528

(8,937)

17,591

Balance at 31 December

1,156,332

(453,520)

702,812

912,625

(345,358)

567,267

62

Notes to the financial statements: (cont’d)

2024

2023

Gross provisions£000

Reinsurance

Assets£000

Net£000

Gross provisions£000

Reinsurance

Assets£000

Net£000

Unearned premiums

Balance at 1 January

216,348

(30,145)

186,203

201,681

(21,344)

180,337

Premiums written during the year

745,614

(226,303)

519,311

588,777

(167,830)

420,947

Premiums earned during the year

(690,401)

211,925

(

4

7

8

,

4

7

6

)

(558,381)

153,413

(404,968)

Foreign exchange movements

(1,621)

1,207

(414)

(16,736)

5,642

(11,094)

Other

840

55

895

1,007

(26)

981

Balance at 31 December

270,780

(43,261)

227,519

216,348

(30,145)

186,203

Refer to Note 4 for the sensitivity analysis performed over the value of insurance liabilities, disclosed in the accounts, to potential movements in the assumptions applied within the technical provisions.

19.Discounted claims

There were no (2023: £nil) claims discounted during the period.

20.Creditors arising out of direct insurance operations

2024£000

2023£000

Due within one year

10,284

803

Total

10,284

803

21.Creditors arising out of reinsurance operations

2024£000

2023£000

Due within one year

91,316

86,678

Total

91,316

86,678

22.Other creditors

2024£000

2023£000

Other related party balances (non-syndicates)

11,060

19,766

Other liabilities

6,000

-

Total

17,060

19,766

63

Notes to the financial statements: (cont’d)

23.Cash and cash equivalents

2024£000

2023£000

Cash at bank and in hand

4,459

2,967

Total cash and cash equivalents

4,459

2,967

24.Analysis of net debt

At 1 January 2024

Cash flows

Acquired

Fair value and exchange movements

Non-cash changes

At 31 December 2024

Cash and cash equivalents

2,967

(4,867)

-

6,359

-

4,459

Total

2,967

(4,867)

-

6,359

-

4,459

25.Related parties

Arch Companies:

Syndicate 1955 is managed by AMAL. The Directors of AMAL regard ACGL, a company incorporated in Bermuda, as the ultimate holding company and controlling party. This is the largest company into which the Syndicate’s results are consolidated. Copies of the consolidated financial statements of ACGL can be obtained from The Secretary. Arch Reinsurance Limited is the smallest company into which the Syndicate’s results are consolidated.

A Managing Agency fee of £6.4m (2023: £5.5m) was payable from the Syndicate to the Agency during the year.

During 2024, Arch Re Europe contributed gross written premium of £0.1m (2023: £0.2m) and Syndicate 1955 entered into an outwards reinsurance contract with the following Group companies: Arch Re Ltd which resulted in ceded written premium of £90.1m (2023: £46.1m), with paid recoveries of £13m (2023: £22.7m) and Somers Re Ltd which resulted in ceded written premium of £0.1m (2023: £nil).

These disclosure requirements are in addition to the requirement to disclose key management personnel compensation. This disclosure is given in note

8

.

26.Off-balance sheet items

As at 31 December 2024, the Syndicate had received £149.0m of collateral (2023: £121.3m) from reinsurers with ratings lower than A-. Other than this, the Syndicate has not been party to any arrangement, not reflected in its balance sheet, where material risks or benefits arise for the Syndicate.

64

Notes to the financial statements: (cont’d)

27.Post balance sheet events

The amounts that are proposed to be transferred to members are disclosed in note

11

. On 1 January 2025 the Syndicate accepted into the 2023 YOA, via Reinsurance to Close (“RITC”), the 2022 YOA.

The developing California Wildfires event, which occurred in January 2025, continues to be closely monitored by the Syndicate. The Syndicate has exposure, in particular from policies covering Property Treaty and Fine Art & Specie. This exposure to Property Treaty is largely protected by reinsurance where gross losses are expected to be significantly covered by the reinsurance in place. The Fine Art & Species line of business is written as part of a 20% split stamp agreement with Syndicate 2012. The current estimate of potential losses are not yet known and the Syndicate will continue to assess the impact of this event during 2025 on both the 2024 and 2025 years of account.

28.Foreign exchange rates

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

2024

2023

Start of period rate

End of period

rate

Average

rate

Start of period rate

End of period rate

Average

rate

Sterling

1.00

Euro

1.15

1.21

1.13

1.15

US dollar

1.27

1.25

1.26

1.20

1.27

1.24

Canadian dollar

1.68

1.80

1.79

1.63

1.68

Australian dollar

1.87

2.02

1.99

1.77

1.87

1.89

Japanese Yen

179.72

196.83

193.86

158.72

179.72

182.54

29.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.

65

Syndicate 1955

Underwriting Year Accounts

Closed 2022 Year of Account

31 December 2024

66

Statement of managing agent’s responsibilities

The Directors are responsible for preparing the Syndicate Underwriting Year Accounts in accordance with applicable law and regulations.

The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 require the Agency to prepare Syndicate Underwriting Year Accounts at 31 December each year in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The Syndicate Underwriting Year Accounts are required by law to give a true and fair view of the state of affairs of the Syndicate as at that date and of its profit or loss for that year. In preparing the Syndicate Underwriting Year Accounts, the Agency is required to:

•Select suitable accounting policies which are applied consistently and, where there are items which affect more than one Year of Account, ensure a treatment which is equitable as between the Members of the Syndicate affected. In particular, the amount charged by way of premium in respect of the Reinsurance to Close shall, where the reinsuring Members and reinsured Members are Members of the same Syndicate for different Years of Account, be equitable between them, having regard to the nature and amount of the liabilities reinsured;

•Take into account all income and charges relating to a closed Year of Account without regard to the date and receipt or payment;

•Make judgements and estimates that are reasonable and prudent; and

•State whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the notes to the Syndicate Underwriting Year Accounts.

The Managing Agent confirms it has complied with the above requirements in preparing the Syndicate Underwriting Year Accounts.

The Managing Agent is responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Syndicate and enable it to ensure that the Syndicate Underwriting Year Accounts comply with the 2008 Regulations. It is also responsible for safeguarding the assets of the Syndicate and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Agency is responsible for the maintenance and integrity of the corporate and financial information included on the business’ website. Legislation in the United Kingdom governing the preparation and dissemination of Underwriting Year Accounts may differ from legislation in other jurisdictions.

67

Independent auditors’ report to the members of Syndicate 1955 - 2022 closed year of account

Report on the audit of the syndicate underwriting year financial statements

Opinion

In our opinion, Syndicate 1955’s syndicate underwriting year financial statements for the 2022 year of account for the three years ended 31 December 2024 (the “underwriting year financial statements”):

●give a true and fair view of the state of the syndicate’s affairs as at 31 December 2024 and of its profit for the 2022 closed year of account;

●have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law); and

●have been prepared in accordance with the requirements of The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and the Lloyd’s Syndicate Accounting Byelaw (No. 8 of 2005).

We have audited the underwriting year financial statements included within the the Underwriting Year Accounts, which comprise: the Balance Sheet as at 31 December 2024; the Statement of profit or loss and other comprehensive income: Technical account – General business and the Statement of profit or loss and other comprehensive income: Non-technical account – General business for the 3 years then ended; the accounting policies; and the notes to the underwriting year financial statements, which include a description of the significant accounting policies.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”), including ISA (UK) 800, and The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and other applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the underwriting year financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We remained independent of the syndicate in accordance with the ethical requirements that are relevant to our audit of the underwriting year financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to other entities of public interest, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

68

Independent auditors’ report to the members of Syndicate 1955 - 2022 closed year of account (continued)

Emphasis of matter – Basis of preparation

Without modifying our opinion, we draw attention to note 3(A) of the underwriting year financial statements, which describes the basis of preparation. In particular, as these underwriting year financial statements relate to a closed underwriting year of account, matters relating to going concern are not relevant to these underwriting year financial statements. The underwriting year financial statements are prepared in accordance with a special purpose framework for the specific purpose as described in the Use of this report paragraph below. As a result, the underwriting year financial statements may not be suitable for another purpose.

Reporting on other information

The other information comprises all of the information in the Underwriting Year Accounts other than the

underwriting year financial statements and our auditors’ report thereon. The Managing Agent is

responsible for the other information. Our opinion on the underwriting year financial statements does

not cover the other information and, accordingly, we do not express an audit opinion or, except to the

extent otherwise explicitly stated in this report, any form of assurance thereon.

In connection with our audit of the underwriting year financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the underwriting year financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the underwriting year financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.

Responsibilities for the underwriting year financial statements and the audit

Responsibilities of the Managing Agent for the underwriting year financial statements

As explained more fully in the Statement of Managing Agent’s Responsibilities, the Managing Agent is responsible for the preparation of the underwriting year financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view of the result for the 2022 closed year of account. The Managing Agent is also responsible for such internal control as they determine is necessary to enable the preparation of underwriting year financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibilities for the audit of the underwriting year financial statements

Our objectives are to obtain reasonable assurance about whether the underwriting year financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these underwriting year financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

69

Independent auditors’ report to the members of Syndicate 1955 - 2022 closed year of account (continued)

Based on our understanding of the syndicate and industry, we identified that the principal risks of non-compliance with laws and regulations related to breaches of regulatory principles, such as those governed by the Prudential Regulation Authority and the Financial Conduct Authority, and those regulations set by the Council of Lloyd’s, and we considered the extent to which non-compliance might have a material effect on the underwriting year financial statements. We also considered those laws and regulations that have a direct impact on the underwriting year financial statements such as The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 . We evaluated management’s incentives and opportunities for fraudulent manipulation of the underwriting year financial statements (including the risk of override of controls), and determined that the principal risks were related to posting of inappropriate journals and management bias in accounting estimates. Audit procedures performed by the engagement team included:

●discussions with the Audit Committee, management and internal audit, including consideration of known or suspected instances of non-compliance with laws and regulation and fraud;

●evaluation and testing of the operating effectiveness of management's controls designed to prevent and detect irregularities;

●reviewing, and challenging where appropriate, the assumptions and judgements made by management in their significant accounting estimates, in particular in relation to the estimation of gross (and net) outstanding claims reserves, and estimated premium income;

●identifying and testing journal entries based on selected fraud risk criteria, in particular journal entries with unusual account combinations;

●evaluating the business rationale for any significant transactions identified outside the normal course of business; and

●designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing.

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the underwriting year financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

A further description of our responsibilities for the audit of the underwriting year financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.

Use of this report

This report, including the opinions, has been prepared for and only for the syndicate’s members as a body in accordance with part 2 of The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and Part C of the Lloyd’s Syndicate Accounting Byelaw (No. 8 of 2005) and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

70

Independent auditors’ report to the members of Syndicate 1955 - 2022 closed year of account (continued)

Other required reporting

Under The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and the Lloyd’s Syndicate Accounting Byelaw (No. 8 of 2005), we are required to report to you if, in our opinion:

●we have not obtained all the information and explanations we require for our audit; or

●adequate accounting records have not been kept by the Managing Agent in respect of the syndicate; or

●the underwriting year financial statements are not in agreement with the accounting records.

We have no exceptions to report arising from this responsibility.

Sean Forster (Senior statutory auditor)

for and on behalf of PricewaterhouseCoopers LLP

Chartered Accountants and Statutory Auditors

London

6 March 2025

71

Statement of profit or loss and other comprehensive income:

Technical Account – General Business

For the closed 2022 Year of Account for the three years ended 31 December 2024

Note

Cumulative balance at 31 December 2024

£000

Syndicate allocated capacity

500,000

Gross premiums written

Outward reinsurance premiums

6

530,826

(124,767)

Premiums written, net of reinsurance

Allocated investment return transferred from non-technical account

Reinsurance to close premium received, net

406,059

38,202

248,667

Total technical income

692,928

Claims paid

Gross amount

Reinsurers’ share

Net claims paid

Change in the provision for claims

Gross amount

Reinsurers’ share

Net change in provisions for claims

(186,762)

53,242

(133,520)

(643,859)

263,231

(380,628)

Claims incurred, net of reinsurance

(514,148)

Net operating expenses

7

(121,253)

Balance on the technical account – general business

57,527

72

Statement of profit or loss and other comprehensive income: (cont’d)

Non-Technical Account

For the closed 2022 Year of Account for the three years ended 31 December 2024

All results are attributable to continuing operations.

There are no other comprehensive income or expense other than those reported in the Income Statement, thus no Statement of Comprehensive Income has been prepared.

The accompanying notes from page 75 to 97 form an integral part of these financial statements.

Note

Cumulative balance at 31 December 2024

£000

Balance on the technical account – general business

57,527

Investment income

33,949

Realised gains/(losses) on investments

(5,954)

Unrealised gains/(losses) on investments

10,329

Investment expenses and charges

(122)

Total investment return

8

38,202

Allocated investment return transferred to the general business technical account

(38,202)

Loss on foreign exchange

(2,816)

Profit for the financial year

54,711

Total comprehensive income for the year

54,711

73

Balance Sheet - Assets

For the Closed 2022 Year of Account

As at 31 December 2024

Note

2024£000

Financial Investments

Deposits with ceding undertakings

475,458

(32)

Investments

475,426

Provision for unearned premiums

8,186

Claims outstanding

246,359

Reinsurers’ share of technical provisions

254,545

Debtors arising out of direct insurance operations

170,033

Debtors arising out of reinsurance operations

41,290

Other debtors

9

11,160

Debtors

222,483

Cash at bank and in hand

Other

(143,419)

18,665

Other assets

(124,754)

Deferred acquisition costs

5,836

Other prepayments and accrued income

4,178

Prepayments and accrued income

10,014

Total assets

837,714

74

Balance Sheet - Liabilities

For the Closed 2022 Year of Account

As at 31 December 2024

Note

2024£000

Members’ balance

54,711

Total capital and reserves

54,711

Provision for premiums

Claims outstanding

19,144

639,930

Technical provisions

659,074

Creditors arising out of direct insurance operations

Creditors arising out of reinsurance operations

Other creditors

10

103,095

(17,657)

28,289

Creditors

113,727

Accruals and deferred income

10,202

Total Liabilities

783,003

Total Liabilities, capital and reserves

837,714

The notes on pages 75 to 97 form part of these financial statements

The Syndicate Underwriting Year Accounts on pages 71 to 74 were approved by the Board of Arch Managing Agency Limited on 6 March 2025 and were signed on their behalf by:

Hugh Sturgess

President and Chief Executive Officer

Arch Managing Agency Limited

6 March 2025

75

Notes to the Financial Statements

1.General Information

The Syndicate transacts in the underwriting of general insurance and reinsurance business at Lloyd’s with underwriting capacity being provided by ASIL and various third-party capital providers. The address of the Managing Agent registered office is 60 Great Tower Street, London, EC3R 5AZ.

2.Statement of Compliance

The financial statements of the Syndicate have been prepared in compliance with United Kingdom Accounting Standards, including Financial Reporting Standard 102, “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”), Financial Reporting Standard 103, “Insurance Contracts” (FRS 103), The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and the Companies Act 2006.

The Syndicate financial statements have been prepared in compliance with the provisions of The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations relating to insurance groups.

3.Significant accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

A.Basis of Preparation

These financial statements are prepared on a going concern basis, under the historical cost convention, as modified by the revaluation of certain financial assets and liabilities measured at fair value through profit and loss.

The preparation of financial statements in conformity with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Syndicate’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 5.

B.Going Concern

The Directors of the Managing Agent have assessed the Syndicate’s ability to continue as a going concern by considering, amongst other things, the Syndicate’s reserve strength, available capital, future business plan and any expected material changes to its operations. Based on the assessment, they continue to adopt the going concern basis in preparing the financial statements.

C.Insurance Contracts

i.Classification

Contracts under which the Syndicate accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder are classified as insurance contracts.

76

Notes to the Financial Statements: (cont’d)

ii.Recognition and measurement Revenue

Premiums written relate to business incepted during the year, together with any differences between booked premiums for prior years and those previously accrued and include estimates of premiums incepted but not yet received or notified to the Syndicate. Premiums written are shown gross of commission payable to intermediaries, and exclude taxes and duties levied on premiums.

The earned proportion of premiums is recognised as revenue. Premiums are earned from the date of inception of risk mostly on a time apportionment basis. In the opinion of the Directors of the managing agent the resulting earned portion is not materially different from one based on the pattern of incidence of risk. For lines of business where the earned proportion would be materially different a pattern based on incidence of risk is applied.

Outwards Reinsurance

Outward reinsurance premiums are accounted for in the same accounting year as the premiums for the related direct insurance or inwards reinsurance business. Reinsurance contracts that operate on a ‘losses occurring’ basis are accounted for in full over the year of coverage, whilst ‘risk attaching’ policies are expensed using the same earnings year as the underlying premiums on a daily pro rata basis. The reinstatement premium is contingent on the claim amount. If no insured event occurs, no reinstatement premium is charged.

Reinsurance commission income

Commissions on reinsurance premiums are earned in a manner consistent with the recognition of the costs of the reinsurance, generally on a pro-rata basis over the terms of the policies reinsured.

Unearned premium provision

Unearned premiums represent the proportion of premiums written in the year that relate to unexpired terms of policies in force at the balance sheet date calculated on a time apportionment basis. In the opinion of the Directors of the managing agent the resulting provision is not materially different from one based on the pattern of incidence of risk. For lines of business where the earned proportion would be materially different a pattern based on incidence of risk is applied.

Claims

Claims incurred comprise notified claims and related expenses in the year together with changes in the estimates of what we ultimately expect to pay on claims based on facts and circumstances known at the balance sheet date. The insurance reserves include the Syndicate’s total cost of claims incurred but not reported (“IBNR”).

Claims outstanding comprise provisions for the Syndicate’s best estimate of the ultimate cost of settling all claims incurred but unpaid at the reporting date whether reported or not, and related internal and external claims handling expenses. Claims outstanding are assessed by reviewing individual reported claims and making allowance for claims incurred but not yet reported, the effect of both internal and external foreseeable events, such as changes in claims handling procedures, inflation, judicial trends, legislative changes and past experience and trends. Provisions for claims outstanding are not discounted. Adjustments to claims provisions established in prior periods are reflected in the financial statements of the period in which the adjustments are made and are disclosed separately if material. The methods used, and the estimates made, are reviewed regularly.

The Syndicate’s reserving policy is to use recognised actuarial techniques appropriate to the loss experience that exists. Where there is limited loss experience our choice of method has primarily been the expected loss method.

77

Notes to the Financial Statements: (cont’d)

We select the initial expected loss and loss adjustment expense ratios based on information derived from our underwriters and actuaries during the initial pricing of the business, supplemented by industry data where appropriate. These ratios consider, amongst other things, rate changes and changes in terms and conditions that have been observed in the market.

For a given underwriting year, additional weight is given to the historic paid and incurred loss development methods in the reserving process, assuming that case reserving practices are consistently applied over time. This reserving process makes some key assumptions that historical paid and reported development patterns are stable.

For catastrophe-exposed business, our reserving process also includes the use of catastrophe models for known events, a heavy reliance on analysis of individual catastrophic events and management judgement. The development of property losses can be unstable, especially for policies characterised by high severity, low frequency losses.

Reinsurance recoveries in respect of estimated claims incurred but not reported are booked in line with the underlying programme, adjusted to reflect changes in the nature and extent of the Syndicate’s reinsurance programme over time. An assessment is also made of the recoverability of reinsurance recoveries having regard to market data on the financial strength of each of the reinsurance companies. Reinsurance liabilities are primarily premiums payable for reinsurance.

Unexpired risk provision

Provision is made for unexpired risks arising from contracts where the expected value of claims and expenses attributable to the unexpired periods of policies in force at the balance sheet date exceeds the unearned premiums provision in relation to such policies (after the deduction of any deferred acquisition costs). The provision for unexpired risks is calculated by reference to classes of business which are managed together, after taking into account the future investment return on investments held to back the unearned premiums and unexpired claims provisions.

iii.Reinsurance assets and liabilities

The Syndicate cedes reinsurance in the normal course of business for the purpose of limiting its net loss potential through the diversification of its risks. Assets, liabilities and income and expense arising from ceded reinsurance contracts are presented separately from the assets, liabilities, income and expense from the related insurance contracts because the reinsurance arrangements do not relieve the Syndicate of its direct obligations to its policyholders.

Amounts due to and from reinsurers are accounted for in a manner consistent with the insured policies and in accordance with the relevant reinsurance contract. For general insurance business, reinsurance premiums are expensed over the period that the reinsurance cover is provided based on the expected pattern of the reinsured risks. The unexpensed portion of ceded reinsurance premiums is included in reinsurance assets.

Reinsurance assets are assessed for impairment at each balance sheet date. A reinsurance asset is deemed impaired if there is objective evidence, as a result of an event that occurred after its initial recognition, that the Syndicate may not recover all amounts due, and that the event has a reliably measurable impact on the amounts that the Syndicate will receive from the reinsurer. Impairment losses on reinsurance assets are recognised in the comprehensive income for the period.

78

Notes to the Financial Statements: (cont’d)

iv.Deferred acquisition costs

Acquisition costs which represent commission and other related underwriting expenses are deferred over the year in which the related premiums are earned. The deferred expenses relate to underwriter salaries, office costs, and marketing which are deferred based on a ratio between bound and quoted policies by line of business. To the extent that acquisition costs are deferred and considered irrecoverable against the related unearned premiums, they are written off to net operating expenses as incurred.

The deferred acquisition cost represents the proportion of acquisition costs which corresponds to the proportion of gross premiums written that is unearned at the balance sheet date. The acquisition costs are expensed from the date of inception of risk on mostly a time apportionment basis. For lines of business where using a time apportionment basis would lead to a materially different result to applying a pattern based on incident of risk, the risk-based earning pattern is applied.

D.Acquisition costs

Costs incurred in acquiring general insurance contracts are deferred. Acquisition costs include direct costs such as brokerage and commission, and indirect costs such as administrative expenses connected with the processing of proposals and the issuing of policies. The deferred acquisition cost asset represents the proportion of acquisition costs which corresponds to the proportion of gross premiums written that is unearned at the balance sheet date.

E.Reinsurance

The Syndicate assumes and cedes reinsurance in the normal course of business. Premiums and claims on reinsurance assumed are recognised in the technical account along the same basis as direct business, taking into account the product classification. Reinsurance premiums ceded and reinsurance recoveries on claims incurred are included in the respective expense and income accounts. Premiums ceded and claims reimbursed are presented on a gross basis in the technical account and statement of financial position as appropriate.

Reinsurance outwards premiums are earned according to the nature of the cover. ‘Losses occurring during’ policies are earned evenly over the policy period. ‘Risks attaching’ policies are expensed on the same basis as the inwards business being protected.

F.Foreign currencies

i.Functional and presentational currency

The Syndicate’s functional and reporting currency is pounds sterling.

These financial statements are presented in pounds sterling (“pounds” or “GBP”), which is the functional currency of the Syndicate, and are rounded to the nearest thousand unless otherwise stated.

79

Notes to the Financial Statements: (cont’d)

ii.Foreign currency

The results and financial positions of the non-functional currencies are retranslated into the functional currency as follows:

•monetary assets and liabilities are retranslated at the closing rate at the balance sheet date;

•income and expenses are retranslated at the average rate of exchange during the year; and

•all resulting exchange differences are recognised through the non-technical account.

G.Financial assets and liabilities

The Syndicate has accounted for financial instruments using Sections 11 and 12 of FRS 102.

i.Classification

The accounting classification of financial assets and liabilities determines the way in which they are measured and changes in those values are presented in the statement of profit or loss and other comprehensive income. Financial assets and liabilities are classified on their initial recognition.

The initial classification of a financial instrument shall take into account contractual terms including those relating to future variations. Once the classification of a financial instrument is determined at initial recognition, re-assessment is only required subsequently when there has been a modification of contractual terms that is relevant to an assessment of the classification.

Financial assets and financial liabilities at fair value through profit and loss comprise financial assets and financial liabilities held for trading and those designated as such on initial recognition. Investments in shares and other variable yield securities, units in unit trusts, and debt and other fixed income securities are designated as at fair value through profit or loss on initial recognition, as they are managed on a fair value basis in accordance with the Syndicate’s investment strategy.

The Syndicate does not hold any non-derivative financial assets or financial liabilities for trading purposes although derivatives (assets or liabilities) held by the Syndicate are categorised as held for trading.

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

ii.Recognition

Financial instruments are recognised when the Syndicate becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Syndicate’s contractual rights to the cash flows from the financial assets expire or if the Syndicate transfers the financial asset to another party without retaining control of substantially all risks and rewards of the asset. A financial liability is derecognised when its contractual obligations are discharged, cancelled or expired.

Regular way purchases and sales of financial assets are recognised and derecognised, as applicable, on the trade date, i.e., the date that the Syndicate commits itself to purchase or sell the asset.

iii.Measurement

A financial asset or financial liability is measured initially at fair value plus, for a financial asset or financial liability not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issue.

80

Notes to the Financial Statements: (cont’d)

Financial assets at fair value through profit or loss are measured at fair value with fair value changes recognised immediately in profit or loss. Net gains or net losses on financial assets measured at fair value through profit or loss includes foreign exchange gains/losses arising on their translation to the functional currency but excludes interest and dividend income.

Loans and receivables and non-derivative financial liabilities are measured at amortised cost using the effective interest method, except Syndicate Loans to the Central Fund which are measured at fair value through profit or loss.

iv.Identification and measurement of impairment

At each reporting date the Syndicate assesses whether there is objective evidence that financial assets not at fair value through profit or loss are impaired. Financial assets are impaired when objective evidence demonstrates that a loss event has occurred after the initial recognition of an asset, and that the loss event has an impact on the future cash flows on the asset that can be estimated reliably.

Objective evidence that financial assets are impaired includes observable data that comes to the attention of the Syndicate about any significant financial difficulty of the issuer, or significant changes in the technological, market, economic or legal environment in which the issuer operates.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

An impairment loss recognised on an amortised cost asset reduces directly the carrying amount of the impaired asset. All impairment losses are recognised in profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost the reversal is recognised in profit or loss.

v.Off-setting

Financial assets and financial liabilities are offset, and the net amount presented in the balance sheet when, and only when, the Syndicate currently has a legal right to set off the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

H.Investment return

Investment return comprises investment income and movements in unrealised gains and losses on financial instruments at fair value through profit or loss, less investment management expenses, interest expense, realised losses and impairment losses. Investment income comprises interest income, dividends receivable and realised investment gains.

81

Notes to the Financial Statements: (cont’d)

Dividend income is recognised when the right to receive income is established. Usually this is the ex-dividend date for equity securities. Interest income on financial assets measured at amortised cost is recognised using the effective interest method. For the purpose of separately presenting investment income and unrealised gains and losses for financial assets at fair value through profit or loss, interest income is calculated using the effective interest method excluding transaction costs that are expensed when incurred. For investments at fair value through profit or loss, realised gains and losses represent the difference between the net proceeds on disposal and the purchase price. For investments measured at amortised cost, realised gains and losses represents the difference between the net proceeds on disposal and the latest carrying value (or if acquired after the last reporting date, the purchase price).

Unrealised investment gains and losses represent the difference between the fair value at the balance sheet date and the fair value at the previous balance sheet date, or purchase price if acquired during the year. Movements in unrealised investment gains and losses comprise the increase/decrease in the reporting period in the value of the investments held at the reporting date and the reversal of unrealised investment gains and losses recognised in earlier reporting periods in respect of investment disposals of the current period.

Investment return is initially recorded in the non-technical account. The return is transferred in full to the general business technical account to reflect the investment return on funds supporting underwriting business.

I.Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or less. Bank overdrafts that are repayable on demand and form an integral part of the Syndicate’s cash management are included as a component of cash and cash equivalents.

J.Taxation

Under Schedule 19 of the Finance Act 1993 managing agents are not required to deduct basic rate income tax from trading income. In addition, all UK basic rate income tax deducted from Syndicate investment income is recoverable by managing agents and consequently the distribution made to members 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 United States Federal Income Tax payable on underwriting results or investment earnings. Any payments on account made by the Syndicate during the year have been included in the balance sheet under the heading ‘Other Debtors’.

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

K.Profit commission

The syndicate has a contractual commitment, if profitable, to pay a profit commission on the closing YOA to the Managing Agent of 17.5% of total profit at 36 months. On this basis, the Syndicate books an accrual based on the current 3-year funded position of each of the 2022, 2023 and 2024 YOA with the 2022 YOA element being settled in the first quarter of 2025.

82

Notes to the Financial Statements: (cont’d)

L.Deposits with ceding undertakings

Deposits with ceding undertakings are funds held by Lloyd’s Europe on behalf of the Syndicate to settle Part VII claims. These funds are held at fair value in the balance sheet.

4.Risk and capital management

Introduction and overview

The Syndicate’s core business is to take risk and our mission is to generate a positive contribution to the growth in the Tangible Book Value (TBV) of our Members. We do this through our objective of maximising return on equity within a defined ‘risk appetite’. It is therefore essential that we understand the significant exposures we face to manage the business well. It is also important that our knowledge of those risks underpins every important decision we make across the Syndicate. The risks from our core business of insurance represent our most significant exposures.

A.Strategic risk

This is the risk that the Syndicate’s strategy is inappropriate or that the Syndicate is unable to implement its strategy. Where events supersede the Syndicate’s strategic plan this is escalated at the earliest opportunity through the Syndicate’s monitoring tools and governance structure.

On a day-to-day basis, the Syndicate’s management structure encourages organisational flexibility and adaptability, while ensuring that activities are appropriately coordinated and controlled. Staff, management and outsourced service providers are expected to excel in service and quality. Individuals and teams are also expected to transact their activities in an open and transparent way. These behavioural expectations reaffirm our low risk tolerance by aligning interests of all stakeholders.

B.Insurance risk

Insurance risk arises from the possibility of an adverse financial result due to actual claims experience being different from that expected when an insurance product was designed and priced. The actual performance of insurance contracts is subject to the inherent uncertainty in the occurrence, timing and amount of the final insurance liabilities.

a. Underwriting risk

The process of selecting and pricing insurance risks is addressed through a framework of policies, procedures and internal controls. Risk selection is our business, and our procedures are designed to ensure that the evaluation of risk is transparent and logical. We have a clearly defined appetite for underwriting risk, which dictates our business plan.

To ensure that our risk appetite is not exceeded, we maintain disciplined underwriting, which is reviewed through quarterly underwriting meetings, regularly monitor closely our exposures to and aggregations of risk in particular places and buy reinsurance to limit our losses from disasters. We adapt our business plan, target products and reinsurance programme to ensure our book of business is well diversified. The Syndicate’s long-term underwriting strategy is to seek a diverse and balanced portfolio of risks in order to limit volatility. This is achieved by accepting a spread of business over time, segmented between different classes of business and geography.

83

Notes to the Financial Statements: (cont’d)

The quality of our underwriting models and our capability to accurately measure our aggregate exposure are key to managing this risk. Our underwriters are given incentives to make sound decisions that are aligned with the Syndicate’s overall strategic objectives and risk appetite. Clear limits are also placed on their authority. We regularly review our policy wordings in the light of legal developments to ensure the Syndicate’s exposure is restricted, as far as possible, to those risks identified in the policy at the time it was issued.

The Syndicate has large aggregate exposures to natural and man-made catastrophic events. These risks are inherently uncertain as it is difficult to predict the timing of such events with statistical certainty or estimate the amount of loss which any given occurrence will generate. The Syndicate regularly monitors its exposure to catastrophic events, including earthquake, wind and terrorism, using a catastrophe modelling tool, (Property, Terrorism and Onshore Energy), both locally and at Arch Group level. Additionally, the Syndicate regularly monitors its exposure to man-made realistic disaster scenarios.

The Syndicate seeks to limit its loss exposure by purchasing reinsurance to limit exposure to certain extreme events. The Syndicate monitors concentration risk through limiting its loss exposure by geographical and line of business diversification.

The Syndicate’s largest exposures to natural catastrophe 1 in 250-year stress events, gross and net basis for the 2022 underwriting year at 31 December 2024 are:

In common with all insurers, the Syndicate is exposed to price volatility. However, the Syndicate is firm in its resolve to exit business that is unlikely to generate underwriting profit. Additionally, the Syndicate alters its appetite for the lines of business and the layers it writes within them in response to market conditions.

The Syndicate writes a significant amount of premium income through coverholder arrangements to whom binding authority is given to accept risks on behalf of the Syndicate. This delegation is strictly controlled through tight underwriting guidelines and limits, and extensive monitoring, review and audits.

b. Reserving and Claims Risk

The Syndicate’s claims teams are focused upon 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 Syndicate’s broader interests. Our objective is to set prompt and accurate case reserves for all known claims’ liabilities, including provisions for expenses.

Territory

Peril

Gross £m

Net

£m

North America

Earthquake

1.3

0.4

East Asia

Earthquake

0.1

0.0

South America

Earthquake

0.1

Caribbean

Earthquake

0.1

84

Notes to the Financial Statements: (cont’d)

The Syndicate operates to a prudent best estimate reserving philosophy. Reserve estimates are derived by the internal actuary after consultation with individual underwriters, claims team, actuarial analysis of the loss reserve development and comparison with market benchmarks. The objective is to produce reliable and appropriate estimates that are consistent over time and across classes of business. The internal actuary’s loss assessments are peer reviewed by ACGL actuaries, and the reserves also are subject to review by external actuaries. Where legal disputes are reflected in the book’s history, reserves are established taking these into account. Larger disputes are reviewed individually in conjunction with the claims team and legal advice received. Reserves are not discounted for the time value of money.

c. Ceded Reinsurance Risk

Reinsurance risk to the Syndicate arises where reinsurance contracts put in place to reduce gross insurance risk do not perform as anticipated, resulting in coverage disputes or prove inadequate in terms of the vertical or horizontal limits purchased. The Syndicate’s reinsurance programmes are determined from 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 2023, the Syndicate bought a combination of proportional and non-proportional reinsurance treaties and facultative reinsurance to reduce the maximum net exposure. The Syndicate aims to establish appropriate retention levels and limits of protection that are consistent with keeping within the Board’s risk tolerance and achieving the target rates of return. The efficacy of protection sought is assessed against the cost of reinsurance, taking into consideration current and expected market conditions.

The Syndicate’s reinsurance philosophy is to:

•Provide stable, sustainable core capacity for each product line with non-core reinsurance purchased when market conditions allow;

•Reduce volatility;

•Achieve a broad spread of well rated security;

•Purchase reinsurance to limit exposure from maximum line sizes and accumulations with Catastrophe limits purchased up to our risk appetite;

•Utilise the standard model throughout ACGL;

•Comply with the guidance from the ACGL Security Committees;

•Apply common standards throughout ACGL;

•Consider hard and soft factors such as ability to pay and willingness to pay;

•Set cession limits by reinsurer and by lines of business; and

•Strive for 100% of security rated A- or higher. When this is not the case, we aim to have these collateralized.

i.Sensitivity to insurance risk

The liabilities established could be significantly lower or higher than the ultimate cost of settling the claims arising. This level of uncertainty varies between the classes of business and the nature of the risk being underwritten and can arise from developments in case reserving for large losses and catastrophes, or from changes in estimates of claims IBNR.

The following table presents the sensitivity of the value of insurance liabilities disclosed in the accounts to potential movements in the assumptions applied within the technical

provisions. Given the nature of the business underwritten by the Syndicate, the approach to calculating the technical provisions for each class can vary and as a result the sensitivity performed is to apply a beneficial and adverse risk margin to the total insurance liability.

85

Notes to the Financial Statements: (cont’d)

C.Operational risk

Management continually reviews potential operational risk factors and has enacted controls to meet these. They have been classified as follows:

Operational Risk Classification

Description

People

Loss of staff (underwriting and key non-underwriting) or inability to recruit; issues concerning integrity and competence of staff, including training; succession; manual inputting error; lack of management supervision; inadequate performance and or failure of escalation to management; and data protection breach or loss.

Processes

Inappropriate underwriting; inappropriate claims and reserve handling; inappropriate reinsurance purchasing; inadequate performance or failure of a third-party supplier; inadequate segregation of duties; inadequate management information; weak processing controls; processes are insufficiently resilient, customers do not receive good outcomes, and failure of corporate governance.

Systems (including Cyber Attack)

Hardware/software failure; network telecommunications software; IT third-party provider inadequate performance or failure; inadequate virus protection; inadequate system or security information; insufficient or untested business continuity processes; insufficient processing capacity; system breach defects; and systems error.

External events, including physical security and business continuity

Natural or man-made disasters leading to business continuity threat; external financial crime, including theft or fraud; changes to the regulatory environment; external security breach; and power outage.

Outsourcing, including delegated underwriting

Inadequate performance or failure of an outsourced service provider, including breach of agreement.

Financial crime, including Anti-Money Laundering

Internal or external fraud; electronic crime; money laundering; terrorist financing; bribery and corruption; market abuse; and insider dealing.

Regulatory and Legal

Risk of loss resulting from failure to comply with regulation and legislation as well as prudent ethical standards and contractual obligations. It also includes the exposure to litigation and regulatory censure from all aspects of the Syndicate’s activities.

The operational risk profile is reviewed by the Executive Risk Committee and the controls to mitigate the risks are included in the Risk Register. Risk owners are required to report to the Executive Risk Committee and review the relevant risks and are responsible for identifying new, emerging or changing risks and any subsequent control changes required to realign the risks with the risk appetite. When measuring operational risk, both quantitative factors, in the form of the probable loss, and qualitative factors, in the form of an assessment of the likely reputational impact or the ability of the Syndicate to deliver its service, are taken into account and contribute to determining the risk tolerance.

D.Financial risk

The focus of financial risk management for the Syndicate is ensuring that the proceeds from its financial assets are sufficient to fund the obligations arising from its insurance contracts. The goal of the investment management process is to optimise the risk-adjusted investment income and risk-adjusted total return by investing in a diversified portfolio of securities, whilst ensuring that the assets and liabilities are managed on a cash flow and duration matching basis.

86

Notes to the Financial Statements: (cont’d)

a)Credit risk

Exposure to credit risk arises from financial transactions with counterparties including debtors, borrowers, brokers, policyholders, reinsurers, banks and guarantors. The Syndicate uses the credit ratings assigned to particular counterparties to measure credit risk. To lessen the risk of the Syndicate’s exposure to any particular reinsurer, exposure limits are approved. On behalf of the Syndicate, ACGL has developed processes to formally examine all reinsurers before entering into new business arrangements.

With regard to premium debtor risk, the Syndicate ensures that all brokers are subject to a due diligence protocol and that they have terms of business agreements in place. An approval system also exists for new brokers, and broker performance is regularly reviewed. System exception reports highlight trading with non-approved brokers, and the Syndicate’s credit control team regularly monitors the ageing and collectability of debtor balances. The Syndicate monitors all key counterparties, including exposures to banking counterparties, on an ongoing basis, and bank credit ratings and concentrations are also monitored at the Operations Committee.

The largest single reinsurer counterparty is Arch Reinsurance Limited in respect of the whole account quota share reinsurance. The reinsured claims outstanding in the credit distribution of reinsurance receivables table are included within the balance that has a credit rating of ‘A+’.

The Syndicate has established guidelines for its investment managers regarding the type, duration and quality of investments within the Syndicate guidelines. The performance of investment managers is regularly reviewed to confirm adherence to these guidelines.

i.Management of credit risk

The Syndicate’s credit risk in respect of debt securities is managed by placing limits on its exposure to a single counterparty, by reference to the credit rating of the counterparty. Financial assets are graded according to current credit ratings issued by rating agencies such as Standard and Poor’s. The Syndicate has a policy of investing mainly in government issued and government backed debts. The Syndicate does not currently invest new monies in speculative grade assets (i.e., those rated below BBB).

The Syndicate limits the amount of cash and cash equivalents that can be deposited with a single counterparty and maintains an authorised list of acceptable cash counterparties.

The Syndicate’s exposure to intermediaries and reinsurance counterparties is monitored by the individual business units as part of their credit control processes.

All intermediaries must meet minimum requirements established by the Syndicate. The credit ratings and payment histories of intermediaries are monitored on a regular basis.

The Syndicate assesses the creditworthiness of all reinsurers by reviewing public rating information and by internal investigations. The impact of reinsurer default is regularly assessed and managed accordingly.

ii.Exposure to credit risk

The carrying amount of financial assets and reinsurance assets represents the maximum credit risk exposure. The Syndicate does not hold any collateral as security or purchase any credit enhancements (such as guarantees, credit derivatives and netting arrangements that do not qualify for offset).

87

Notes to the Financial Statements: (cont’d)

The following table analyses the credit rating by investment grade of financial investments, debt securities and derivative financial instruments, reinsurers’ share of claims outstanding, amount due from intermediaries, amounts due from reinsurers in respect of settled claims, cash and cash equivalents, and other debtors and accrued interest.

2024

AAA£000

AA£000

A£000

BBB£000

Other£000

Not rated£000

Total£000

Shares and other variable yield securities and units in unit trusts

-

644

-

644

Debt securities and other fixed income securities

78,635

44,841

96,489

82,655

-

302,620

Participation in investment pools

12,782

16,119

52,915

63,547

23,270

-

168,633

Syndicate loans to central fund

-

3,560

Deposits with ceding undertakings

-

(32)

-

(32)

Reinsurers’ share of claims outstanding

-

235,335

569

-

10,455

246,359

Debtors arising out of direct insurance operations

-

170,033

-

170,033

Debtors arising out of reinsurance operations

-

623

-

40,569

98

41,290

Cash at bank and in hand

-

(143,419)

-

(143,419)

Total

91,417

60,960

242,555

146,771

233,872

14,113

789,688

b)Liquidity risk

The Syndicate is exposed to daily calls on its available cash resources, principally from claims arising from its insurance business. Liquidity risk arises where cash may not be available to pay obligations when due and maintain a liquidity position. The Syndicate’s approach is to manage its cash flows so that it can reasonably survive a significant 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 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. Regular cash flow monitoring ensures that maturing deposits are sufficient to meet cash calls.

We run stress tests to estimate the impact of a major catastrophe on our cash position in order to identify any potential issues. We also run scenario analyses that consider the impact on our liquidity should a number of adverse events occur simultaneously, such as an economic downturn and declining investment returns combined with unusually high insurance losses.

Our investment policy recognises the demands created by our underwriting strategy, so that some investments may need to be realised before maturity or at short notice. Hence a high proportion of our investments are in liquid assets, which reduces our risk of making losses because we may have to sell assets quickly.

The nature of the Syndicate’s exposures to liquidity risk and its objectives, policies and processes for managing liquidity risk have not changed significantly from the prior year.

i.Management of liquidity risk

The Syndicate’s approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when they fall due, under both normal and stressed conditions.

88

Notes to the Financial Statements: (cont’d)

The Syndicate’s approach to managing its liquidity risk is as follows:

Forecasts are prepared and revised on a regular basis to predict cash outflows from insurance contracts over the short, medium and long term;

•The Syndicate purchases assets with durations not greater than its estimated insurance contract outflows;

•Assets purchased by the Syndicate are required to satisfy specified marketability requirements;

•The Syndicate maintains cash and liquid assets to meet daily calls on its insurance contracts;

•The Syndicate holds significant committed borrowing facilities from a range of highly rated banks to enable cash to be raised in a relatively short time-span; and

•The Syndicate regularly updates its contingency funding plans to ensure that adequate liquid financial resources are in place to meet obligations as they fall due in the event of reasonably foreseeable abnormal circumstances.

ii.Maturity analysis of syndicate liabilities

The maturity analysis presented in the table below shows the remaining contractual maturities for the Syndicate’s insurance contracts and financial instruments. 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.

6

000

Undiscounted net cash flows

2024

No maturity stated£000

0-1 yrs£000

1-3 yrs£000

3-5 yrs£000

>5 yrs£000

Total£000

Claims outstanding

-

309,315

141,343

84,651

104,621

639,930

Creditors

-

113,727

-

113,727

Total

-

423,042

141,343

84,651

104,621

753,657

c) Market risk

Our investment results are subject to a variety of risks, including changes in the business, financial condition or results of operations of the entities in which we invest, as well as changes in general economic conditions and overall market conditions. Valuations of investments are also exposed to potential loss from various market risks, including changes in equity prices, interest rates, and exchange rates.

The Syndicate’s primary investment objective is to preserve capital and to ensure adequate liquidity for settling policyholder claims, while also providing a return that meets or exceeds the total return of the assigned benchmark for each portfolio. Technical funds, those funds held for reserves, are invested primarily in high quality bonds and cash. The high quality and short duration of these funds allows the Syndicate to meet its aim of paying valid claims quickly. These funds, as far as possible, are maintained in the currency of the original premiums for which they are set aside to reduce foreign exchange risk.

Market risk also encompasses the risk of default of counterparties, which is primarily with issuers of bonds in which we invest. The Syndicate has established guidelines for its investment managers regarding the type, duration and quality of investments that may be made. The performance of investment managers is regularly reviewed to confirm adherence to these guidelines.

89

Notes to the Financial Statements: (cont’d)

The value of the Syndicate’s fixed-income securities is inversely correlated to movements in market interest rates. If market interest rates fall, the fair value of the fixed-income investments would tend to rise and vice versa, assuming that credit spreads remain constant.

The sensitivity of the price of a bond is also closely correlated to its duration. The longer the duration of a security, the greater its price volatility.

The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk. The nature of the Syndicate exposures to market risk and its objectives, policies and processes for managing market risk have not changed significantly from the prior year.

i.Management of market risks

For each of the major components of market risk the Syndicate has policies and procedures in place which detail how each risk should be managed and monitored. The management of each of these major components of major risk and the exposure of the Syndicate at the reporting date to each major risk are addressed below.

ii.Interest rate risk

Interest rate risk is the risk that the fair value and/or future cash flows of a financial instrument will fluctuate because of changes in interest rates.

The Syndicate is exposed to interest rate risk through its investment portfolio, borrowings and cash and cash equivalents.

The risk of changes in the fair value of these assets is managed by primarily investing in short-duration financial investments and cash and cash equivalents. The Investment Committee monitors the duration of these assets on a regular basis, targeting an investment portfolio duration that, in the event of changes in interest rates, always maintains the internal capital requirements.

iii.Currency risk

The Syndicate is exposed to currency risk in respect of liabilities under insurance policies and reinsurance recoverable debtors under reinsurance policies, denominated in currencies other than sterling.

The Syndicate writes business primarily in Sterling, US dollar, Euro, Canadian dollar, Australian dollar and Japanese Yen and is therefore exposed to currency risk arising from fluctuations in these exchange rates.

The Syndicate seeks to mitigate the risk by matching the estimated foreign currency denominated liabilities with assets denominated in the same currency. Assets and liabilities are appropriately matched and as such, the impact to the net result of the Syndicate through movements in the exchange rates are mitigated.

90

Notes to the Financial Statements: (cont’d)

iv.Asset Liability Matching

The Syndicate reviews currency asset and liability positions on a regular basis. The currency net assets / (liabilities) positions denote the Syndicate’s foreign exchange risk as a result of the translation of subordinated currency positions that are different to the reporting currency of the Syndicate. The main subordinate trading currencies are USD, AUD, EUR, CAD and JPY. The following table describes the net assets / (liabilities) positions at the year end.

The table below summarises the carrying value of the Syndicate’s assets and liabilities, at the reporting date:

Sterling

US dollar

Euro

Canadian dollar

Australian dollar

Japanese Yen

Total

2024

£000

Investments

62,427

390,099

-

22,900

-

475,426

Reinsurers' share of technical provisions

11,494

241,554

675

206

(24)

640

254,545

Debtors

2,832

196,324

5,765

(1,412)

2,190

5,623

211,322

Other assets

(6,071)

(153,055)

23,867

11,538

25,520

(5,108)

(103,579)

Total assets

70,682

674,922

30,307

33,232

27,416

1,155

837,714

Technical provisions

(54,571)

(517,881)

(33,621)

(17,360)

(16,212)

(19,429)

(65

9

,

0

7

4

)

Creditors

(48,422)

(66,349)

13,675

4,264

3,667

(20,562)

(113,727)

Accruals and deferred income

(94,531)

4,056

28,562

30,917

18,793

2,001

(10,202)

Total liabilities

(197,524)

(58

0

,

1

7

4

)

8,616

17,821

6,248

(37,990)

(78

3

,

0

3

)

Total capital and reserves

(126,842)

94,748

38,923

51,053

33,664

(36,835)

54,711

v.Sensitivity analysis to market risks

The analysis below is performed for reasonably possible movements in market indices on financial instruments with all other variables held constant, showing the impact on the result before tax due to changes in fair value of financial assets and liabilities (whose fair values are recorded in the profit and loss account) and members’ balances.

£000

2022Impact on results before tax£000

2022

Impact on

members’

balances£000

Interest rate risk

+ 50 basis points shift in yield curves

(5,334)

(5,534)

- 50 basis points shift in yield curves

5,513

A 50 basis point increase (or decrease) in yield curves have been selected on the basis that these are considered to be reasonably possible changes in these risk variables over the following year.

The sensitivity analysis demonstrates the effect of a change in a key variable while other assumptions remain unchanged. However, the occurrence of a change in a single market factor may lead to changes in other market factors as a result of correlations.

91

Notes to the Financial Statements: (cont’d)

The sensitivity analyses do not take into consideration that the Syndicate’s financial investments are actively managed. Additionally, the sensitivity analysis is based on the Syndicate’s financial position at the reporting date and may vary at the time that any actual market movement occurs. As investment markets move past pre-determined trigger points, action would be taken which would alter the Syndicate’s position.

E.Regulatory risk

This risk is affected by changes in law and regulations which are not identified, understood, or are inappropriately and incorrectly interpreted, or adopted, or business practices are not efficiently modified. Further, there is a risk that current legal or regulatory requirements are not complied with. We have a constructive and open relationship with our regulators.

F.Conduct risk

Conduct risk describes the Syndicate’s behaviour that aims to provide appropriate products to the right group of consumers that achieve fair outcomes. The Syndicate’s approach starts with our strong culture which means we consider and understand the needs of our customers and form an important cultural base to getting this right. From a risk management perspective, we facilitated the development of the conduct objective, the conduct risk appetite and the standards required to remain within this risk appetite. We are able to extract conduct-related controls from the risk register to provide the Board with assurance that the expected behaviours towards customers are being demonstrated.

G.Reputational risk

Reputational risk is the risk of negative publicity as a result of the Syndicate’s contractual arrangements, customers, products, services and other activities. Key sources of reputational risk include operation of a Lloyd’s franchise and reliance upon the Arch brand in the United States, Europe and Australia. The Syndicate’s preference is to minimise reputational risks, but where it is not possible or beneficial to avoid them, we seek to minimise their frequency and severity by management through public relations and communication channels.

H.Capital risk

The Syndicate uses an Internal Capital Model for setting economic capital along with a number of other uses. The Syndicate follows a risk-based approach to determine the amount of capital required to support its activities. Recognised stochastic modelling techniques are used to measure risk exposures, and capital to support business activities is allocated according to risk profile. Stress and scenario analysis is regularly performed, and the results are documented and reconciled to the Board’s risk appetite where necessary.

i.Capital framework at Lloyd’s

The Society of Lloyd’s (Lloyd’s) is a regulated undertaking and subject to supervision by the Prudential Regulatory Authority (PRA) under the Financial Services and Markets Act 2000, and in accordance with the Solvency II Framework.

Within this supervisory framework, Lloyd’s applies capital requirements at member level and centrally to ensure that Lloyd’s would comply with the Solvency II requirements, and beyond that to meet its own financial strength, licence and ratings objectives.

92

Notes to the Financial Statements: (cont’d)

Although, as described below, Lloyd’s capital setting processes use a capital requirement set at syndicate level as a starting point, the requirement to meet Solvency II and Lloyd’s capital requirements apply at overall and member level only respectively, not at syndicate level. Accordingly, the capital requirement in respect of Syndicate 1955 is not disclosed in these financial statements.

ii.Lloyd’s capital setting process

In order to meet Lloyd’s requirements, each Syndicate is required to calculate its Solvency Capital Requirement (SCR) for the prospective underwriting year. This amount must be sufficient to cover a 1 in 200 year loss, reflecting uncertainty in the ultimate run-off of underwriting liabilities (SCR ‘to ultimate’).

The Syndicate must also calculate its SCR at the same confidence level but reflecting uncertainty over a one year time horizon (one year SCR) for Lloyd’s to use in meeting Solvency II requirements. The SCRs of each Syndicate are subject to review by Lloyd’s and approval by the Lloyd’s Capital and Planning Group.

A syndicate may be comprised of one or more underwriting members of Lloyd’s. Each member is liable for its own share of underwriting liabilities on the Syndicates on which it is participating but not other members’ shares. Accordingly, the capital requirements 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 loss ‘to ultimate’ for that member. Over and above this, Lloyd’s applies a capital uplift to the member’s capital requirement, known as the Economic Capital Assessment (ECA). The purpose of this uplift, which is a Lloyd’s not a Solvency II requirement, is to meet Lloyd’s financial strength, licence and ratings objectives. The capital uplift applied for 2024 was 35% (2023: 35%) of the member’s SCR ‘to ultimate’.

iii.Provision of capital by members

Each member may provide capital to meet its ECA either by (i) assets held in trust by Lloyd’s specifically for that member (Funds at Lloyd’s “FAL”), (ii) assets held and managed within a syndicate (Funds in Syndicate “FIS”), or (iii) as the member’s share of the 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, represent resources available to meet members’ and Lloyd’s capital requirements.

iv.Capital management

The Board of AMAL has in place policies and procedures for managing compliance with regulatory capital requirements and its own capital management objective. This objective is to balance risk and return while maintaining economic and regulatory capital in accordance with risk appetite. The Board of AMAL has no appetite for the Syndicate failing to maintain sufficient capital. To this end, AMAL recalculates its ECA routinely at different points during the annual business cycle and may also recalculate the ECA on an ad hoc basis if the risk management framework identifies significant changes to the risk profile, or as required by the Board.

93

Notes to the Financial Statements: (cont’d)

I.Emerging risk

Identifying, planning for and controlling emerging risks is an important part of our risk management activity across all aspects of our business, including underwriting, operations and strategy. We make a significant effort to try to identify material emerging threats to the Syndicate. It is a core responsibility of each of our committees and we believe we take all reasonable steps to minimise the likelihood and impact of emerging risks and to prepare for them in case they occur.

5.Critical Accounting Judgements and Estimation Uncertainty

The preparation of the financial statements in conformity with the Generally Accepted Accounting Practice in the UK (“UK GAAP”), requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates and judgements.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. These disclosures supplement the commentary on insurance and financial risk management in the Outlook and Future Developments section.

i.Key sources of estimation uncertainty

The areas of the Syndicate’s business containing key sources of estimation uncertainty include the measurement of insurance and reinsurance assets and liabilities at the balance sheet date. The most significant of these involves the valuation of outstanding claims and, in particular, the provision for claims incurred but not reported.

The processes used to determine the assumptions on which the measurement of insurance contract provisions is based, actual assumptions used, the effects of changes in assumptions, and an analysis of sensitivity to changes in assumptions are described below.

ii.Process used to determine the assumptions for measuring insurance contracts

Claims Outstanding, i.e. loss reserves for the Syndicate are comprised of (1) estimated amounts for claims reported (“case reserves”) and (2) IBNR losses. Claims personnel determine whether to establish a case reserve for the estimated amount of the ultimate settlement of individual claims. The estimate reflects the judgement of claims personnel based on general corporate reserving practices, the experience and knowledge of such personnel regarding the nature and value of the specific type of claim and, where appropriate, advice of counsel. The Syndicate also contracts with a number of outside third-party administrators in the claims process who, in certain cases, have limited authority to establish case reserves. The work of such administrators is reviewed and monitored by our claims’ personnel.

Loss Reserves are also established to provide for loss adjustment expenses and represent the estimated expense of settling claims, including legal and other fees and the general expenses of administering the claims adjustment process. Periodically, adjustments to the reported or case reserves may be made as additional information regarding the claims is reported or payments are made. IBNR reserves are established to provide for incurred claims which have not yet been reported to an insurer or reinsurer at the balance sheet date, as well as to adjust for any projected variance in case reserving. IBNR reserves are derived by subtracting paid losses and loss adjustment expenses and case reserves from estimates of ultimate losses and loss adjustment expenses. Actuaries estimate ultimate losses and loss adjustment expenses using various generally accepted actuarial methods applied to known losses and other relevant information. Like case reserves, IBNR reserves are adjusted as additional information becomes known or payments are made. The process of estimating reserves involves a considerable degree of judgement by management and, as of any given date, is inherently uncertain.

94

Notes to the Financial Statements: (cont’d)

Ultimate losses and loss adjustment expenses are generally determined by extrapolation of claim emergence and settlement patterns observed in the past that can reasonably be expected to persist into the future. The Syndicate uses several methods for determining its reserves. These methods generally fall into one of the following categories or are hybrids of one or more of the following categories:

Expected loss methods – these methods are based on the assumption that ultimate losses vary proportionately with premiums. Expected loss and loss adjustment expense ratios are typically developed based upon the information derived by underwriters and actuaries during the initial pricing of the business, supplemented by industry data available from organisations, such as statistical bureau and consulting firms, where appropriate. These ratios consider, among other things, rate increases and changes in terms and conditions that have been observed in the market. Expected loss methods are useful for estimating ultimate losses and loss adjustment expenses in the early years of long-tailed lines of business, when little or no paid or incurred loss information is available and is commonly applied when limited loss experience exists for a syndicate.

Historical incurred loss development methods – these methods assume that the ratio of losses in one period to losses in an earlier period will remain constant in the future. These methods use incurred losses (i.e. the sum of cumulative historical loss payments plus outstanding case reserves) over discrete periods of time to estimate future losses. Historical incurred loss development methods may be preferable to historical paid loss development methods because they explicitly take into account open cases and the claims adjusters’ evaluations of the cost to settle all known claims. However, historical incurred loss development methods necessarily assume that case reserving practices are consistently applied over time. Therefore, when there have been significant changes in how case reserves are established, using incurred loss data to project ultimate losses may be less reliable than other methods.

Bornhuetter-Ferguson (“B-F”) paid and incurred loss methods – these methods utilise actual paid and incurred losses and expected patterns of paid and incurred losses, taking the initial expected ultimate losses into account to determine an estimate of expected ultimate losses. The B-F paid and incurred loss methods are useful when there are few reported claims and a relatively less stable pattern of reported losses.

Additional analyses – other methodologies are often used in the reserving process for specific types of claims or events, such as catastrophic or other specific major events. These include vendor catastrophe models, which are typically used in the estimation of Loss Reserves at the early stage of known catastrophic events before information has been reported to an insurer or reinsurer, and analyses of specific industry events, such as large lawsuits or claims. The selection of a method to determine the Syndicate’s reserves is driven by not only the characteristics of the lines of business, but also by the development stage of the years of account and the availability, credibility and relevance (for future projection) of in-house or benchmark data. For short-tail lines of business, such as Property and Offshore Operating, reserves will mostly be calculated using the expected loss ratio method for the most recent year of account, unless early loss experience necessitates an upward deviation, before moving to the more data-driven methods for more mature years. For long-tail lines of business, typically the Casualty and D&O classes, reflecting slower loss emergence and settlement, the expected loss ratio method is usually applied for longer than 1 year, unless early loss experience necessitates an upward deviation, before allowing for benign claims experience using more data-driven methods.

Ukraine war – The war in Ukraine continues to be closely monitored in line with other large loss events. The Syndicate’s 2022 YOA has exposure, in particular from policies covering political violence and war which is largely protected by reinsurance where gross losses are expected to be covered by the reinsurance in place. The current estimate of potential losses included within our net reserves are £16.0m (2023: £12.3m). The Syndicate has been negatively impacted by adverse development, resulting in strengthening of specific reserves in relation to Ukraine losses during the calendar year, largely on 2021 year of account, on both gross and net basis.

95

Notes to the Financial Statements: (cont’d)

The premium written on a number of classes of business have been impacted following the introduction of international sanctions in 2024.

Inflation risk – We assess the expected impact of inflation on the booked reserves using a multi-year cash flow approach. Our approach estimates the impact of economic inflation on the expected claims frequency and severity of the in-force business, recognising that different insurance classes are affected differently by economic inflation. The expected impact on reserves is compared to an independent actuarial review to ensure our reserve surplus versus said independent actuarial remains within our risk appetite.

iii.Estimated Premium Income

Premium estimates are made in respect of binder accruals and inwards reinsurance contracts. Estimates are used where reporting on actual written premiums has not been received on a timely basis. The estimate is based on a combination of previous years binders or contracts, adjusted for changes in market developments, higher or lower projections on ultimate premiums being written and discussions with the coverholder or insurer about how much additional premium is expected to be reported. These estimates are monitored on an ongoing basis by underwriting teams, actuarial and finance. Estimates are also used in respect of inwards reinsurance reinstatement premiums.

These are based on the loss reserves calculated on a loss event basis and the corresponding reinstatement rates within the line of business impacted.

6.Analysis of underwriting result

2024

Gross premiums written£000

Gross premiums earned£000

Gross claims incurred£000

Gross operating expenses£000

Reinsurance balance£000

Underwriting result£000

Direct insurance

Accident and health

9,874

(19,919)

(2,566)

9,826

(2,785)

Marine, aviation, and transport

23,438

(43,561)

(3,439)

24,258

696

Fire and other damage to property

48,245

(54,425)

(18,332)

29,536

5,024

Third party liability

126,470

(100,180)

(33,119)

47,408

40,579

Credit and suretyship

7,917

(5,067)

(1,823)

2,768

3,795

Total direct insurance

215,944

(223,152)

(59,279)

113,796

47,309

Reinsurance acceptances

314,882

(

6

0

7

,

4

6

9

)

(62,423)

327,026

(27,984)

Total

530,826

(

8

3

0

,

6

2

1

)

(121,702)

440,882

19,325

Investment return

-

38,202

Technical account result

-

57,527

96

Notes to the Financial Statements: (cont’d)

7.Net Operating Expenses

2024£000

Acquisition costs

85,546

Administrative expenses

26,828

Members’ standard personal expenses

17,978

Reinsurance commissions and profit participation

(9,098)

Net operating expenses

121,254

8.Investment Income

2024£000

Interest and similar income

From financial assets designated at fair value through profit or loss

Interest and similar income

33,949

Other income from investments

From financial assets designated at fair value through profit or loss

Gains on the realisation of investments

10,436

Losses on the realisation of investments

(16,390)

Unrealised gains on investments

12,609

Unrealised losses on the investments

(2,280)

Investment management expenses

(122)

Total investment return

38,202

Transferred to the technical account from the non-technical account

38,202

9.Other Debtors

2024£000

Amounts due from members

409

Other

10,751

Total

11,160

97

Notes to the Financial Statements: (cont’d)

10.Other Creditors

2024£000

Other related party balances (non-syndicates)

28,289

Total

28,289

11.Funds at Lloyd’s (FAL)

The Syndicate is supported by ASIL and third-party capital providers via FAL on the 2022 underwriting year. Since FAL is not under the management of the Syndicate no amount has been shown in these Underwriting year accounts, however the Syndicate is able to make a call on the Members’ FAL to meet liquidity requirements or to settle losses.

12.Related Parties

Syndicate 1955 is managed by AMAL. The Directors of AMAL regard ACGL, a company incorporated in Bermuda, as the ultimate holding company and controlling party. This is the largest company into which the Syndicate’s results are consolidated. Copies of the consolidated financial statements of ACGL can be obtained from The Secretary. Arch Reinsurance Limited is the smallest company into which the Syndicate’s results are consolidated.

During the three years ending 31 December 2024, a Managing Agency fee of £3.9m was payable from the Syndicate to the Agency in relation to the 2022 underwriting year.

13.Non-Adjusting Post Balance Sheet Events

On 1 January 2025 the 2022 YOA has RITC’ed into the Syndicate’s 2023 YOA.