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Contents
Brit Syndicate 2988 Annual Report and Accounts 2024
1
Report of the Directors of the Managing Agent 2
Statement of Managing Agent’s Responsibilities 8
Independent Auditors’ Report to the Members of Syndicate 2988 9
Income Statement – Technical Account 13
Income Statement – Non-Technical Account 14
Statement of Comprehensive Income 14
Statement of Financial Position - Assets 15
Statement of Financial Position - Liabilities 16
Statement of Changes in Members’ Balances 17
Statement of Cash Flows 18
Notes to the Accounts 19
Directors of the Managing Agent 57
Brit Syndicate 2988 Annual Report and Accounts 2024
Report of the Directors of the Managing Agent
2
The Directors of the Managing Agent, Brit Syndicates Limited (BSL) a company registered in England and
Wales, present the Report and Accounts of Syndicate 2988 (the Syndicate) for the year ended 31 December
2024.
These annual accounts are prepared using the annual basis of accounting as required by Statutory Instrument
No. 1950 of 2008 and The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts)
Regulations 2008 (Lloyd’s Regulations 2008).
Principal activity and review of the business
The Syndicate’s principal activity is the underwriting of general insurance and reinsurance business in the
Lloyd’s market.
The Syndicate participates on new and renewal business written by Brit’s Syndicate 2987. Starting in 2024, the
Syndicate has been writing modest amounts of income from risks where 2987 is not on the slip. This is delivered
through consortia and facilities where 2987 will not have access to the business due to channel conflict and so
provides an attractive additional source of income alongside the 2987 follow business.
The underwriting strategy reflects the Directors’ view of prevailing market conditions in the classes of business
written by the Syndicate during the year.
The result for the 2024 calendar year is a profit of £29,070k (2023 profit: £45,733k), including an underwriting
profit of £16,218k (2023: profit of £32,972k) with a combined ratio of 91.1% (2023: 84.8%) and a net investment
return of £12,776k (2023: £14,328k).
The Syndicate’s key performance indicators (KPI’s) during the year were as follows:
2024
2023
£’000
£’000
Gross premiums written
180,965
211,167
Net premiums written
171,394
201,964
Earned premiums, net of reinsurance
182,954
216,799
Underwriting result
16,218
32,972
Investment return
12,776
14,328
Technical result for the financial year
28,994
47,300
Non-technical account for the financial year
76
(1,567)
Result for the financial year
29,070
45,733
Total comprehensive income for the financial year
30,175
45,470
Claims ratio
1
62.7%
59.4%
Expense ratio
2
28.4%
25.4%
Combined ratio
3
91.1%
84.8%
1
The ratio of net claims incurred to net earned premiums.
2
The ratio of net operating expenses (both net acquisition costs and administrative expenses) to net earned premiums.
3
The total of net claims and net operating expenses as a percentage of net earned premium.
Report of the Directors of the Managing Agent (continued)
Brit Syndicate 2988 Annual Report and Accounts 2024
3
Gross premiums written
An analysis of gross premiums written by Brit portfolio is set out below:
2024
2023
Variance
Premium by portfolio
£000
£000
%
Finpro & Cyber
71,228
50,449
41.2
Programmes & Facilities
17,221
38,049
(54.7)
Property & Specialty
57,172
51,201
11.7
Casualty
32,159
29,257
9.9
*Discontinued
3,185
42,211
(92.5)
Total
180,965
211,167
(14.3)
*Discontinued includes predominantly the whole account Quota share from S2987 not written in S2988 in 2024.
The Syndicate’s gross premiums written decreased -14% to £180,965k (2023: £211,167k) whilst achieving a
risk adjusted rate decrease of -3.2% during 2024, that was as expected and lower than the prior year (2023:
+1.4%).
FinPro & Cyber
The Syndicate’s FinPro & Cyber portfolio covers several classes. Cyber is the largest component of the portfolio
and makes up around nearly half of the income. The other main classes underwritten are US Professional
Indemnity, Healthcare Liability and a Warranty & Indemnity book which is written through Amynta, a leading
global Managing General Underwriter.
During the 2024 financial year, negative rating movements were experienced across most of the FinPro portfolio.
In particular, the Cyber account saw rate decreases of c.-15%. Despite the challenging rating environment, the
Syndicate has achieved over 40% increase in premium on FinPro & Cyber business with measured growth in
all lines, most significantly driven by increased third party business in Financial Institutions and Political & Credit
Risks.
Programmes and Facilities
The Programmes and Facilities portfolio comprises Property Binders and Long Tail Facilities, as well as
Accident & Health and Contingency.
Towards the end of 2023 Brit undertook a strategic review of the Property segments, which resulted in a
rebalancing of the portfolios and a managed reduction in income from Property Binders and exposure to Cat
business. Income from within the Property Binders division has therefore been significantly reduced during 2024
compared to the prior year. Accident & Health and Contingency business has continued to benefit from a good
flow of in-appetite business opportunities aiding stable income levels between 2023 and 2024.
Property & Specialty
Property comprises of US and International Property risks written on an open market basis. The portfolio also
includes Terrorism and Political & Credit Risk business (collectively referred to as ‘Political Risk & Violence’ or
‘PRV’). Specialty lines primarily covers Specialist Liability, Marine and Energy classes of business.
For the 2024 underwriting year the Syndicate is no longer writing US Open Market Property. This had been a
significant source of volatility in 2988, driving losses on most of the earlier years of account. Premium from this
class is therefore significantly reduced year-on-year. However, this has been more than offset by increased
appetite for International Open Market Property and growth in Energy and Marine, predominantly through the
third-party follow channel.
Rates across the portfolio reflected small positive increases across all lines with more notable improvement on
Energy products.
Report of the Directors of the Managing Agent (continued)
Brit Syndicate 2988 Annual Report and Accounts 2024
4
Casualty
Overall year-on-year income is modestly up, with positive growth in Direct Casualty, being partially offset by
reductions across the Casualty Treaty business. Market conditions have been challenging, particularly on the
Long-Tail part of the account. The underwriting team has taken a firm stance on pricing, terms and conditions
and this has resulted in some risks being non-renewed or new business not taken up where it doesn’t meet risk
appetite.
Discontinued
The Discontinued business relates to the whole account quota share of S2987 that was written by S2988 from
2020 to 2023. This is no longer being written in 2024.
Outwards reinsurance
Outwards reinsurance spend increased from £9,203k in 2023 to £9,571k in 2024.
The Syndicate has continued to buy reinsurance on an excess of loss basis to protect the casualty and specialty
accounts. The Syndicate had previously purchased a Cyber-specific stop loss but that was replaced in 2024
with an event XOL programme that offers better value and higher recovery potential. The aggregate cost of
these covers has increased in line with growth in the underlying exposures.
Claims
Major loss activity
The table below sets out the net impact of major losses on the Syndicate’s results, analysed by event:
2024
2023
Major losses
£’000
£’000
Hurricane Helene
1,979
-
Hurricane Milton
2,260
-
Hawaii Wildfires
-
2,586
Hurricane Idalia
-
1,024
Total
4,239
3,610
Effect on the COR%
2.3%
1.7%
Worldwide natural disasters in 2024 resulted in economic losses of around $320bn (2023: $250bn), above the
five-year average of $261bn, while insured losses were in the region of $140bn (2023: $95bn), above the five-
year average of $106bn (Source: Munich Re).
The year’s costliest events included Hurricane Helene (economic losses of $56bn, with insured losses of $16bn)
and Hurricane Milton (economic loss $38bn, with insured losses of $25bn).
Syndicate 2988’s major catastrophe losses in 2024 amounted to £4,239k and added 2.3pps to the combined ratio
(2023: £3,610k/1.7pps), driven by Hurricane Helene (£1,979k net) and Hurricane Milton (£2,260k net). Whilst
both of these events are significant in terms of insured losses, the decision to no longer underwrite US Property
risk in 2024 has significantly reduced the potential scale of loss exposure to Syndicate 2988. The Syndicate
does have some exposure to other catastrophe events which occurred during the year but they are considered
as attritional in nature.
Attritional losses
The Syndicate’s attritional claims ratio of 63.1% is higher than the previous year (2023: 58.6%). During 2024
the Syndicate experienced several uncorrelated large man-made risk events which, collectively, have increased
the attritional loss ratio. The 2023 financial year, by comparison, saw more benign loss experience.
Report of the Directors of the Managing Agent (continued)
Brit Syndicate 2988 Annual Report and Accounts 2024
5
Prior year development
The Syndicate saw favourable prior year development in 2024, improving the loss ratio by 2.7pps (2023:
1.1pps). Favourable attritional experience emerging from the 2987 whole account quota share, as well as an
improvement on the Ukraine and Covid losses, were the main drivers.
Expenses
The overall expense ratio for the 2024 financial year of 28.4% has increased compared to 2023 (25.4%). The
increase is attributable to the inclusion of the closing year profit commission in 2024 (1.9%) and the lower net
earned premium. Underlying expenses are 11% lower in 2024 than 2023.
Syndicate 2988’s ability to leverage the operating model of the wider Brit group has always provided an efficient
platform from which to operate from and this has also facilitated an improvement in administrative expenses
which have reduced from £12,139k in 2023 to £11,072k in the current year.
Underwriting Result
The Syndicate reported an underwriting profit of £16,218k (2023 profit: £32,972k) and a combined ratio of 91.1%
(2023: 84.8%). This is the second year of strong performance and a clear marker that the underwriting strategy
is now starting to materialise in the results.
Investment Return
Total investment return, net of investment management fees, was a gain of £12,776k (2023: gain £14,328k).
Returns were driven by income in the fixed income portfolio, supported by capital gains. Over 2024, the two-
year yield was unchanged at 4.24% (2023: 4.25%), the five-year yield rose from 3.85% to 4.38% and the ten-
year yield rose from 3.88% to 4.57%. Investment grade spreads narrowed in the US from 0.77% to 0.60% and
in Europe narrowed from 1.28% to 0.92%, while high yield spreads in the US narrowed from 3.23% to 2.87%
and in Europe narrowed from 3.83% to 3.08%.
Members’ Balance
The Syndicate’s Members’ Balance of £58,887k at 31 December 2024 (2023: £30,057k) comprise the
cumulative results of the Syndicate for the open years of account, plus any collections that the Syndicate has
made from its Members. The increase is primarily driven by the total comprehensive income in the year of
£30,175k.
Financial position
Net Technical Reserves
The Syndicate maintains appropriate loss reserves to cover its estimated future liabilities. The Syndicate’s net
technical reserves have increased by £30,649k, or 7%, to £457,492k (2023: £426,843k). Preserving a strong
financial position is critical to the long-term success of an insurance business. Reserves are estimates that
involve actuarial and statistical projections of the expected cost of the ultimate settlement and administration of
claims. The reserving process is robust and managed by the Chief Risk Officer and Chief Actuary and under
the oversight of the Reserving Committee. Reserving estimates are prepared quarterly and are based on facts
and circumstances then known, predictions of future developments, estimates of future trends in claims
frequency and severity and other variable factors such as inflation. Movement in these reserves forms an
integral element of our operating result.
As part of the year-end reserving exercise, the impact of inflation was considered in detail by the Actuarial team
to ensure that assumptions are consistent with forward looking expectations for claims inflation. Various
techniques have been considered in line with guidance from Lloyd’s and regulators.
The Syndicate’s reserving policy is to reserve to a best estimate and carry an explicit risk margin above that
best estimate. Maintaining reserves is critical to safeguard future obligations to policyholders and the
Syndicate’s approach provides a secure foundation. It also provides a secure foundation for the pricing of new
business which is particularly critical in a soft rating environment.
Report of the Directors of the Managing Agent (continued)
Brit Syndicate 2988 Annual Report and Accounts 2024
6
Financial Investments
The investment portfolio retains a large allocation to cash and cash equivalents (£49,365k or 12.4%) and fixed
income securities (£325,511k or 81.8%), (2023: £60,622k cash and cash equivalents, 19.2%, fixed income
securities £252,215k, 80.0%).
Syndicate outlook
Stamp capacity for the 2025 year of account has increased by 11.1% to £192,666k (2024 year of account
£173,401k) largely coming from the intended increase in third party business from c.10% in 2024 to c.20% of
gross written premium in the 2025 underwriting year.
Going into 2025, the industry faces a number of challenges and uncertainties, driven by the volatile geopolitical
and economic landscapes, including ongoing inflationary pressures. Wider challenges also continue to exist
such as the potential risk for increased frequency and magnitude of major loss events due to climate change,
excess capacity, the cost of doing business in the London Market, and increased competition.
As per the 2024 underwriting year, the Syndicate’s planned portfolio for the 2025 underwriting year does not
include any US Property risk. Whilst conditions remain favourable in this area, this has been a material source
of volatility in the Syndicate’s historic performance and so there remains little appetite to go back into this area.
The underlying portfolio will therefore remain largely unchanged, with modest growth in areas where there is
margin and contraction where conditions are more challenging, As noted above, the main source of growth in
2025 will come from an increase in third-party business. The third-party portfolio is biased towards Property
and Specialty and so provides a counterbalance to the slightly longer-tailed Syndicate 2987 follow book.
Brit remains cognisant of the potential impacts of inflation, with work being undertaken internally to quantify and
mitigate its impact on profitability. There is continued focus on ensuring that underwriting and pricing adequately
addresses inflationary trends and Brit continues to review the key drivers of claim settlement costs and
frequency by class of business. The Syndicate’s reserves continue to be set at a margin above the actuarial
estimate which is in turn set on a conservative best estimate basis incorporating management’s current view of
social and economic inflation.
The Syndicate’s outwards reinsurance renewals at 1 January have been successfully completed, with the extent
and type of cover evolving in line with the development of the inwards book.
The insurance market continues to evolve, but Syndicate 2988’s strategy, agile approach and underwriting
discipline position it well to take advantage of opportunities as they arise.
Going concern
Following a review of the financial performance and position of the Syndicate, the Directors have a reasonable
expectation that the Syndicate has adequate resources to continue in operational existence for the foreseeable
future. For this reason, they continue to adopt the going concern basis in preparing the report and accounts.
Principal risks and uncertainties
The information on principal risks and uncertainties is disclosed in note 3 to the accounts.
Employee and environmental matters
All staff in the UK are employed by Brit Group Services Limited, the group’s service company, and the full staff
cost disclosures are included in the notes to those accounts. Amounts are recharged to the Syndicate as part
of the annual fixed fee charged by the Managing Agent.
Climate change will impact Brit’s business and all its stakeholders, and Brit is committed to responsible business
practices and recognises that it is most effective when acting alongside others in the industry.
Directors
The names of the current Directors of the Managing Agent and those who have served during the year are
shown on page 57.
Report of the Directors of the Managing Agent (continued)
Brit Syndicate 2988 Annual Report and Accounts 2024
7
Independent Auditors
PricewaterhouseCoopers LLP remain in office as the Syndicate’s auditors.
Statement of disclosure of information to the Auditors
Each person who is a Director of the Managing Agent at the date of approval of this report confirms that:
• so far as the Director is aware, there is no relevant audit information, being information needed by the
Syndicate’s auditors in connection with its report, of which the Syndicate’s auditors are unaware; and
• he or she has taken all the steps that he or she is obliged to take as a director in order to make himself
or herself aware of any relevant audit information and to establish that the Syndicate’s auditors are
aware of that information.
Syndicate Annual General Meeting
In accordance with the Syndicate Meetings (Amendment No. 1) Byelaw (No. 18 of 2000) the Managing Agent
does not propose holding a Syndicate Annual General Meeting of members of Syndicate 2988. Objections to
this proposal or the intention to reappoint the auditors for a further 12 months can be made by Syndicate
members to the Compliance Officer at the Managing Agent’s registered address by 25 April 2025.
On behalf of the Board,
Gavin Wilkinson
Director
4 March 2025
Brit Syndicate 2988 Annual Report and Accounts 2024
8
Statement of Managing Agent’s Responsibilities
The Managing Agent is responsible for preparing the Syndicate annual accounts in accordance with applicable
law and regulations.
The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 require the
Managing Agent to prepare Syndicate annual accounts at 31 December each year in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom accounting standards and applicable law).
The Syndicate annual 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 annual accounts, the Managing Agent is required to:
1. select suitable accounting policies and then apply them consistently;
2. make judgements and estimates that are reasonable and prudent;
3. state whether applicable UK accounting standards have been followed, subject to any material
departures disclosed and explained in the notes to the Syndicate annual accounts; and
4. prepare the Syndicate 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 directors of the Managing Agent confirm that they have complied with the above requirement in preparing
the Syndicate 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 comply with the Insurance Accounts
Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008. It is also responsible for safeguarding
the assets of the Syndicate and hence for taking reasonable steps for prevention and detection of fraud and
other irregularities.
The Managing Agent is responsible for the maintenance and integrity of the corporate and financial information
included on the business’ website. Legislation in the United Kingdom governing the preparation and
dissemination of annual accounts may differ from legislation in other jurisdictions.
The Directors of the Managing Agent are also responsible for the preparation and review of the iXBRL tagging
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.
Brit Syndicate 2988 Annual Report and Accounts 2024
9
Independent auditors’ report to the
members of Syndicate 2988
Report on the audit of the syndicate annual
accounts
Opinion
In our opinion, Syndicate 2988 ’s syndicate annual accounts:
• give a true and fair view of the state of the syndicate’s affairs as at 31 December 2024 and of its profit
and cash flows for the year then ended;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard
applicable in the UK and Republic of Ireland”, and applicable law); and
• have been prepared in accordance with the requirements of The Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008 and the requirements within the Lloyd’s
Syndicate Accounts Instructions version 2.0 as modified by the Frequently Asked Questions issued by
Lloyd’s version 1.1 (“the Lloyd’s Syndicate Instructions”).
We have audited the syndicate annual accounts included within the Report and Accounts (the “Annual Report”),
which comprise: the Statement of Financial Position as at 31 December 2024; the Income Statement: Technical
Account – General Business, the Income Statement: Non-Technical Account, the Statement of Comprehensive
Income, the Statement of Cash Flows, and the Statement of Changes in Members’ Balances for the year then
ended; and the notes to the syndicate annual accounts, which include a description of the significant accounting
policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”), and 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 5, we have provided no non-audit services to the syndicate in the period
under audit.
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.
Brit Syndicate 2988 Annual Report and Accounts 2024
10
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 Report of the Directors of the Managing Agent (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.
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.
Brit Syndicate 2988 Annual Report and Accounts 2024
11
Based on our understanding of the syndicate and industry, we identified that the principal risks of non-
compliance with laws and regulations related to breaches of regulatory principles, such as those governed by
the Prudential Regulation Authority and the Financial Conduct Authority, and those regulations set by the
Council of Lloyd’s, and we considered the extent to which non-compliance might have a material effect on the
syndicate annual accounts. We also considered those laws and regulations that have a direct impact on the
syndicate annual accounts such as The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate
Accounts) Regulations 2008 and the Lloyd’s Syndicate Instructions. We evaluated management’s incentives
and opportunities for fraudulent manipulation of the syndicate annual accounts (including the risk of override of
controls), and determined that the principal risks were related to the risk of fraud in revenue recognition and
management override of controls, including the potential for management bias in significant accounting
estimates. Audit procedures performed by the engagement team included:
• Discussions with the Board, management, internal audit and the compliance function of the Managing
Agent, including consideration of known or suspected instances of non-compliance with laws and
regulations, and fraud;
• Assessment of matters reported on the Managing Agent’s whistleblowing helpline and the results of the
investigation of such matters;
• Reviewing relevant meeting minutes and correspondence with regulatory authorities;
• Testing and challenging where appropriate the assumptions and judgements made in establishing
significant accounting estimates;
• Identifying and testing journal entries identified as potential indicators of fraud; and
• Designing audit procedures to incorporate unpredictability around the nature, timing and extent of
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.
Brit Syndicate 2988 Annual Report and Accounts 2024
12
Other matter
We draw attention to the fact that this report may be included within a document to which iXBRL tagging
has been applied. This auditors’ report provides no assurance over whether the iXBRL tagging has
been applied in accordance with section 2 of the Lloyd’s Syndicate Instructions version 2.0.
Paul Pannell (Senior statutory auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
5 March 2025
Brit Syndicate 2988 Annual Report and Accounts 2024
Income Statement
Technical Account – General Business for the year ended 31 December 2024
13
The accompanying notes are an integral part of these accounts.
| 2024 | 2023 | ||
Note | £’000 | £’000 | |
Gross premiums written | 4 | ||
Outward reinsurance premiums | ( | ( | |
Net premiums written | |||
Change in the gross provision for unearned premiums | 12 | ||
| Change in the provision for unearned premiums, reinsurers’ share | 12 | ( | ( |
Net change in the provision for unearned premiums | |||
Earned premiums, net of reinsurance | |||
Allocated investment return transferred from/(to) the non- technical account | |||
Total technical income | 195,730 | 231,127 | |
Claims paid: | |||
Gross amount | 13 | ( | ( |
| Reinsurers’ share | 13 | ||
Net claims paid | ( | ( | |
Change in the provision for claims: | |||
Gross amount | ( | ( | |
| Reinsurers’ share | ( | ||
Net change in the provision for claims | ( | ( | |
Claims incurred, net of reinsurance | 13 | ( | ( |
Net operating expenses | 5 | ( | ( |
Total technical charges | (166,736) | (183,827) | |
Balance on the technical account for general business |
Brit Syndicate 2988 Annual Report and Accounts 2024
Income Statement
Non-Technical Account for the year ended 31 December 2024
14
| 2024 | 2023* | ||
Note | £’000 | £’000 | |
Balance on the technical account for general business | |||
Investment income | 8 | ||
Realised gains/(losses) on investments | 8 | ( | |
Unrealised (losses)/gains on investments | 8 | ( | |
Investment expenses and charges | 8 | ( | ( |
Net investment return | |||
Allocated investment return transferred (to)/from general business technical account | ( | ( | |
Gain/(loss) on exchange | ( | ||
Profit for the financial year |
*Investment income, realised gains/losses, unrealised gains/losses and investment expenses and charges have been re-
presented from the prior year to align to the Lloyd’s Illustrative Accounts. In the prior year, realised gains were presented
within investment income, realised losses were presented within investment expenses and charges and unrealised gains
were presented separately to unrealised losses. Full disclosure of each of these balances can be found in Note 8.
Statement of Comprehensive Income
For the year ended 31 December 2024
| 2024 | 2023 | |
| £’000 | £’000 | |
Profit for the financial year | 29,070 | 45,733 |
Currency translation gain/(loss) | ( | |
Total comprehensive income for the financial year |
The accompanying notes are an integral part of these accounts.
Brit Syndicate 2988 Annual Report and Accounts 2024
Statement of Financial Position
Assets
as at 31 December 2024
15
| 2024 | 2023* | ||
Note | £’000 | £’000 | |
Assets | |||
Investments: | |||
Financial investments | 10 | ||
Deposits with ceding undertakings | |||
| Reinsurers’ share of technical provisions: | |||
Provision for unearned premium | 12 | ||
Claims outstanding | 13 | ||
Debtors: | |||
Debtors arising out of direct insurance operations | 15 | ||
Debtors arising out of reinsurance operations | 16 | ||
Other debtors | 17 | ||
Other assets: | |||
Cash at bank and in hand | 18 | ||
Other | 19 | ||
Prepayments and accrued income: | |||
Deferred acquisition costs | 20 | ||
Other prepayments and accrued income | |||
Total assets |
*Other debtors have been re-presented from the prior year to align to the Lloyd’s Illustrative Accounts. In the prior year,
the breakdown of other debtors due within one year and after one year was shown on the Statement of Financial
Position. This information can now be found in Note 17.
The accompanying notes are an integral part of these accounts.
Brit Syndicate 2988 Annual Report and Accounts 2024
Statement of Financial Position
Liabilities
For the year ended 31 December 2024
16
| 2024 | 2023 | ||
Note | £’000 | £’000 | |
| Members’ balances and liabilities | |||
| Members’ balances | |||
Technical provisions: | |||
Provision for unearned premium | 12 | ||
Claims outstanding | 13 | ||
Creditors: | |||
Creditors arising out of direct insurance operations | 21 | ||
Creditors arising out of reinsurance operations | 22 | ||
Other creditors | 23 | ||
Accruals and deferred income | |||
Total liabilities | |||
Total liabilities, capital and reserves |
The accompanying notes are an integral part of these accounts.
The annual accounts on pages 13 to 57 were approved by the Board of Brit Syndicates Limited on 4
March 2025 and signed on its behalf by:
Gavin Wilkinson Martin Thompson
Director Director
Brit Syndicate 2988 Annual Report and Accounts 2024
Statement of Changes in Members’ Balances
as at 31 December 2024
17
| 2024 | 2023 | ||
Note | £’000 | £’000 | |
| Members’ balances as at 1 January | ( | ||
Total comprehensive income for the financial year | |||
Distributions to/collections from members | 9 | ( | |
Other | ( | ||
| Members’ balances as at 31 December |
The Members’ balances relate entirely to Underwriting participation.
The accompanying notes are an integral part of these accounts.
Statement of Cash Flows
For the year ended 31 December 2024
Brit Syndicate 2988 Annual Report and Accounts 2024
18
| 2024 | Restated* 2023 | ||
Note | £’000 | £’000 | |
Cash flows from operating activities | |||
Profit for the financial year | |||
Increase in gross technical provisions | |||
(Increase)/decrease in reinsurers’ share of gross technical provisions | ( | | |
Decrease in debtors | |||
Increase/(decrease) in creditors | ( | ||
Movement in other assets/liabilities | ( | ||
Net investment return | ( | ( | |
Foreign exchange on operating activities | |||
Net cash flows from operating activities | |||
Cash flows from investing activities | |||
Purchase of equity and debt instruments | ( | ( | |
Sale of equity and debt instruments | |||
Investment income received | |||
Other | ( | ||
Net cash flow from investing activities | ( | ( | |
Cash flows from financing activities | |||
Collections from members | |||
Distribution to members | ( | ||
Other | ( | ||
Net cash flows from financing activities | ( | ||
Net (decrease)/increase in cash and cash equivalents | ( | ||
Cash and cash equivalents at 1 January | |||
Foreign exchange on cash and cash equivalents | ( | ||
Cash and cash equivalents at 31 December | 18 |
*Refer to note 24 for details of the restatement.
The accompanying notes are an integral part of these accounts.
Notes to the Accounts
For the year ended 31 December 2024
Brit Syndicate 2988 Annual Report and Accounts 2024
19
1 Accounting policies, statement of compliance and basis of preparation
1.1 Statement of compliance and basis of preparation
The financial statements have been prepared in compliance with FRS 102 and FRS 103, being the applicable
UK GAAP accounting standards, and in accordance with The Insurance Accounts Directive (Lloyd’s Syndicate
and Aggregate Accounts) Regulations 2008 (The Regulations 2008), and where appropriate the provisions of
Schedule 3 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008
(The Regulations) relating to insurance companies. The financial statements have also been prepared in
accordance with the Lloyd’s Syndicate Accounts Instructions version 2.0, as modified by the Frequently Asked
Questions version 1.1 issued by Lloyd’s.
The principal accounting policies applied in the preparation of these financial statements are set out below. These
policies have been consistently applied unless otherwise stated.
The financial statements are prepared under the historical cost convention, as modified by the recognition of
certain financial assets and liabilities measured at fair value. The annual basis of accounting has been applied to
all classes of business written by the Syndicate.
The Directors of the Managing Agent have prepared the annual accounts on the going concern basis that the
Syndicate will continue to write future business.
The functional currency of the Syndicate is the United States dollar (US$). The financial statements are reported
in sterling (£), which is the presentational currency of the Syndicate, and rounded to the nearest £1,000, unless
otherwise stated.
The 2023 accounts were rounded to the nearest £0.1m, unless otherwise stated. The 2023 comparatives have
therefore been re-presented to the nearest £1,000 in this document, which may lead to minor rounding differences
compared to the prior year accounts.
Furthermore, 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 re-
presented to ensure consistency with current year presentation and compliance with the Lloyd's Syndicate
Accounts Instructions. These changes have been detailed within the impacted financial statements and note
disclosures. The changes have been applied retrospectively and have no impact on previously reported profit,
total comprehensive income, total assets, total liabilities or total capital and reserves.
1.2 Product classification
Insurance contracts are those contracts that transfer significant insurance risk. The significance of insurance risk
is dependent on both the probability of an insured event and the magnitude of its potential effect to the
policyholder. Once a contract has been classified as an insurance contract, it remains an insurance contract for
the remainder of its lifetime, even if the insurance risk reduces significantly during this period.
1.3 Significant accounting policies
1.3.1 Insurance contracts
a. Premiums
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 due but not yet
receivable or notified, less an allowance for cancellations. Premiums are accreted to the technical account (i.e.
earned) on a pro rata basis over the term of the related policy, except for those contracts where the period of risk
differs significantly over the contract period. In these circumstances, premiums are recognised over the period of
risk in proportion to the amount of insurance protection provided. Reinstatement premiums are accreted to the
technical account on a pro rata basis over the term of the original policy to which it relates. Premiums are shown
net of premium taxes and other levies on premiums. Pipeline premium estimates (estimated premium income)
are derived from ultimate premium estimates which are typically based on standard actuarial projection
techniques (e.g. Basic Chain Ladder) on the key assumption that historical development of premiums is
representative of future development.
Notes to the Accounts
For the year ended 31 December 2024
1
Accounting policies, statement of compliance and basis of preparation (continued)
Brit Syndicate 2988 Annual Report and Accounts 2024
20
b. Profit commissions
Profit commission income arising from whole account quota share contracts is recognised when the economic
benefits are highly probable. These are netted off against commission costs which are included within the
‘acquisition costs’ line in the technical account.
c. Deferred acquisition costs
Commission and other acquisition costs incurred during the financial period that are related to securing new
insurance contracts and/or renewing existing insurance contracts, but which relate to subsequent financial
periods, are deferred to the extent that they are recoverable out of future revenue margins. Deferred acquisition
costs are capitalised and amortised over the life of the policy to which they relate on a basis consistent with the
earnings pattern of that policy.
d. Claims
Claims incurred comprise claims and claims handling costs paid in the year and changes in the outstanding
claims provisions, including provisions for claims incurred but not reported (IBNR) and related expenses, together
with any adjustments to claims from prior years. Claims handling costs are mainly external costs related to the
negotiation and settlement of claims.
Internal costs to negotiate, manage, and settle claims (unallocated loss adjustment expenses) are apportioned
to paid claims. The apportionment utilises the annual ULAE assumption that is agreed by the Reserving
Committee.
Outstanding claims represent the estimated ultimate cost of settling all claims (including direct and indirect claims
settlement costs) arising from events which have occurred up to the date of the statement of financial position,
including IBNR, less any amounts paid in respect of those claims. The Syndicate does not discount its liabilities
for unpaid claims, the ultimate cost of which cannot be known with certainty at the date of the statement of
financial position.
Claims provisions have been established on an individual class of business basis. The underwriting and
management teams conduct a quarterly review of each class of business. Claims are projected to the ultimate
position and provision is made for known claims and claims IBNR.
While the Directors consider that the estimate of claims outstanding is fairly calculated on the basis of the
information currently available to them, there is inherent uncertainty in relation to the ultimate liability which will
vary as a result of subsequent information and events. Adjustments to the amounts of the claims provisions
established in prior years are reflected in the technical account for the period in which the adjustments are made.
e. Provision for unearned premiums
The proportion of written premiums that relate to unexpired terms of policies in force at the date of the statement
of financial position is deferred as a provision for unearned premiums, generally calculated on a time apportioned
basis. The movement in the provision is taken to the technical account in order that revenue is recognised over
the period of the risk.
f. Unexpired risks provision
Provision is made for any deficiencies arising when unearned premiums, net of related deferred acquisition costs,
are insufficient to meet expected claims and expenses. The expected claims are calculated having regard to
events that are relevant to the provision at the date of the statement of financial position. Unexpired risk surpluses
and deficits are offset where business classes are managed together, and a provision is made if an aggregate
deficit arises. At 31 December 2024, the Syndicate reported an unexpired risks provision of £nil (2023: £nil).
Notes to the Accounts
For the year ended 31 December 2024
1
Accounting policies, statement of compliance and basis of preparation (continued)
Brit Syndicate 2988 Annual Report and Accounts 2024
21
g. 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. 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.
Reinstatement premiums on both inwards and outwards business are accreted to the technical account on a pro
rata basis over the term of the original policy to which they relate.
Reinsurance assets include amounts recoverable from reinsurance companies for paid and unpaid losses and
loss adjustment expenses and ceded unearned premiums. Amounts recoverable from reinsurers are calculated
with reference to the claims liability associated with the reinsured risks. Revenues and expenses arising from
reinsurance agreements are therefore recognised in accordance with the underlying risk of the business
reinsured.
Gains or losses on buying reinsurance are recognised immediately in the technical account.
If a reinsurance asset is impaired, the Syndicate reduces its carrying amount accordingly, and will immediately
recognise the impairment loss in the technical account. A reinsurance asset will be deemed to be impaired if
there is objective evidence, as a result of an event that occurred after initial recognition of that asset, that the
Syndicate may not receive all amounts due to it under the terms of the contract, and that the event has a reliably
measurable impact on the amounts that the Syndicate will receive from the reinsurer.
Gains or losses on buying retroactive reinsurance are recognised immediately in the technical account and are
not deferred and amortised. Premiums ceded and claims reimbursed are presented on a gross basis in the
technical account and statement of financial position as appropriate.
h. Expenses
The Managing Agent has charged the Syndicate an annual fixed fee and has borne all the management expenses
of the Syndicate, other than those related to the direct cost of underwriting and investment management charges.
Investment management charges are netted off against investment return as disclosed in note 9. Any internal or
external claims adjustment or settlement costs are included within gross claims paid.
The Managing Agent also charges the Syndicate profit commission equal to a fixed percentage of profit for each
year of account, subject to a deficit clause brought forward from previous years. An accrual is recognised as and
when the year of account becomes profitable, with payment crystallising on closure of the year of account after
three years. Profit commission of £3,432k was charged or accrued for in the calendar year to 31 December 2024
(2023: £27k).
i. Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred and subsequently stated at
amortised cost. Fair value is normally determined by reference to the fair value of the proceeds received or
amounts paid. Any difference between the initial carrying amount and the redemption value is recognised in the
income statement over the period of the borrowing using the effective interest rate method.
1.3.2 Investments
a. Financial investments
The Syndicate has designated on initial recognition its financial assets held for investment purposes
(investments) at fair value through profit or loss (FVTPL). This is in accordance with the Syndicate’s documented
investment strategy and consistent with investment risk being assessed on a portfolio basis. Information relating
to investments is provided internally to the Directors of the Managing Agent and management personnel on a fair
value basis.
Notes to the Accounts
For the year ended 31 December 2024
1
Accounting policies, statement of compliance and basis of preparation (continued)
Brit Syndicate 2988 Annual Report and Accounts 2024
22
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value of financial assets and liabilities traded in
active markets (which are the principal markets or the most advantageous markets that maximise the amount
that would be received to sell the asset or minimises the amount that would be paid to transfer the liability) is
based on quoted market bid and ask price for both financial assets and financial liabilities respectively.
The fair value of financial assets and liabilities that are not traded in an active market, including over-the-counter
derivatives, is determined using valuation techniques. The Syndicate uses a variety of methods and makes
assumptions that are based on market conditions existing at each reporting date. Valuation techniques include
the use of comparable recent arm’s length transactions, reference to other instruments that are substantially the
same, discounted cash flow analysis, option pricing models and others commonly used by market participants
and which make the maximum use of observable inputs.
Gains and losses on investments designated as FVTPL are recognised through the technical account. Interest
income from investments in bonds and short term investments is recognised at the effective interest rate.
b. Investment return
Investment return comprises all investment income, interest receivable, dividend income, overseas deposit
income, and realised and unrealised investment gains and losses and investment expenses and charges. Interest
income is recognised using the effective interest rate method.
Realised gains and losses on investments carried at market value are calculated as the difference between sale
proceeds and purchase price and are recognised when the sale transaction occurs. Unrealised gains and losses
on investments represent the difference between the valuation at the date of the statement of financial position
and their valuation at the previous statement of financial position, or purchase price if acquired during the year,
together with the reversal of unrealised gains and losses recognised in earlier accounting periods in respect of
investment disposals in the current period. Investment expenses and charges relate to those cost incurred in
relation to investment activities.
Investment return is initially recorded in the non-technical account. A transfer is made from the non-technical
account to the general business technical account to reflect the investment return on funds supporting
underwriting business. All investment return is considered to arise on such funds except to the extent that
investment income arises on Funds at Lloyd’s retained at the Syndicate level, also known as ‘Funds in Syndicate’
(FIS); that income remains in the non-technical account.
1.3.3 Measurement of other financial assets and financial liabilities
Other financial assets and financial liabilities are initially recognised at transaction price and subsequently
measured at amortised cost using the effective interest rate method.
1.3.4 Recognition and derecognition of financial assets and financial liabilities
Financial assets and financial liabilities are recognised when the Syndicate becomes a party to the contractual
provisions of the contract. A financial asset is derecognised when either the contractual rights to the asset’s cash
flows expire, or the asset is transferred, and the transfer qualifies for derecognition under a combination of risks
and rewards and control tests.
A financial liability is derecognised when it is extinguished, which is when the obligation in the contract is
discharged, cancelled or expired.
All ‘regular way purchases and sales’ of financial assets are recognised on the trade date, i.e. the date that the
Syndicate commits to purchase or sell the asset. Regular way purchases and sales are purchases and sales of
financial assets that require delivery of assets within the time frame generally established by regulation or
convention in the marketplace.
If the carrying value of an asset is impaired, it is reduced to the recoverable amount by an immediate charge in
the income statement. The recoverable amount is the higher of an asset’s fair value less costs to sell and value
in use.
Notes to the Accounts
For the year ended 31 December 2024
1
Accounting policies, statement of compliance and basis of preparation (continued)
Brit Syndicate 2988 Annual Report and Accounts 2024
23
1.3.5 Derivatives
Derivative financial instruments include foreign exchange contracts, forward rate agreements, interest rate
futures, currency and interest rate swaps and other financial instruments that derive their value mainly from
underlying interest rates, foreign exchange rates, credit indices, commodity values or equity instruments. All
derivatives are initially recognised in the statement of financial position at their fair value, which represents their
cost. They are subsequently remeasured at their fair value, with movements in this value recognised in the
technical account. Fair values are obtained from quoted market prices or, if these are not available, by using
valuation techniques such as discounted cash flow models or option pricing models.
All derivatives are carried as assets when the fair values are positive and as liabilities when the fair values are
negative. Derivative contracts may be traded on an exchange or over-the-counter (OTC). Exchange-traded
derivatives are standardised and include certain futures and option contracts. OTC derivative contracts are
individually negotiated between contracting parties and include forwards and swaps.
Derivatives are subject to various risks including market, liquidity and credit risk, similar to those related to the
underlying financial instruments. Many OTC transactions are contracted and documented under International
Swaps and Derivatives Association (ISDA) master agreements or their equivalent, which are designed to provide
legally enforceable set-off in the event of default, reducing the Syndicate’s exposure to credit risk. The notional
or contractual amounts associated with derivative financial instruments are not recorded as assets or liabilities
on the statement of financial position as they do not represent the fair value of these transactions.
1.3.6 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 are included in the
statement of financial position under the heading ‘Members’ balance’.
No provision has been made for any overseas tax payable by members on underwriting results.
1.3.7 Pension costs
Brit Group Services Limited operates a defined contribution pension scheme on behalf of the Managing Agent.
Contributions are charged to the Syndicate within the annual fixed fee.
1.3.8 Foreign currencies
In accordance with FRS102, the functional currency is the currency of the primary economic environment in which
the Syndicate operates. The functional currency for Syndicate 2988 is the United States dollar (US$). The annual
accounts are presented in sterling. Foreign exchange resulting from translating balances from the functional
currency to the presentational currency is reported in other comprehensive income.
Unless otherwise stated, transactions in sterling, Canadian dollars and euros are translated into the functional
currency at average rates of exchange. Transactions in foreign currencies other than sterling, US dollars,
Canadian dollars and Euros are translated at the rate of exchange ruling at the date the transaction is processed.
Monetary assets and liabilities in currencies other than the functional currency are translated at the rate of
exchange ruling at 31 December of each year. Exchange profits or losses arising on the translation of foreign
currency amounts relating to the Syndicate insurance operations are included within the non-technical account
as prescribed by FRS 103.
1.3.9 Offsetting of financial instruments
Financial assets and liabilities are offset, and the net amount reported in the statement of financial position only
when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a
net basis, or to realise the assets and settle the liability simultaneously.
Notes to the Accounts
For the year ended 31 December 2024
Brit Syndicate 2988 Annual Report and Accounts 2024
24
2 Critical accounting estimates and judgements in applying accounting policies
The Syndicate makes various assumptions about the future, and other major sources of estimation uncertainty
at the end of the reporting period, that have a significant risk of resulting in a material adjustment to the reported
amounts of assets and liabilities within the next financial year.
Estimates and judgements are regularly re-evaluated and are based on a combination of historical experience
and other factors, including exposure analysis, expectations of future experience and expert judgement.
2.1 Estimation and judgements in relation to determining the ultimate liability arising from claims
made under Insurance contracts
The estimation of the ultimate liability arising from claims made under insurance contracts is the Syndicate’s most
critical accounting estimate. There are several sources of uncertainty that need to be considered in the estimate
of the amounts that the Syndicate will ultimately pay to settle such claims. Significant areas requiring estimation
and judgement include:
• Estimates of the amount of any liability in respect of claims notified but not settled and incurred but not
reported claims (IBNR) to be included within provisions for inwards insurance and reinsurance contracts;
• The corresponding estimate of the amount of outwards reinsurance recoveries which will become due
as a result of the estimated claims on inwards business;
• The recoverability of amounts due from reinsurers; and
• Estimates of the proportion of exposure which has expired in the period as represented by the earned
proportion of premiums written.
The assumptions used and the manner in which these estimates and judgements are made are set out below,
including the reserving process for the estimation of gross, and net of reinsurance, ultimate premiums and claims:
• Quarterly statistical data is produced in respect of gross and net premiums and claims (paid and incurred);
• Projections of ultimate premiums, reinstatement premiums and claims are produced by the internal actuarial
department using standard actuarial projection techniques (e.g. Basic Chain Ladder, Bornhuetter-
Ferguson, Initial Expected Loss Ratio). The Basic Chain Ladder and Bornhuetter-Ferguson projection
methods are based on the key assumption that historical development of premiums and claims is
representative of future development. Claims inflation is taken into account in the initial expected loss ratio
selections but is otherwise assumed to be in line with historical inflation trends, unless explicit adjustments
for other drivers of inflation such as legislative developments are deemed appropriate. Given the early stage
of development for the Syndicate, these methods have typically relied on benchmark information e.g. from
similar business written by BSL into Syndicate 2987;
• Some classes of business have characteristics which do not necessarily lend themselves easily to statistical
estimation techniques e.g. due to low data volumes. In such cases, for example, a policy-by-policy review
may also be carried out to supplement statistical estimates;
• In the event of catastrophe losses, and prior to detailed claims information becoming available, claims
provision estimates are compiled using a combination of output from specific recognised modelling software
and detailed reviews of contracts exposed to the event in question.
• Underlying key assumptions and methodology, are discussed with class underwriters, divisional
underwriting directors and the claims team at the ‘Pre-Meet’ meetings. The actuarial department use the
information gathered to help inform the initial ultimate selections following these meetings;
• A peer review process takes place within the Actuarial department of the inital ultimates and they are also
presented to the relevant MDs by senior members of the Actuarial team. This informs the ‘Pre-Close’
ultimate selections, assumptions, methodology and uncertainties are presented to the Reserving
Committee for discussion and debate;
• Following the review of the ‘Pre-Close’ estimate, the Reserving Committee is presented a range of
suggested changes following the Senior Actuarial management review and feedback from the MDs.
• The Reserving Committee then recommends the committee estimates to be adopted in the financial
statements.
The estimates and judgements are applied in line with the overall reserving philosophy and seek to state the
claims provisions on a best estimate, undiscounted basis. A management risk margin is also applied over and
above the actuarial best estimate to allow for the inherent uncertainty within the best estimate reserve position.
Notes to the Accounts
For the year ended 31 December 2024
Brit Syndicate 2988 Annual Report and Accounts 2024
25
2 Critical accounting estimates and judgements in applying accounting policies (continued)
The Syndicate has carefully considered the impact of the higher levels of inflation. As part of the year-end
reserving exercise, the impact of inflation has been considered in detail by the internal Actuarial team to ensure
that assumptions are consistent with the Syndicate’s forward looking expectations for claims inflation. Various
techniques have been considered in line with guidance from Lloyd’s and regulators.
In addition to claims provisions, the reserve for future loss adjustment expenses is also subject to estimation with
consideration being given to the level of internal and third-party loss adjustment expenses incurred annually. The
estimated loss adjustment expenses are expressed as a percentage of gross claims reserves and the
reasonableness of the estimate is assessed through benchmarking. Further judgements are made as to the
recoverability of amounts due from reinsurers. Provisions for bad debts are made specifically, based on the
solvency of reinsurers, internal and external ratings, payment experience with them and any disputes of which
the Syndicate is aware.
2.2 Estimated premium income
Premium income reported by the Syndicate includes estimates for ultimate premiums for certain contracts, in
particular those written under delegated authority agreements. These ultimate premiums are written in line with
expected attachments of the underlying policies. The Syndicate considers relevant information when determining
estimates, including information provided by brokers and coverholders, past underwriting experience, market
conditions, and the contractual terms of policies. As updated information relating to such variables becomes
available, for example when bordereaux are received, adjustments to estimates are recorded in the period in
which they are determined, and will impact gross premiums written and provisions for unearned premium in the
technical account.
2.3 Estimation of premium earnings
The Syndicate attributes earning of gross written premium to each period on the basis of the passage of time.
However, if the expected pattern of release of risk during the coverage period differs significantly from the passage
of time, for example a group of contracts that is exposed to large natural catastrophe risk concentrated in the first
or second half of the year, then the allocation is made on the basis of the expected timing of claims incurred. At
a portfolio level this is considered to provide a reasonable estimate for the full year of the pattern of risk over the
coverage period.
2.4 Estimation and judgements in respect of fair value of financial investments
Financial investments are carried in the statement of financial position at fair value. Determining the fair value of
certain investments requires estimation.
The Syndicate values investments using designated methodologies, estimations and assumptions. These
securities, which are reported at fair value on the statement of financial position, represent the majority of the
invested assets. The measurement basis for assets carried at fair value is categorised into a ‘fair value hierarchy’
in accordance with the valuation inputs and consistent with UK GAAP.
The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities
(level one); the middle priority to fair values other than quoted prices based on observable market information
(level two); the lowest priority to unobservable inputs that reflect the assumptions that the Syndicate considers
market participants would normally use (level three). To the extent that valuations are based on models or inputs
that are unobservable in the market, the determination of fair value requires more judgement and accordingly,
those instruments included in level three will require a greater degree of judgement to be exercised during
valuation than for those included in level two or level one. At 31 December 2024, financial investments amounting
to £1,949k (2023: £2,345k) were classified as level three.
The classification within the fair value hierarchy is based on the lowest level of significant input to its valuation.
Any change to investment valuations may affect the Syndicate results of operations and reported financial
condition. For further information, refer to note 10.
Notes to the Accounts
For the year ended 31 December 2024
Brit Syndicate 2988 Annual Report and Accounts 2024
26
3 Principal risks and uncertainties
3.1 Insurance risk
Insurance risk arises from the possibility of an adverse financial result due to actual 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. This is the principal risk the Syndicate is exposed to as its primary function is to underwrite insurance
contracts. The risk arises due to the possibility of insurance contracts being under-priced, under-reserved or
subject to unforeseen catastrophe claims.
The areas of insurance risk discussed below include underwriting (including aggregate exposure management),
reinsurance and reserving.
a. Underwriting risk
Underwriting risk is the risk that insurance premiums will not be sufficient to cover the future losses and associated
expenses. It arises from the fluctuations in the frequency and severity of financial losses incurred through the
underwriting process by the Syndicate because of unpredictable events.
The Syndicate is also exposed to the risks resulting from its underwriters accepting risks for premiums which are
insufficient to cover the ultimate claims which result from such policies. The underwriting and economic
environment and the associated impact on premium rates, including trends due to the underwriting cycle and
inflation, are factored into the Syndicate’s pricing models and risk management tools, and is continually monitored
to assess whether any corrective action is required. Additional controls over the underwriting strategy are
described in the section below.
The Syndicate writes all of its business through Lloyd’s and therefore can take advantage of Lloyd’s centralised
infrastructure and service support. Lloyd’s also has an established global distribution framework, with extensive
licensing agreements providing the Syndicate access to over 200 territories. Exclusively using the Lloyd’s
platform subjects the Syndicate to a number of resulting underwriting risks. The Syndicate relies on the efficient
functioning of the Lloyd’s market. In particular any damage to the brand or reputation of Lloyd’s or deterioration
in Lloyd’s asset base when compared with its liabilities may have a material adverse effect on the Syndicate’s
ability to write new business.
The Syndicate also benefits from the ability to write business based on the Lloyd’s financial rating, which allows
the Syndicate to write more business as part of the Lloyd’s platform. A downgrade in Lloyd’s financial strength
ratings may have an adverse effect on the Syndicate.
(i) Controls over underwriting strategy
The BSL Board sets the Syndicate’s underwriting strategy for accepting and managing underwriting risk. The
Syndicate Underwriting Committee, chaired by the Active Underwriter , meets regularly to drive the underwriting
strategy and to monitor performance against the plans. The assessment of underwriting performance is all-
encompassing applying underwriting key performance indicators (KPIs), technical pricing management
information (MI), premium monitoring, delegated underwriting operations and claims. The risks are managed by
the committee in line with the underwriting risk policy and within the risk tolerance set by the Board. The
underwriting risk policy also sets out a number of controls, which are summarised below:
The Managing Agent carries out a detailed annual business planning process for each of the Syndicate’s
underwriting units. The resulting plans set out premium, territorial and aggregate limits and reinsurance protection
thresholds for all classes of business and represent a key tool in managing concentration risk. Performance
against the plans is monitored on a regular basis by the Underwriting Committee as well as by the Board. A
dedicated Risk Aggregation team also performs catastrophe modelling and Realistic Disaster Scenarios (RDS)
on a regular basis to ensure that the Syndicate’s net losses remain within its risk appetite.
The Managing Agent has developed underwriting guidelines, limits of authority and business plans for the
Syndicate which are binding upon all staff authorised to underwrite. These are detailed and specific to
underwriters and classes of business. Gross and net line size limits are in place for each class of business with
additional restrictions in place on catastrophe exposed business.
Notes to the Accounts
For the year ended 31 December 2024
3
Principal risks and uncertainties (continued)
Brit Syndicate 2988 Annual Report and Accounts 2024
27
A proportion of the Syndicate’s insurance risks are written by third parties under delegated underwriting
authorities, with the remaining being written through individual risk acceptances or through reinsurance treaties.
The third parties are closely vetted in advance and are subject to tight reporting requirements. In addition, the
performance of these contracts is closely monitored by underwriters and/or portfolio managers, with regular audits
being carried out.
The technical pricing framework ensures that the pricing process in the Syndicate is appropriate. It ensures
pricing methodologies are demonstrable and transparent and that technical (or benchmark) prices are assessed
for each risk. The underwriting and actuarial functions work together to maintain the pricing models and assess
the difference between technical price and actual price. The framework also ensures that sufficient data is
recorded and checked by underwriters to enable the Syndicate to maintain an effective rate monitoring process.
Compliance is checked through both a peer review process and, periodically, by the Managing Agent’s Internal
Audit department which is entirely independent of the underwriting units.
In order to limit risk, the number of reinstatements per policy is limited, deductibles are imposed, policy exclusions
are applied and whenever allowed by statute, maximum indemnity limits are put in place per insured event.
(ii) Underwriting risk profile
The core insurance portfolio of property, marine and casualty, covers a variety of largely uncorrelated events and
also provides some protection against the underwriting cycle as different classes are at different points in the
underwriting cycle. The underwriting portfolio is managed to target top quartile underwriting performance and the
mix of business is continually adjusted based on the current environment (including the current pricing strength
of each class). This assessment is conducted as part of business planning process, which operates annually,
and ongoing strategy process and uses inputs from the technical pricing framework. The business plan is
approved by the BSL Board and is monitored monthly.
(iii) Geographical concentration of premium
The Syndicate enters into policies with policyholders from all over the world, with the underlying risk relating to
premiums spread worldwide. This allows the Syndicate to benefit from a wide geographic diversification of risk.
The principal location of the Syndicate’s policyholders is the United States. The concentration of insurance
premium before and after reinsurance by the location of the underlying risk is summarised below:
Premiums written
Gross
Net
2024
£’000
£’000
United States
47,991
46,065
United Kingdom
20,248
19,016
Europe (excluding UK)
5,112
4,808
Other (including worldwide)
107,614
101,505
Total
180,965
171,394
Premiums written
Gross
Net
2023
£’000
£’000
United States
62,258
59,492
United Kingdom
18,532
17,780
Europe (excluding UK)
4,366
4,126
Other (including worldwide)
126,011
120,566
Total
211,167
201,964
The nature of the London Market business is such that the insureds and reinsureds are often operating on a
multi-territory or worldwide basis and hence coverage is often provided on a worldwide basis. Premiums written
on a multi-territory or worldwide basis are included in ‘Other’ in the table above.
Notes to the Accounts
For the year ended 31 December 2024
3
Principal risks and uncertainties (continued)
Brit Syndicate 2988 Annual Report and Accounts 2024
28
(iv) Portfolio mix
2024
2023
Variance
Premium by portfolio
£000
£000
%
Finpro & Cyber
71,228
50,449
41.2
Programmes & Facilities
17,221
38,049
(54.7)
Property & Specialty
57,172
51,201
11.7
Casualty
32,159
29,257
9.9
*Discontinued
3,185
42,211
(92.5)
Total
180,965
211,167
(14.3)
The Syndicate underwrites a business mix of both insurance and reinsurance, long and short tailed business
across a number of geographic areas which results in diversification of the Syndicate’s portfolio. The business
mix is monitored with focus on the short tail vs. long tail split and the proportion of delegated underwriting
business. Long tail business is currently 51.7% of the portfolio in the year to 31 December 2024 (2023: 35.9%)
and delegated underwriting represents approximately 38.1% of the portfolio (2023: 31.6%).
(v) Aggregate exposure management
The Syndicate closely monitors aggregation of exposure to natural catastrophe events against agreed risk
appetites using stochastic catastrophe modelling tools, along with knowledge of the business, historical loss
information, and geographical accumulations. Climate change impacts natural catastrophe events. Analysis and
monitoring also measures the effectiveness of the Syndicate’s reinsurance programmes. Risk appetites are set
by the Board on an annual basis.
Aggregations of exposure to man-made catastrophes are monitored using in-house scenario analysis and Lloyd’s
Realistic Disaster Scenarios (RDSs). Catastrophe risk tolerances are reviewed by the Board on an annual basis.
Stress and scenario tests are also run, such as Lloyd’s and internally developed Realistic Disaster Scenarios
(RDSs). Below are the key RDS losses to the Syndicate for all classes combined as at 1
st
October 2024
(unaudited):
Lloyd’s Prescribed RDS Event
Estimated
Modelled Syndicate
Loss at 1 October 2024
(i)
Modelled Syndicate
Loss at 1 October 2023
(ii)
Industry
Loss (i)
$’000
Gross
Net
Gross
Net
Gulf of Mexico Windstorm
111,000,000
10,000
10,000
33,000
17,000
Florida Miami Windstorm
131,000,000
6,000
6,000
31,000
17,000
US North East Windstorm
81,000,000
7,000
6,000
27,000
18,000
San Francisco Earthquake
80,000,000
35,000
32,000
55,000
41,000
Japan Earthquake
55,886,000
5,000
5,000
11,000
10,000
Japan Windstorm
11,876,000
-
-
3,000
2,000
European Windstorm
26,800,000
5,000
5,000
15,000
15,000
(i): At 31 December 2024 foreign exchange rates
(ii) At 31 December 2023 foreign exchange rates
Actual results may differ materially from the modelled losses above given the significant uncertainties within
model assumptions, techniques and simulations applied to calculate these event loss estimates. There could also
be non-modelled losses which result in actual losses exceeding these figures. Moreover, the portfolio of insured
risks changes dynamically over time.
Notes to the Accounts
For the year ended 31 December 2024
3
Principal risks and uncertainties (continued)
Brit Syndicate 2988 Annual Report and Accounts 2024
29
(vi) Sensitivity to changes in insurance liabilities
The following table presents the profit and loss impact of 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. The amount disclosed in the table represents the profit or loss impact
of an increase or decrease in the insurance liability as a result of applying the sensitivity. The amount disclosed
for the impact on claims outstanding – net of reinsurance represents the impact on both the profit and loss for the
year and member balance.
General insurance business sensitivities as at 31 December 2024
Sensitivity
+5.0%
-5.0%
£’000
£’000
Claims outstanding – gross of reinsurance
19,687
(19,687)
Claims outstanding – net of reinsurance
18,760
(18,760)
General insurance business sensitivities as at 31 December 2023
Sensitivity
+5.0%
-5.0%
£’000
£’000
Claims outstanding – gross of reinsurance
17,395
(17,395)
Claims outstanding – net of reinsurance
16,671
(16,671)
b. Reinsurance risk
The Syndicate purchases reinsurance to manage exposure to individual risks and aggregation of risks arising
from individual large claims and catastrophe events. This allows the Syndicate to mitigate exposure to insurance
losses against the risk appetite, reduce volatility of reported results and protect capital.
The Syndicate has in place a comprehensive programme of excess of loss reinsurances to protect itself from
severe size or frequency of losses. The following covers may be used:
(i) Facultative reinsurance is used to reduce risk relating to individual contracts. The amount of cover bought
varies by class of business. Facultative reinsurance is also used as a tool to manage the net line size on
individual risks to within tolerance.
(ii) Risk excess of loss reinsurance is used to protect a range of individual inwards contracts which could give rise
to individual large claims. The optimal net retention per risk is assessed for each class of business given the
Syndicate’s risk appetite during the business planning exercise.
(iii) Catastrophe excess of loss reinsurance cover on a basis whereby the Syndicate’s reinsurance recoveries
under the contract are based on Syndicate 2987’s experience rather than Syndicate 2988’s. This introduces
an element of basis risk, but this is mitigated by the correlation between the Syndicate 2987 and Syndicate
2988 inwards portfolios.
Given the fundamental importance of reinsurance protection to the Syndicate’s risk management, the Managing
Agent has in place internal controls and processes to ensure that the reinsurance arrangements provide
appropriate protection of capital and maintain the Syndicate’s ability to meet policyholder obligations. The Head
of Outwards Reinsurance Placement proposes external reinsurance arrangements with input from class
underwriters and the BSL Chief Risk Officer. All reinsurance purchases are reviewed by the Underwriting
Committee. The Head of Outwards Reinsurance Placement monitors and reports on the purchase of reinsurance
protections.
Notes to the Accounts
For the year ended 31 December 2024
3
Principal risks and uncertainties (continued)
Brit Syndicate 2988 Annual Report and Accounts 2024
30
The Syndicate remains exposed to a number of risks relating to its reinsurance programme:
• It is possible for extremely severe losses to exhaust the reinsurance purchased. Any losses exceeding
the reinsurance protection would be borne by the Syndicate.
• Some parts of the programme have limited reinstatements which limit the amount that may be recovered
from second or subsequent claims. If the entirety of the cover is exhausted, it may not be possible to
purchase additional reinsurance at a reasonable price.
• A dispute may arise with a reinsurer which may mean the recoveries received are lower than
anticipated.
• Basis risk on reinsurance which responds to something other than the Syndicate’s Ultimate Net Loss.
These risks are managed through a combination of techniques and controls including risk aggregation
management, capital modelling and internal actuarial review of outward reinsurance costs. The counterparty risk
in relation to reinsurance purchased is managed by the Credit Committee. This is further discussed in the Credit
risk section below.
c. Reserving risk
Reserving risk arises where the actual cost of losses for policyholder obligations incurred before the reporting
date may differ from the established reserves due to inaccurate assumptions or unforeseen circumstances. This
is a key risk for the Syndicate as the reserves for unpaid losses represent the largest component of the
Syndicate’s liabilities and are inherently uncertain. The BSL Reserving Committee is responsible for the
management of the Syndicate’s reserving risk.
The Syndicate has a rigorous process for establishing reserves for insurance claim liabilities and a number of
controls are used to mitigate reserving risk. The reserving process starts with controls over claims data which
ensure complete and accurate recording of all paid and notified claims. Claims adjusters validate policy terms
and conditions, adjust claims and investigate suspicious or disputed claims in accordance with the Syndicate’s
claims policy. Case reserves are set for notified claims using the experience of specialist claims adjusters,
underwriters and external experts where necessary.
Whilst the case reserve is expected to be sufficient to meet the claims amount when it is settled, incurred but not
reported (IBNR) claims require additional reserves. This is particularly the case for the longest tailed classes of
business where the final settlement can occur several years after the claim occurred. Actuarial triangulation
techniques are employed by the Syndicate’s experienced actuaries to establish the IBNR reserves.
These techniques project IBNR reserves based on historical development of paid and incurred claims by
underwriting year. For the most uncertain claims, the triangulation techniques are supplemented by additional
methods, such as using historical information of Syndicate 2987, to ensure the established reserves are
appropriate. The actuarial team work closely with other business functions such as underwriting, claims and risk
aggregation to ensure that they have a full understanding of the emerging claims experience across the
Syndicate. Inflation is considered as part of reserve setting process.
The Syndicate’s reserving policy sets out the approach to estimating claims provisions and is designed to produce
accurate and reliable estimates that are consistent over time and across classes of business. The actuarial best
estimate set out in the policy is subject to sign-off by the Reserving Committee, as part of the formal governance
arrangements for the Syndicate. The estimate agreed by the committees is used as a basis for the Syndicate
financial statements. A management risk margin is also applied over and above the actuarial best estimate to
allow for the inherent uncertainty within the best estimate reserve position and wider inherent uncertainty across
the economic and insurance environment. This margin increases the reserves reflected in the Syndicate financial
statements above the mean expectation. Finally, the reserves in the financial statements are presented to the
Audit Committee for recommendation to the BSL Board.
Notes to the Accounts
For the year ended 31 December 2024
3
Principal risks and uncertainties (continued)
Brit Syndicate 2988 Annual Report and Accounts 2024
31
The reserves can be more or less than is required to meet the claims arising from earned business. The level of
uncertainty varies significantly between the classes written by the Syndicate but typically is highest for those
classes where there are significant delays in the settlement of the final claim amount. More specifically, the key
areas of uncertainty within the Syndicate’s reserves are considered to be claims from the long-tailed direct and
reinsurance classes. The issues contributing to this high uncertainty are common to all entities which write such
business.
3.2 Liquidity risk
This is the risk the Syndicate may encounter difficulty in meeting obligations associated with financial liabilities
that are settled by delivering cash or another financial asset. The predominant liquidity risk the Syndicate faces
is the daily calls on its available cash resources in respect of claims arising from insurance contracts.
The Managing Agent monitors the levels of cash and cash equivalents on a daily basis, ensuring adequate
liquidity to meet the expected cash flow requirements due over the short-term.
The Syndicate also limits the amount of investment in illiquid securities in line with the liquidity policy set by the
Board. This involves ensuring sufficient liquidity to withstand an internally developed stressed scenario which
includes a severe catastrophe event (with associated payment and funding requirements) and financial market
volatility. Contingent liquidity also exists in the form of the Group’s revolving credit facility.
The table below presents the undiscounted value of monetary liabilities of the Syndicate into their relevant
maturing groups based on the remaining period at the end of the year to their contractual maturities or expected
repayment dates.
As at 31 December 2024
Up to a year
1-3 years
3-5 years
More than
5 years
Total
Liabilities (undiscounted
values)
£’000
£’000
£’000
£’000
£’000
Claims outstanding
101,119
116,614
71,392
104,611
393,736
Derivative liabilities
646
-
-
-
646
Creditors
7,679
-
-
-
7,679
Accruals and deferred income
2,566
-
-
-
2,566
Total
112,010
116,614
71,392
104,611
404,627
As at 31 December 2023
Up to a year
1-3 years
3-5 years
More than
5 years
Total
Liabilities (undiscounted
values)
£’000
£’000
£’000
£’000
£’000
Claims outstanding
88,367
103,839
62,995
92,697
347,898
Derivative liabilities
322
-
-
-
322
Creditors*
6,199
-
-
-
6,199
Accruals and deferred income*
1,742
-
-
-
1,742
Total
96,630
103,839
62,995
92,697
356,161
*The Creditors and Accruals and deferred income lines have been re-presented since prior year, to align to the Lloyd’s
Illustrative Accounts. In the prior year these lines were presented in aggregate as ‘Creditors’ in the table, with a footnote to
disclose the breakdown.
Notes to the Accounts
For the year ended 31 December 2024
3
Principal risks and uncertainties (continued)
Brit Syndicate 2988 Annual Report and Accounts 2024
32
3.3 Credit risk
This is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to
discharge an obligation in a timely manner. The main sources of credit risk relate to:
• Reinsurers: through the failure to pay valid claims against a reinsurance contract held by the Syndicate;
• Brokers and coverholders: where counterparties fail to pass on premiums or claims collected or paid on
behalf of the Syndicate;
• Investments: through the issuer default of all or part of the value of a financial instrument or derivative
financial instrument; and
• Cash and cash equivalents: through the default of the banks holding the cash and cash equivalents.
The insurance and non-insurance related counterparty credit risks are managed separately by the Syndicate.
(i) Investment Credit risk management process
The Investment Committee is responsible for the management of investment credit risk. The Investment
Guidelines and Investment Policy set out clear limits and controls around the level of investment credit risk. The
Syndicate has established concentration guidelines that restrict the exposure to any individual counterparty. The
investment guidelines further limit the type, credit quality and maturity profile of both the Syndicate’s cash and
investments. In addition, the investment risk framework further limits potential exposure to credit risk through
monitoring of the aggregate investment risk limits.
(ii) Insurance Credit Risk management process
Insurance credit risk arises primarily from reinsurers (whereby reinsurers fail to pay recoveries due to the
Syndicate in a timely manner) and brokers and coverholders (whereby intermediaries fail to pass on premiums
due to the Syndicate in a timely manner).
The Credit Committee, chaired by the Brit Group Chief Financial Officer, is responsible for the management of
credit risk arising from insurance activities.
Reinsurer credit risk is managed by transacting only with reinsurance counterparties that satisfy a minimum level
of financial strength or provide appropriate levels of collateral and have been approved for use by the Credit
Committee. The reinsurer security list, which sets out the list of approved reinsurance counterparties, is reviewed
at least annually and following any significant change in risk profile, which includes any changes to reinsurers’
financial ratings. Credit risk appetite limits are set for reinsurance entities and groups to limit accumulations of
risk. These positions are monitored quarterly against current statement of financial position exposures and in
relation to a number of extreme loss scenarios.
Reinsurance aged debt is monitored and managed against the management risk appetite limits set by the Credit
Committee. A bad debt provision is held against all non-rated reinsurers or any reinsurer where there is deemed
to be a specific risk of non-payment.
Any breaches of credit risk tolerance and/or appetite are reported to the Risk Oversight Committee and the Board
on at least a quarterly basis.
Notes to the Accounts
For the year ended 31 December 2024
3
Principal risks and uncertainties (continued)
Brit Syndicate 2988 Annual Report and Accounts 2024
33
(iii) Credit risk profile
A summary of the credit risk exposures for the Syndicate is set out in the tables below:
£’000
AAA
AA
A
BBB
Other
Not
Rated
Total
As at 31 December 2024
Financial Investments
Shares and other variable
yield securities
25,678
15,169
-
-
-
20,827
61,674
Debt securities
208,866
9,540
56,439
22,851
-
27,815
325,511
Derivative assets
-
-
233
-
-
-
233
Syndicate loans to central
fund
-
-
-
-
-
1,949
1,949
Deposits with ceding
undertakings
-
-
-
-
-
27
27
Total Investments
234,544
24,709
56,672
22,851
-
50,618
389,394
Reinsurers’ share of claims
outstanding
-
6,338
7,222
-
-
4,970
18,530
Debtors arising out of direct
insurance operations
-
-
-
-
-
52,511
52,511
Debtors arising out of
reinsurance operations
-
24
6
-
-
40,345
40,375
Cash at bank and in hand
-
-
8,518
-
-
-
8,518
Other assets
6,887
1,386
4,226
747
847
-
14,093
Other debtors and accrued
interest
-
-
-
-
-
4,555
4,555
Total
241,431
32,457
76,644
23,598
847
152,999
527,976
£’000
AAA
AA
A
BBB
Other
Not
Rated
Total
As at 31 December 2023
Financial Investments
Shares and other variable
yield securities*
9,995
11,114
34,501
-
-
525
56,135
Debt securities
151,172
5,879
45,412
16,032
-
33,720
252,215
Derivative assets
-
-
-
-
-
324
324
Syndicate loans to central
fund*
2,345
2,345
Deposits with ceding
undertakings
72
72
Total Investments
161,167
16,993
79,913
16,032
-
36,986
311,091
Reinsurers’ share of claims
outstanding
-
4,282
6,122
-
-
4,072
14,476
Debtors arising out of direct
insurance operations
-
-
-
-
-
60,290
60,290
Debtors arising out of
reinsurance operations
-
114
-
-
-
55,271
55,385
Cash at bank and in hand
-
1,100
(32)
3,420
-
-
4,488
Other assets
8,536
1,055
3,459
854
430
-
14,334
Other debtors and accrued
interest
-
-
-
-
-
2,333
2,333
Total
169,703
23,544
89,462
20,306
430
158,952
462,397
*The Syndicate loans to central fund have been re-presented since prior year, to align to the Lloyd’s Illustrative Accounts.
In the prior year, this balance was disclosed within the Shares and other variable yield securities line.
Notes to the Accounts
For the year ended 31 December 2024
3
Principal risks and uncertainties (continued)
Brit Syndicate 2988 Annual Report and Accounts 2024
34
Collateral of £3,694k (2023: £5,295k) is held in third party trust accounts or as a letter of credit (‘LOC’) to
guarantee Syndicate 2988 against reinsurance counterparties and is available for immediate drawdown in the
event of a default. As at 31 December 2024, £3,328k (2023: £4,258k) of reinsurers claims were protected by
cash and cash equivalents held in third party trust accounts or by LOC’s.
The table below shows the maximum exposure to credit risk for the components of the statement of financial
position. The maximum exposure is shown gross, before the effect of mitigation through collateral agreements.
£’000
Neither
past due
nor
impaired
Past due
but not
impaired
assets
Gross
value of
impaired
assets
Impairment
allowance
Total
As at 31 December 2024
Financial Investments
Shares and other variable yield securities
61,674
-
-
-
61,674
Debt securities
325,511
-
-
-
325,511
Derivative assets
233
-
-
-
233
Syndicate loans to central fund
1,949
-
-
-
1,949
Deposits with ceding undertakings
27
-
-
-
27
Total Investments
389,394
-
-
-
389,394
Reinsurer's share of claims outstanding
18,530
-
-
-
18,530
Debtors arising out of direct insurance
operations
52,511
-
-
-
52,511
Debtors arising out of reinsurance operations
40,343
32
-
-
40,375
Other assets
14,093
-
-
-
14,093
Other debtors and accrued interest
4,555
-
-
-
4,555
Cash at bank and in hand
8,518
-
-
-
8,518
Total
527,944
32
-
-
527,976
Notes to the Accounts
For the year ended 31 December 2024
3
Principal risks and uncertainties (continued)
Brit Syndicate 2988 Annual Report and Accounts 2024
35
£’000
Neither
past due
nor
impaired
Past due
but not
impaired
assets
Gross
value of
impaired
assets
Impairment
allowance
Total
As at 31 December 2023
Financial Investments
Shares and other variable yield
securities*
56,135
-
-
-
56,135
Debt securities
252,215
-
-
-
252,215
Derivative assets
324
-
-
-
324
Syndicate loans to central fund*
2,345
-
-
2,345
Deposits with ceding undertakings
72
-
-
72
Total Investments
311,091
311,091
Reinsurer's share of claims outstanding
14,476
-
-
-
14,476
Debtors arising out of direct insurance
operations
60,290
-
-
-
60,290
Debtors arising out of reinsurance
operations
54,866
519
-
-
55,385
Other assets
14,334
-
-
-
14,334
Other debtors and accrued interest
2,333
-
-
-
2,333
Cash at bank and in hand
4,488
-
-
-
4,488
Total
461,878
519
-
-
462,397
*The Syndicate loans to central fund have been re-presented since prior year, to align to the Lloyd’s Illustrative Accounts. In the prior
year, this balance was disclosed within the Shares and other variable yield securities line.
The table below sets out the age analysis of financial assets that are past due but not impaired at the balance sheet date:
£’000
Past due but not impaired
As at 31 December 2024
0 – 3
months past
due
3 – 6
months past
due
6 – 12
months past
due
Greater than
1 year past
due
Total
Debtors arising out of reinsurance operations
-
24
15
(7)
32
Total
-
24
15
(7)
32
£’000
Past due but not impaired
As at 31 December 2023
0 – 3
months past
due
3 – 6
months past
due
6 – 12
months past
due
Greater than
1 year past
due
Total
Debtors arising out of reinsurance operations
153
76
290
-
519
Total
153
76
290
-
519
Notes to the Accounts
For the year ended 31 December 2024
3
Principal risks and uncertainties (continued)
Brit Syndicate 2988 Annual Report and Accounts 2024
36
3.4 Market risk
This is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes
in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk.
Credit risk on financial investments and cash is covered in the credit risk section.
a. Currency risk
Currency risk is the risk that movements in exchange rates imp act the financial performance or solvency position
of the Syndicate. The split of assets and liabilities for each of the Syndicate’s main currencies converted to £
sterling is set out in the tables below:
Converted £’000
UK £
US $
EUR €
CAD$
AUD $
Total
As at 31 December 2024
Investments
Reinsurers’ share of technical provisions
Debtors
Other assets
Prepayments and accrued income
Total Assets
Technical provisions
Creditors
Accruals and deferred income
6,335
1,836
20,311
3,814
3,845
36,141
(62,518)
(10,098)
(2,490)
347,432
18,172
63,580
9,451
15,444
454,079
(370,874)
12,876
(76)
1,879
998
6,198
82
1,147
10,304
(23,268)
(5,647)
-
33,748
845
3,780
3,616
960
42,949
(22,683)
(5,456)
-
-
-
-
5,648
-
5,648
-
-
-
389,394
21,851
93,869
22,611
21,396
549,121
(479,343)
(8,325)
(2,566)
Total liabilities
(75,106)
(358,074)
(28,915)
(28,139)
-
(490,234)
Net (liabilities)/assets
excluding the effect of
currency derivatives
(38,965)
96,005
(18,611)
14,810
5,648
58,887
Adjustment for foreign exchange
derivatives
24,314
(24,340)
11,770
(11,744)
-
-
Adjusted net (liabilities)/assets
(14,651)
71,665
(6,841)
3,066
5,648
58,887
Notes to the Accounts
For the year ended 31 December 2024
3
Principal risks and uncertainties (continued)
Brit Syndicate 2988 Annual Report and Accounts 2024
37
*The AUD $ balances have been re-presented since the prior year to align to the Lloyd’s Illustrative Accounts. In
the prior year, AUD overseas deposits balances were shown within UK £, as AUD $ is not one of the Syndicate’s
core currencies.
The non-sterling denominated net assets of the Syndicate may lead to profit or losses (depending on the mix
relative to the liabilities), should sterling vary relative to these currencies.
The Syndicate manages its exposure in each of the main currencies and the net asset position is rebalanced
periodically. Where mismatches occur, these may lead to foreign exchange gains and losses reported through
the income statement.
Foreign currency forward contracts may be used to achieve the desired exposure to each currency. From time
to time the Syndicate may also choose to utilise foreign currency derivatives to manage the risk of reported losses
due to changes in foreign exchange rates. The degree to which derivatives are used is dependent on the
prevailing cost versus the perceived benefit to the Syndicate from reducing the chance of a reported loss due to
changes in foreign exchange rates. The details of all foreign currency derivatives contracts entered into are given
in Note 11.
b. Sensitivity to changes in foreign exchange rates
The table below gives an indication of the impact on the result of a percentage movement in the relative strength
of sterling against the value of the US dollar, Canadian dollar and Euro simultaneously, after taking into
consideration the effect of hedged positions. The analysis is based on the information at 31 December of each
year end:
Converted £’000
UK £
US $
EUR €
CAD$
AUD $*
Total
As at 31 December 2023
Investments
Reinsurers’ share of technical provisions
Debtors
Other assets
Prepayments and accrued income
Total Assets
Technical provisions
Creditors
Accruals and deferred income
9,182
1,331
22,183
3,366
3,585
39,647
(56,780)
(2,381)
(1,742)
290,259
15,919
57,705
2,866
13,778
380,527
(344,329)
(1,578)
-
3,374
563
29,770
3,137
942
37,786
(21,628)
(440)
-
8,276
543
6,277
3,997
1,010
20,103
(22,462)
(2,122)
-
-
-
-
5,456
-
5,456
-
-
-
311,091
18,356
115,935
18,822
19,315
483,519
(445,199)
(6,521)
(1,742)
Total liabilities
(60,903)
(345,907)
(22,068)
(24,584)
-
(453,462)
Net (liabilities)/assets
excluding the effect of
currency derivatives
(21,256)
34,620
15,718
(4,481)
5,456
30,057
Adjustment for foreign exchange
derivatives
12,664
(12,553)
11,978
(12,089)
-
-
Adjusted net (liabilities)/assets
(8,592)
22,067
27,696
(16,570)
5,456
30,057
Notes to the Accounts
For the year ended 31 December 2024
3
Principal risks and uncertainties (continued)
Brit Syndicate 2988 Annual Report and Accounts 2024
38
Impact on result for the financial year
and net assets
£’000
2024
2023
GBP weakens
10% against other currencies
6,789
3,323
20% against other currencies
13,578
6,647
GBP strengthens
10% against other currencies
(6,789)
(3,323)
20% against other currencies
(13,578)
(6,647)
c. Interest rate risk and price 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 sensitivity of the price of these financial exposures is
indicated by their respective durations. The greater the duration of a security, the greater the possible price
volatility.
Insurance liabilities are measured on an undiscounted basis and therefore are not sensitive to changes in interest
rate.
The Syndicate takes into account the duration of its required capital, targeting an investment portfolio duration
that, under a variation in interest rates, preserves the solvency ratio of the Syndicate. The duration of the
investment portfolio is then set within an allowable range relative to the targeted duration.
The analysis below is performed for reasonably possible movements in interest rates with all other variables held
constant, showing the impact on the result before tax due to changes in fair value of financial assets and liabilities
(whose fair values are recorded in the profit and loss account) and members’ balances.
2024
Impact on
results before
tax
2024
Impact on
members’
balances
2023
Impact on
results
before tax
2023
Impact on
members’
balances
£’000
£’000
£’000
£’000
Interest rate risk
+50 basis points shift in yield curves
-50 basis points shift in yield curves
(7,327)
7,375
(7,237)
7,375
(5,997)
5,999
(5,997)
5,999
3.5 Operational Risk
Operational risk is the potential for loss arising from the failure of people, process or technology or the impact of
external events. The nature of operational risk means that it is dispersed across all functional areas of the Brit
Group which the syndicate is managed by. Operational risk exposures are managed through a consistent set of
management processes that drive risk identification, assessment, control and monitoring.
The BSL Operations Committee, chaired by the Group Head of Claims and Operations, is a key governance
committee reporting to the Executive Committee. The BSL Operations Committee is responsible for managing
operational risk in line with the operational risk policy and the risk tolerance and management appetite limits set
by the BSL Board and management respectively. Each individual risk committee is provided with relevant
operational risk updates and these committees include operational risk owners within executive management
who actively manage operational risk within their respective areas (such as Underwriting, Claims, Investments
and Finance).
Notes to the Accounts
For the year ended 31 December 2024
3
Principal risks and uncertainties (continued)
Brit Syndicate 2988 Annual Report and Accounts 2024
39
An operational risk management framework is in place to ensure an appropriate standard approach is taken to
managing operational risk across the Brit Group. The key elements of this framework are:
• Allocation of responsibility for the identification and assessment of operational risk. Standard tools are
used to facilitate these assessments;
• Definition of standard elements of sound operating controls that are expected to be in place to address
all identified operational risks;
• A process that integrates with Brit’s internal model to support the setting and monitoring of operational
risk appetite and tolerances;
• Governance, reporting and escalation for operational risk;
• Infrastructure supporting the operational risk management framework; and
• Operational risk management training and awareness.
A conduct risk framework is in place across the Brit Group to ensure Brit’s products and services continue to
meet the needs of our customers.
3.6 Emerging risks
Brit undertakes a formal emerging risk review annually with the results reported to the Risk Oversight Committee
and included in the Own Risk & Solvency Assessment (ORSA) report and Commercial Insurer’s Solvency Self-
Assessment (CISSA) reports of the underwriting entities. The review is an important part of the risk identification
aspect of the RMF and includes horizon scanning of the internal and external risk environment to identify potential
new or developing risks to Brit. These risks can then be included in the risk register and managed appropriately
as required.
The emerging risk review has previously identified risks such as climate change and cyber risk. These risks have
been managed throughout their development and are now monitored as part of the business-as-usual risk
management process.
3.6.1 Climate Change Risk
Risk Management Framework
Climate change has been recognised as an emerging risk since 2014 and has been an area of focus since having
been identified as a high priority by Brit’s 2018 emerging risks analysis. Its potential impact on the insurance
industry is an area of focus for the wider insurance market and its regulators.
The financial risks to insurers may include the potential for increased frequency and severity of weather-related
natural catastrophes, for example, hurricanes and wildfires. The three main areas of risk identified for Brit are
natural catastrophes, liability claims and investment losses.
Climate risk management
Natural catastrophe risk
Natural catastrophe risk relates to the physical risks of increased frequency and severity of weather-related
natural catastrophes. This could result in additional claims. Climate change to date may already be affecting
present-day weather events and therefore claims.
Brit’s Research and Development team within the Risk Management Function are responsible for developing the
natural catastrophe modelling. Vendor models such as’ Verisk’ and ‘KatRisk’ (developed by scientists and
specialists) are used for the most material and established perils. The modelling is supplemented using the ‘Brit
View of Risk’ which is a set of in-house adjustments used to apply Brit’s view of risk to vendor model outputs. Brit
continuously monitors scientific studies, and regularly reviews both the completeness of existing models and the
application of the Brit View of Risk.
The natural catastrophe modelling is leveraged in pricing, outwards reinsurance purchasing and the risk appetite
framework. Brit Group, which the syndicate is part of, seeks to ensure a balanced and well diversified portfolio
(including exposure to weather perils). Brit has reviewed its property underwriting strategy in recent years and
has sought to reduce exposure in peak catastrophe regions.
Notes to the Accounts
For the year ended 31 December 2024
3
Principal risks and uncertainties (continued)
Brit Syndicate 2988 Annual Report and Accounts 2024
40
Brit’s exposure to natural catastrophe risks at an overall and peril-region level at key return periods is monitored
on an ongoing basis by the Risk Management Function. Board limits are in place to ensure Brit is not over-
exposed to natural catastrophe risk, and reinsurance is purchased to manage tail risk.
Liability risk
Climate change could result in liability claims arising from litigation against Brit’s clients. For example, claims
could arise from firms being held responsible for directly contributing to climate change, not taking climate change
into account in business decisions or inadequate disclosures.
The Syndicate’s exposure is managed by use of limits on gross underwriting exposure, contract wording and
through the purchase of reinsurance. There is uncertainty over whether courts rule against insurers and if so,
over what time horizon. The number of climate change litigation related claims notifications is monitored to enable
early identification of any material increase.
Market risk
Investment losses have the potential to arise from exposure to industries contributing to climate change whose
market value could reduce as the economy transitions away from fossil fuels. This transition risk could occur over
the short or long-term depending on government policies and financial market movements.
The Syndicate has a diversified investment portfolio, with limits on exposure to individual issuers. Additionally,
Brit has developed metrics to monitor investment exposure to potentially ‘at-risk’ industries such as oil and gas
or transport. An annual review of equity holdings is conducted which includes a review of the ESG strategy of the
underlying companies.
Other risks
There may be reputational risk to firms if customers deem they are insufficiently responsive to concerns about
climate change. Brit Group, which the syndicate is part of, has developed an ESG strategy, as discussed
above, which seeks to address this.
Climate scenario analysis and understanding climate risk
Climate scenario analysis is key to understanding the potential impact of climate-related risks. Analysis performed
to date has identified physical risks arising from natural catastrophes as having the highest potential for losses.
This is therefore a key area of focus.
PRA stress tests
Syndicate 2987 which is part of the Brit Group participated in the PRA Climate Change Biennial Exploratory
Stress Test (CBES) in 2021. The exercise was designed to assess the impact of climate change on physical
and asset risks over a 30-year time horizon in three policy action scenarios. It also required general insurance
participants to consider the impact of seven PRA-designed litigation scenarios on liability classes as well as
articulation of Brit’s current and future risk management actions.
Building on CBES, a more detailed climate change related litigation risk scenario analysis was also performed
in 2022. This considered the potential gross and net impact of climate change related litigation under three
hypothetical scenarios.
Internal scenario analysis
In addition to the above, climate change related scenario analysis is performed in the syndicate’s ORSA, which
encompasses natural catastrophe, market and liability risk. These scenarios provided valuable information for
ongoing risk management given the long-term nature of climate change as a peril.
Notes to the Accounts
For the year ended 31 December 2024
3
Principal risks and uncertainties (continued)
Brit Syndicate 2988 Annual Report and Accounts 2024
41
The findings from the scenarios have been integrated into:
• The internally developed ‘Brit View of Risk’ which is used to supplement natural catastrophe modelling
software (relevant to Natural catastrophe risk);
• Brit’s Property Catastrophe underwriting strategy, identifying the regions and perils most sensitive to
climate change (relevant to Natural catastrophe risk);
• Industry level exposure monitoring for Brit’s asset portfolio for ‘high risk’ sectors (relevant to Natural
catastrophe risk);
• Clarity on potential losses to be accounted for in underwriting and business planning decisions (relevant
to Natural catastrophe risk); and
• The ORSA process, to ensure climate change related risks are considered across relevant areas of the
business (relevant to all risks).
3.6.2 Geopolitics
Geopolitical events, such as the ongoing wars in Ukraine and the Middle East, have the potential to cause
insurance losses and disruption to financial markets. Insurance losses could arise either as a result of direct
damage from the conflicts or from second order impacts such as supply chain disruptions and economic
instability. There may also be a potential impact on the operational costs of the syndicate attributable to the
downstream effects of high inflation. Brit continues to monitor developments closely.
Geopolitical risk events may also impact the global economy, as discussed in section 3.6.3 below, which could
in turn impact the value of the syndicate's investments.
3.6.3 Global economic environment
Inflation in the USA and the UK remains above target levels and interest rates have risen relative to recent years.
Recessionary risks remain given these factors as well as geopolitical risks. Recessions may impact the frequency
and cost of claims, investment results, the likelihood of counterparty defaults and the potential for operational risk
events. Brit continues to actively monitor and respond to changes in the economic environment.
Brit Group, which the syndicate is part of, has considered the impact of inflation and the economic downturn.
Increased focus has been placed on ensuring Brit’s pricing models adequately address current inflationary trends.
Feeding into these models is an enhanced framework assessing the key drivers of claim settlement costs for
each class of business. Inflationary impacts were also considered during the year end reserving process.
We remain cognisant of the impact of inflation on the underlying portfolio.
We continue to review the key drivers of claim settlement costs and frequency by class of business, which in turn
will further inform any required recalibration of our pricing models. Our reserves continue incorporate our current
view of social and economic inflation and include a risk adjustment to allow for uncertainty.
3.6.4 Cyber risk
The cyber threat landscape continues to develop with increasingly sophisticated attack techniques such as
ransomware as a service, increasing interconnectivity (such as networked critical infrastructure and cloud data
storage), and the advancement of generative artificial intelligence (AI).
Brit has invested significantly in developing our understanding of cyber underwriting risk, including the potential
drivers of aggregate loss events. Third-party vendor tools have been licensed, providing enhanced threat
intelligence and data. The ongoing development of the cyber exposure management approach remains an area
of focus given the evolving threat environment.
Similarly, Brit has invested significantly in our own cybersecurity. An annual risk-based evaluation is conducted
to ensure Brit retains the capability to detect security vulnerabilities and safeguard our systems.
Notes to the Accounts
For the year ended 31 December 2024
3
Principal risks and uncertainties (continued)
Brit Syndicate 2988 Annual Report and Accounts 2024
42
3.7 Capital risk management
Capital framework at Lloyd’s
The Society of Lloyd’s (Lloyd’s) is a regulated undertaking and subject to the supervision of the Prudential
Regulatory Authority (PRA) under the Financial Services and Markets Act 2000, 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 complies with Solvency II, and beyond that to meet its own financial strength,
licence and ratings objectives.
Although, as described below, Lloyd’s capital setting processes use a capital requirement set at syndicate level
as a starting point, the requirement to meet Solvency II and Lloyd’s capital requirements apply at overall and
member level respectively, not at syndicate level.
Accordingly, the capital requirement in respect of Syndicate 2988 is not disclosed in these financial statements.
Lloyd’s capital setting process
In order to meet Lloyd’s requirements, each syndicate is required to calculate its Solvency Capital Requirement
(SCR) for the prospective underwriting year. This amount must be sufficient to cover a 1 in 200-year loss,
reflecting uncertainty in the ultimate run-off of underwriting liabilities (SCR to ultimate). The syndicate must also
calculate its SCR at the same confidence level but reflecting uncertainty over a one-year time horizon (one year
SCR) for Lloyd’s to use in meeting Solvency II requirements. The SCRs of each syndicate are subject to review
by Lloyd’s and approval by the Lloyd’s Capital and Planning Group.
A syndicate may comprise one or more underwriting members of Lloyd’s. Each member is liable for its own share
of underwriting liabilities on the syndicate(s) on which it participates, but not other members’ shares. Accordingly,
the capital requirement that Lloyd’s sets for each member operates on a similar basis. Each member’s SCR shall
thus be determined by the sum of the member’s share of the syndicate SCR to ultimate.
Where a member participates on more than one syndicate, a credit for diversification is provided to reflect the
spread of risk, but consistent with determining an SCR which reflects the capital requirement to cover a 1 in 200
year loss to ultimate for that member. Over and above this, Lloyd’s applies a capital uplift to the member’s capital
requirement, known as the Economic Capital Assessment (ECA). The purpose of this uplift, which is a Lloyd’s
not a Solvency II requirement, is to meet Lloyd’s financial strength, licence and ratings objectives. The capital
uplift applying for 2024 was 35% (2023: 35%) of the member’s SCR to ultimate.
Provision of capital by members
Each member may provide capital to meet its ECA either by assets held in trust by Lloyd’s specifically for that
member (funds at Lloyd’s), held within and managed within a syndicate (funds in syndicate) or as the member’s
share of the members’ balances on each syndicate on which it participates. Funds in syndicate are not applicable
to Syndicate 2988, as participants’ capital is held at member level. Accordingly, all of the assets less liabilities of
the syndicate, as represented in the members’ balances reported on the statement of financial position, are taken
into account when determining the members’ Lloyd’s capital requirements.
Capital calculation
The SCR to Ultimate is calculated using a stochastic risk-based capital model developed by the Brit Group which
allows the Board of the Managing Agent to identify an appropriate level of capital required. This capital
requirement is specific to the actual reserving history, reinsurance program and business profile of Syndicate
2988 rather than being based on company market averages. The Board of the Managing Agent reviews and
approves all capital modelling submissions to Lloyd’s.
Notes to the Accounts
For the year ended 31 December 2024
Brit Syndicate 2988 Annual Report and Accounts 2024
4 Analysis of underwriting result
43
An analysis of the underwriting result before investment return is presented in the following table:
Year ended 31
December 2024
Gross
premium
written
Gross
premium
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwriting
Result
£’000
£’000
£’000
£’000
£’000
£’000
Direct Insurance:
Accident and health
2,808
2,733
(1,370)
(1,095)
(74)
194
Marine, aviation
and transport
19,284
17,856
(10,609)
(5,818)
(571)
858
Fire and other damage
to property
27,116
16,562
(11,172)
(4,086)
(59)
1,245
Third party liability
64,289
60,214
(39,103)
(17,245)
(3,737)
129
Credit and suretyship
10,598
9,415
(4,279)
(3,198)
(191)
1,747
Total Direct
Insurance
124,095
106,780
(66,533)
(31,442)
(4,632)
4,173
Reinsurance
acceptances
56,870
86,300
(52,975)
(20,494)
(786)
12,045
Total
180,965
193,080
(119,508)
(51,936)
(5,418)
16,218
Year ended 31
December 2023
Gross
premium
written
Gross
premium
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwriting
Result
£’000
£’000
£’000
£’000
£’000
£’000
Direct Insurance:
Accident and health
2,326
2,418
(1,321)
(922)
(104)
71
Marine, aviation
and transport
17,137
17,317
(8,553)
(5,384)
(803)
2,577
Fire and other damage
to property
9,567
25,441
(11,915)
(7,771)
(718)
5,037
Third party liability
46,021
48,758
(29,032)
(12,886)
(2,260)
4,580
Credit and suretyship
8,774
8,792
(2,157)
(2,785)
(412)
3,438
Total Direct
Insurance
83,825
102,726
(52,978)
(29,748)
(4,297)
15,703
Reinsurance
acceptances
127,342
123,374
(77,766)
(25,412)
(2,927)
17,269
Total
211,167
226,100
(130,744)
(55,160)
(7,224)
32,972
Notes to the Accounts
For the year ended 31 December 2024
4
Analysis of underwriting result (continued)
Brit Syndicate 2988 Annual Report and Accounts 2024
44
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:
The concentration of insurance premium for direct business only, by location of the underlying risk, is summarised
below:
Direct Premiums written*
2024
2023
£’000
£’000
United States
26,929
25,872
United Kingdom
15,461
12,602
Europe (excluding UK)
3,538
2,541
Other (including worldwide)
78,167
42,810
Total
124,095
83,825
*This table has been updated since prior year to align to the Lloyd’s Illustrative Accounts. In the prior year, the
disclosure included the geographical locations for total gross written premium. The disclosure now shows the
geographical location for direct insurance only.
The geographical concentration of total gross written premium and net written premium can be found in Note
3.1(a)(iii).
Year ended 31 December 2024
Gross premium
written
Gross
premiums
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwriting
Result
£’000
£’000
£’000
£’000
£’000
£’000
Additional analysis
Fire and other damage to
property of which is:
Specialties
(183)
(144)
97
30
(6)
(23)
Energy
2,586
1,716
(1,070)
(638)
(113)
(105)
Third party liability of which is:
Energy
28
35
(18)
(8)
(3)
6
Year ended 31 December 2023
Gross premium
written
Gross
premiums
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwriting
Result
£’000
£’000
£’000
£’000
£’000
£’000
Additional analysis
Fire and other damage to
property of which is:
Specialties
464
768
165
(222)
(22)
689
Energy
1,131
736
(525)
(223)
(75)
(87)
Third party liability of which is
Energy
100
86
(42)
(30)
(6)
8
Notes to the Accounts
For the year ended 31 December 2024
Brit Syndicate 2988 Annual Report and Accounts 2024
45
*Members’ standard personal expenses have been re-presented since the prior year, to align to the Lloyd’s Illustrative
Accounts. In the prior year, these expenses were shown within Administrative expenses in the table.
Total commission for direct insurance business for the year amounted to:
2024
2023
£’000
£’000
Total commission for direct insurance business
23,588
18,211
The auditors’ remuneration and audit services charged to the Syndicate within the annual fixed fee charged by
the Managing Agent are as follows:
2024
2023
£’000
£’000
Audit of the Syndicate annual accounts
143
102
Other services pursuant to Regulations and
Lloyd’s Byelaws
41
53
Total
184
155
6 Staff numbers and costs
All staff in the UK are employed by the Brit Group service company, Brit Group Services Limited, and the full staff
cost disclosures are included in the notes to those accounts. Amounts are recharged to the Syndicate as part of
the annual fixed fee charged by the Managing Agent but are not separately identifiable.
7 Remuneration of the Directors of Brit Syndicates Limited and Active Underwriter
Directors’ Remuneration
Remuneration of the Directors of BSL have been recharged to the Syndicate as part of the annual flat fee for the
2024 and 2023 calendar years. It is not practical to allocate these amounts to the underlying entities to which the
directors provide services. The following table therefore represents the total emoluments paid to directors by the
managing agent. There were no advances or credit granted by the Managing Agent to any of its Directors during
the year.
2024
2023
£’000
£’000
Director’s emoluments
4,765
3,860
Total
4,765
3,860
Underwriter's Remuneration
The active underwriter received the following remuneration in respect of the Syndicate. This remuneration was
paid to the active underwriter by the Managing Agent from the annual fixed fee it charged to the Syndicate.
2024
2023
£’000
£’000
Aggregate remuneration
503
436
Total
503
436
5 Net operating expenses
2024
2023
£’000
£’000
Acquisition costs
34,976
34,537
Change in deferred acquisition costs
(490)
4,964
Administrative expenses*
11,072
12,139
Members’ standard personal expenses*
6,378
3,520
Total
51,936
55,160
Notes to the Accounts
For the year ended 31 December 2024
Brit Syndicate 2988 Annual Report and Accounts 2024
46
8 Investment income, expenses and charges
2024
2023
£’000
£’000
Interest and similar income
From financial instruments designated at fair value through profit or
loss
Interest and similar income*
13,121
9,169
Interest on cash at bank*
2,835
2,195
Other income from investments
From financial instruments designated at fair value through profit or
loss
Gains on the realisation of investments
3,552
1,407
Losses on the realisation of investments
(3,285)
(7,621)
Unrealised gains on investments
1,524
9,795
Unrealised losses on investments
(4,635)
(373)
Investment management expenses
(336)
(244)
Total investment return
12,776
14,328
Transferred to the technical account from the non-technical account
12,776
14,328
*The investment income has been re-presented from the prior year to align to the Lloyd’s Illustrative Accounts. In the prior
year, the interest and similar income and interest on cash at bank was presented as one line.
9 Distribution
A distribution of £34,367k to members will be proposed in relation to closing the 2022 year of account (2023:
distribution of £1,320k in relation to closing the 2021 year of account).
Notes to the Accounts
For the year ended 31 December 2024
Brit Syndicate 2988 Annual Report and Accounts 2024
10 Financial Investments
47
Carrying
Value
Carrying
Value
Cost
Cost
2024
2023
2024
2023
£’000
£’000
£’000
£’000
Shares and other variable yield
securities and units in unit
trusts*
61,674
56,135
62,496
55,451
Debt securities
325,511
252,215
327,321
248,198
Derivative contracts
233
324
-
-
Syndicate loan to central fund*
1,949
2,345
1,949
2,345
Total
389,367
311,019
391,766
305,994
*The presentation of the Syndicate loan to Central Fund has been updated since the prior year, to align to the Lloyd’s
Illustrative Accounts. In the prior year, the carrying value was presented within Shares and other variable yield securities.
Shares and other variable yield securities and units in unit trusts comprise short-term deposits that are highly
liquid cash equivalents, all of which are not listed.
Syndicate loans to the Lloyd’s Central Fund comprises collections made on the 2020 year of account in two
tranches of £580k and £1,369k. The 2023 syndicate loan balance also included a collection made on the 2019
year of account for £397k, which Lloyd’s repaid during 2024. All financial investments have been designated as
held at fair value through profit or loss.
The following table shows financial investments recorded at fair value analysed between the three levels in the
fair value hierarchy:
Level 1
Level 2
Level 3
Total
Year ended 31 December 2024
£’000
£’000
£’000
£’000
Shares and other variable
yield securities
21,424
40,250
-
61,674
Debt Securities
184,163
141,348
-
325,511
Derivative assets
-
233
-
233
Syndicate loans to central fund
-
-
1,949
1,949
Total financial investments
205,587
181,831
1,949
389,367
Derivative liabilities
-
(646)
-
(646)
Total
205,587
181,185
1,949
388,721
Restated**
Level 1
Restated**
Level 2
Level 3
Total
Year ended 31 December 2023
£’000
£’000
£’000
£’000
Shares and other variable
yield securities*
21,633
34,502
-
56,135
Debt Securities**
147,422
104,793
-
252,215
Derivative assets
-
324
-
324
Syndicate loans to central fund*
-
-
2,345
2,345
Total financial investments
169,055
139,619
2,345
311,019
Derivative liabilities
-
(322)
-
(322)
Total
169,055
139,297
2,345
310,697
*As noted above, the presentation of the Syndicate loans to central fund has been updated since the prior year, to align
to the Lloyd’s Illustrative Accounts. This was previously presented within Shares and other variable yield securities.
**The values for debt securities in Level 1 and Level 2 have been restated since the prior year to correct a misclassification.
In the prior year, there were £3,316k of Level 1 debt securities and £248,899k of Level 2 debt securities. The restatement
reclassifies £144,106k of debt securities from Level 2 to Level 1.
There have been no movements between levels for any investments held from prior year.
Brit Syndicate 2988 Annual Report and Accounts 2024
Notes to the Accounts
For the year ended 31 December 2024
48
10 Financial Investments (continued)
a. Basis for determining the fair value hierarchy of financial instruments
The Syndicate has classified the fair value measurements using a fair value hierarchy that reflects the significance
of the inputs used in making those measurements. The fair value hierarchy comprises the following levels:
(i) Level one – quoted prices (unadjusted) in active markets for identical assets
(ii) Level two – inputs other than quoted prices included within level one that are observable for the asset,
either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
(iii) Level three – inputs for the assets that are not based on observable market data (unobservable inputs).
Assets are categorised as level one where fair values determined in whole directly by reference to an active
market relate to prices which 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, i.e. the market is still active.
For assets and liabilities that are recognised at fair value on a recurring basis, the Syndicate determines whether
transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level
of input that is significant to the fair value measurement as a whole) at the end of each reporting period.
Fair values for level two and level three assets include:
• Values provided at the request of the Syndicate by pricing services and which are not publicly available
or values provided by external parties which are readily available but relate to assets for which the market
is not always active; and
• Assets measured on the basis of valuation techniques including a varying degree of assumptions
supported by market transactions and observable data.
For all assets not quoted in an active market or for which there is no active market, the availability of financial
data can vary and is affected by a wide variety of factors, including the type of financial instrument, whether it is
new and not yet established in the marketplace, and other characteristics specific to each transaction. To the
extent that valuation is based on the models or inputs that are unobservable in the market, the determination of
fair value requires more judgement. Accordingly, the degree of judgement exercised is higher for instruments
classified in level three and the classification between level two and level three depends highly on the proportion
of assumptions used, supported by market transactions and observable data.
b. Valuation techniques
Level one
These represent assets traded in an active market whose quoted price is readily and regularly available and
those prices represent actual and regular transactions on an arm’s length basis.
Level two
Inputs include directly or indirectly observable inputs (other than level one inputs) such as quoted prices for similar
financial instruments exchanged in active markets, quoted prices for identical or similar financial instruments
exchanged in inactive markets and other market observable inputs.
Level two securities contain certain investments in US and non-US government agency securities, US and non-
US corporate debt securities and specialised investment funds. US government agency securities are priced
using valuations from independent pricing vendors who use discounted cash flow models supplemented with
market and credit research to gather specific information. Market observable inputs for these investments may
include broker-dealer quotes, reported trades, issuer spreads and available bids. Non-US government agency
securities are priced with over-the-counter (OTC) quotes or broker-dealer quotes. Other market observable inputs
include benchmark yields and reported trades. Issuer spreads are also available for these types of investments.
Brit Syndicate 2988 Annual Report and Accounts 2024
Notes to the Accounts
For the year ended 31 December 2024
49
10 Financial Investments (continued)
US and non-US corporate debt securities are investment grade and the information collected during pricing of
these instruments includes credit data as well as other observations from the market and the particular sector.
Prices for all these securities are based on a limited number of transactions (OTC prices/broker-dealer quotes)
so they are derived indirectly using inputs that can be corroborated by observable market data. These also include
certain private placement corporate debt securities which are valued with the use of discounted cash flow models.
Level two specialised investment funds contain credit opportunities funds that are valued based on the underlying
assets in the fund on a security by security basis. A number of direct and indirect inputs such as benchmark yield
curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates and
anticipated timing of principal repayments are considered during their valuation.
Level three
Level 3 investments comprise only of a Syndicate loan to the central fund. Lloyd’s introduced Syndicate loans to
the Central Fund with effect from the 2019 year of account and plan to continue to do so in subsequent years,
subject to PRA approval each year. During 2020, two further tranches were collected from the Syndicate on the
2020 year of account. No such loans were collected during the 2021 calendar years and there were no further
tranches in 2023 nor in 2024.
The proceeds from these loans were used to strengthen Lloyd’s central resources and to inject capital into Lloyd’s
Insurance Company SA (Lloyd’s Brussels). Loans will not be repaid before 5 years have elapsed. Interest thereon
is determined by reference to the risk-free yield plus a credit spread, and will normally be paid annually on an
anniversary of the loan. Interest on all three tranches of loans was received during 2024. These investments have
been classified as an equity share for which the fair value cannot be determined using direct or indirect observable
inputs, therefore these have been classified as Level 3.
11 Derivative contracts
The Syndicate purchases derivative financial instruments:
a. to hedge its foreign currency exposure on future commitments;
b. as part of its investment management strategy.
2024
2024
2023
2023
Notional amount
Fair value
Notional amount
Fair value
£’000
£’000
£’000
£’000
Foreign exchange
forward contract assets
233
233
324
324
Foreign exchange
forward contract liabilities
(646)
(646)
(322)
(322)
Total
(413)
(413)
2
2
The hierarchy of fair values of derivatives contracts is included within the Fair Value Hierarchy in note 10 above.
Brit Syndicate 2988 Annual Report and Accounts 2024
Notes to the Accounts
For the year ended 31 December 2024
50
12 Provision for unearned premium
Gross
Reinsurers’
share
Net
£’000
£’000
£’000
Balance at 1 January 2024
97,301
(3,880)
93,421
Premiums written in the year
180,965
(9,571)
171,394
Premiums earned in the year
(193,080)
10,126
(182,954)
Effect of movement in exchange rates
421
4
425
Balance at 31 December 2024
85,607
(3,321)
82,286
Gross
Reinsurers’
share
Net
£’000
£’000
£’000
Balance at 1 January 2023
117,307
(4,181)
113,126
Premiums written in the year
211,167
(9,203)
201,964
Premiums earned in the year
(226,100)
9,301
(216,799)
Effect of movement in exchange rates
(5,073)
203
(4,870)
Balance at 31 December 2023
97,301
(3,880)
93,421
13 Claims outstanding
Gross
Reinsurers’
share
Net
£’000
£’000
£’000
Balance at 1 January 2024
347,898
(14,476)
333,422
Claims incurred in relation to current underwriting
year
61,973
(4,363)
57,610
Claims incurred in relation to prior underwriting
years
57,535
(345)
57,190
Claims paid in the year
(77,215)
900
(76,315)
Effect of movement in exchange rates
3,545
(246)
3,299
Balance at 31 December 2024
393,736
(18,530)
375,206
Claims reported and loss adjustment expenses
93,893
(3,679)
90,214
Claims Incurred but not reported provisions
299,843
(14,851)
284,992
Balance at 31 December 2024
393,736
(18,530)
375,206
Gross
Reinsurers’
share
Net
£’000
£’000
£’000
Balance at 1 January 2023
322,105
(15,824)
306,281
Claims incurred in relation to current underwriting
year
69,155
(1,363)
67,792
Claims incurred in relation to prior underwriting
years
61,589
(714)
60,875
Claims paid in the year
(88,755)
2,613
(86,142)
Effect of movement in exchange rates
(16,196)
812
(15,384)
Balance at 31 December 2023
347,898
(14,476)
333,422
Claims reported and loss adjustment expenses
79,305
(3,502)
75,803
Claims Incurred but not reported provisions
268,593
(10,974)
257,619
Balance at 31 December 2023
347,898
(14,476)
333,422
Brit Syndicate 2988 Annual Report and Accounts 2024
Notes to the Accounts
For the year ended 31 December 2024
51
14 Claims development tables
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. Non-sterling cumulative claims estimates and cumulative payments
are translated into £ sterling at the period end rate as at 31 December 2024.
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.
Estimate of cumulative gross
incurred claims
£’000
Underwriting year
2017
2018
2019
2020
2021
2022
2023
2024
At end of underwriting year
64,738
47,395
28,935
68,734
75,353
85,312
68,369
62,693
One year later
97,436
84,228
77,111
123,953
136,188
141,684
129,704
Two years later
102,396
87,935
83,538
123,560
130,190
138,634
Three years later
101,865
89,888
83,015
129,841
128,141
Four years later
100,369
91,172
84,671
129,566
Five Years later
100,032
92,999
86,284
Six years later
100,740
94,354
Seven years later
100,292
Current estimate of gross cumulative
claims incurred
100,292
94,354
86,284
129,566
128,141
138,634
129,704
62,693
Cumulative payments
(95,251)
(79,763)
(69,319)
(88,569)
(70,152)
(52,331)
(14,764)
(5,783)
Gross outstanding claims provision
as at 31 December 2024
5,041
14,591
16,965
40,997
57,989
86,303
114,940
56,910
Estimate of cumulative net
incurred claims
£’000
Underwriting year
2017
2018
2019
2020
2021
2022
2023
2024
At end of underwriting year
40,368
46,808
28,623
68,033
74,665
79,931
67,025
58,270
One year later
71,501
83,163
76,303
122,366
133,229
135,764
127,435
Two years later
74,075
86,710
81,239
122,557
126,664
132,937
Three years later
72,462
88,674
80,452
129,171
124,459
Four years later
70,353
89,956
82,021
128,752
Five years later
70,235
91,785
84,076
Six years later
71,105
93,118
Seven years later
70,889
Current estimate of net cumulative
claims incurred
70,889
93,118
84,076
128,752
124,459
132,937
127,435
58,270
Cumulative payments
(66,762)
(79,593)
(67,251)
(88,412)
(70,047)
(52,119)
(14,763)
(5,783)
Net Outstanding claims provision
as at 31 December 2024
4,127
13,525
16,825
40,340
54,412
80,818
112,672
52,487
Brit Syndicate 2988 Annual Report and Accounts 2024
Notes to the Accounts
For the year ended 31 December 2024
52
15 Debtors arising out of direct insurance operations
2024
2023
£’000
£’000
Due within one year
52,511
60,290
Total
52,511
60,290
16 Debtors arising out of reinsurance operations
2024
2023
£’000
£’000
Due within one year
40,375
55,385
Total
40,375
55,385
17 Other debtors
2024
2023
£’000
£’000
Due within one year:
Related party balances (non-syndicate)
227
150
Amounts due from members
51
24
Taxation
36
12
Due after one year:
Amounts due from members
669
74
Total
983
260
18 Cash and cash equivalents
2024
Restated*
2023
£’000
£’000
Cash at bank and in hand
8,518
4,488
Short-term deposits
40,847
56,134
Total
49,365
60,622
*Refer to Note 24 for details of the restatement.
Cash and cash equivalents comprise of cash at bank and in hand, short-term deposits and other highly liquid
investments with a maturity of three months or less at the date of acquisition. Short-term deposits are presented
within Financial investments on the Statement of Financial Position.
Of the total cash and cash equivalents, £5,691k (2023: £6,173k) was held in regulated bank accounts in overseas
jurisdictions.
Brit Syndicate 2988 Annual Report and Accounts 2024
Notes to the Accounts
For the year ended 31 December 2024
53
19 Other assets
Other assets comprise of overseas deposits which are lodged as a condition of conducting underwriting business
in certain countries.
20 Deferred acquisition costs
The table below shows changes in gross deferred acquisition costs from the beginning to the end of the period:
2024
2023
£’000
£’000
Balance at 1 January
17,242
23,120
Incurred acquisition costs
34,976
34,537*
Amortised acquisition costs
(34,486)
(39,501)*
Effect of movement in exchange rates
92
(914)
Balance at 31 December
17,824
17,242
*The change in deferred acquisition costs has been re-presented since the prior year to align to the Lloyd’s Illustrative
Accounts. In the prior year, the incurred acquisition costs and amortised acquisition costs were presented as a single line
disclosing the change in deferred acquisition costs.
21 Creditors arising out of direct insurance operations
2024
2023
£’000
£’000
Due within one year
762
1,359
Total
762
1,359
22 Creditors arising out of reinsurance operations
2024
2023
£’000
£’000
Due within one year
2,128
4,813
Total
2,128
4,813
23 Other creditors
2024
2023
£’000
£’000
Due within one year:
Profit Commission Payable
3,432
27
Derivative Liabilities
646
322
Investment Payable
1,357
-
Total
5,435
349
Brit Syndicate 2988 Annual Report and Accounts 2024
Notes to the Accounts
For the year ended 31 December 2024
54
24 Restatement of the Statement of Cash Flows
The Statement of Cash Flows has been restated to correct the categorisation of certain short-term deposits, from
investments to cash equivalents, and to remove the impact of certain non-cash transactions. This restatement
has no impact on the Income Statement or the Statement of Financial Position.
The balances within the Statement of Cash Flows which are impacted by this restatement are set out below, with
original balances taken from the 2023 accounts which were presented in millions:
Original
Balance
£’000
Adjustment
£’000
Restated
Balance
£’000
Cash and cash equivalents at 1 January 2023
56,100
94
56,194
Cash and cash equivalents at 31 December
2023
57,100
3,522
60,622
Purchase of equity and debt instruments
(434,800)
365
(434,435)
Sale of equity and debt instruments
341,700
(1,500)
340,200
Investment income received
4,900
4,380
9,280
Foreign exchange on operating activities
1,100
311
1,411
The total net cash flows from operating activities, net cash flows used in investing activities and the net decrease
in cash and cash equivalents in the year have been updated accordingly within the Statement of Cash Flows.
Note 18 (Cash and cash equivalents) has also been restated to reflect these changes.
25 Related parties
a. Brit Syndicates Limited (BSL or the Managing Agent)
The Managing Agent is a wholly-owned subsidiary of Brit Insurance Holdings Limited, which in turn is a subsidiary
of Brit Limited. During the year, the Syndicate paid £8,228k (2023: £9,059k) to BSL in respect of management
fees and a further £1,734k (2023: £2,209k) in managing agency fees. Profit commission of £3,432k was charged
in the calendar year to 31 December 2024 (2023: £27k), in respect of the closure of the oldest year of account.
As at 31 December 2024, there were amounts outstanding of £5,998k (2023: £1,741k). The Syndicate also
participates on various Lloyd’s consortia managed by BSL. During the year, the Syndicate incurred consortia
management fees of £nil (2023: £nil) and no technical advisor fees or profit commission to BSL in respect of the
consortia agreements (2023: £nil).
b. Syndicate 2987
BSL also manages Syndicate 2987, a wholly-aligned syndicate of the Brit Limited group. During the year, the
Syndicate paid commissions to Syndicate 2987 in relation to inter-syndicate quota share agreements. The
amounts on the income statement relating to trading with Syndicate 2987 included commissions for transferring
insurance risk of £202k (2023: £2,902k). As at 31 December 2024, no amounts of commission were outstanding
(2023: £nil). As at 31 December 2024, Syndicate 2987 owed £7,392k (2023: £38,707k) of premiums to the
Syndicate.
c. Directors of Brit Syndicates Limited
For information relating to the remuneration of the directors of Brit Syndicates Limited, refer to note 7. There are
no related party director disclosures to note for the year ended 31 December 2024.
Brit Syndicate 2988 Annual Report and Accounts 2024
Notes to the Accounts
For the year ended 31 December 2024
55
25 Related parties (continued)
d. Ambridge Partners LLC
Ambridge Partners LLC is a managing general underwriter of transactional insurance products, writing business
on behalf of a range of insurers including entities within the Brit Limited group. On 10 May 2023 Ambridge was
sold to Amynta Group, which included Ambridge Partners LLC. Ambridge Partners LLC is therefore no longer a
related party and no transactions or balances relating to 2024 have been disclosed.
The amounts in the 2023 Income Statement relating to trading with Ambridge Partners LLC includes commission
for introducing insurance business of £399k for the calendar year. As at 31 December 2023, no amounts of
commission were outstanding. As at 31 December 2023, Ambridge Partners LLC owed £757k of premiums to the
Syndicate.
The Syndicate also participates on various Lloyd’s consortia managed by Ambridge. During 2023, the Syndicate
incurred consortia management fees of £nil and no technical advisor fees or profit commission to BSL in respect
of the consortia agreements.
The underwriting relationship between Ambridge Partners LLC and the Syndicate continued post sale.
e. Sutton Specialty Risk Inc.
On 2 January 2019, Brit Insurance Holdings Limited, acquired 49% of the issued shares of Sutton Specialty Risk
Inc. (Sutton). Sutton is a Canadian MGU, specialising in Accident and Health business. The 49% shareholding in
Sutton was sold on 8 March 2024 to Amynta.
Trading with Sutton is undertaken on an arm’s length basis and is settled in cash. The amounts in the income
statement relating to trading with Sutton from 1 January 2024 to 8 March 2024 included commission for
introducing insurance business of £91k (2023 calendar year: £469k). Amounts recorded in the statement of
financial position in respect of premium net of commissions due from, and fees payable to, Sutton as at 31
December 2024 were not material.
f. Camargue Underwriting Managers Proprietary Limited
On 30 August 2016, the Brit Group acquired 50% of the share capital of the South African company, Camargue
Underwriting Managers Proprietary Limited (Camargue) and also entered into a call and a put option to purchase
the remaining 50% in 2022. On 4 October 2022, Camargue became a 100% subsidiary of the Group and ceased
to be an associated undertaking. Camargue is a leading managing general underwriter of a range of specialised
insurance products and specialist liability solutions in South Africa and is an important trading partner for Brit.
Trading with Camargue is undertaken on an arm’s-length basis and is settled in cash.
The amounts in the income statement relating to trading with Camargue for the year ended 31 December 2024
included commission for introducing insurance business of £59k (2023: £61k). As at 31 December 2024,
Camargue owed £102k (2023: £112k) of premiums to the Syndicate.
g. Brit UW Limited
Brit UW Limited, a subsidiary of the Brit Group provided £88,918k (2023: £90,288k) of capacity in respect of the
2024 year of account of the Syndicate. Refer to note 26 for further information on how capacity is funded by the
member.
26 Funds at Lloyd’s
Every member is required to provide 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 the UK Prudential
Regulation Authority (PRA) requirements and resource criteria. FAL has regard to a number of factors including
but not limited to the nature and amount of risk to be underwritten by the members and the assessment of the
reserving risk in respect of business that has been underwritten. Since FAL is not under the control of the
Managing Agent, no amount has been shown in these financial statements by way of such capital resources.
However, the Managing Agent is able to make a call on the members’ FAL to meet liquidity requirements or to
settle losses.
Brit Syndicate 2988 Annual Report and Accounts 2024
Notes to the Accounts
For the year ended 31 December 2024
56
27 Ultimate holding company
The Managing Agent is a wholly-owned subsidiary of Brit Insurance Holdings Limited, a company registered in
England and Wales. The intermediate holding company, in which the Managing Agent’s result is consolidated, is
Brit Limited, a company registered in England and Wales. Copies of Brit Limited’s consolidated accounts can be
obtained by writing to The Leadenhall Building, 122 Leadenhall Street, London EC3V 4AB, or from the website
www.britinsurance.com.
The ultimate parent undertaking is Fairfax Financial Holdings Limited (Fairfax), a company registered in Toronto.
Copies of Fairfax consolidated accounts can be obtained by writing to 95 Wellington Street West, Suite 800,
Toronto, Ontario, Canada, M5J 2N7 or from the website www.fairfax.ca.
28 Foreign exchange rates
The following currency exchange rates have been used for translating foreign currency transactions:
| 2024 | 2023 | |||||
Start of period rate | Year-end rate | Average rate | Start of period rate | Year-end rate | Average rate | |
Sterling | ||||||
Euro | ||||||
US dollar | ||||||
Canadian dollar | ||||||
Australian dollar | ||||||
29 Events occurring after the reporting date
The Syndicate has potential exposures to claims resulting from the California wildfires of January 2025, which
will be accounted for in the period ending 31 December 2025. After taking into account potential reinsurance
recoveries, the initial estimates, based on information available at the date of this report, is a net cost before
tax of between £3,000k and £5,500k.
Directors of the Managing Agent
Brit Syndicate 2988 Annual Report and Accounts 2024
57
Executive
Martin George Thompson
Gavin Leslie Wilkinson
Jonathan Michael Howson Sullivan
Non-Executive
Simon Philip Guy Lee
Caroline Frances Ramsay
Andrea Caroline Natascha Welsch
Pinar Yetgin (resigned 31 August 2024)
Hayley Robinson (appointed 15 April 2024)
Secretary
Tim James Harmer
Active Underwriter
Simon Bird
Registered Office
The Leadenhall Building
122 Leadenhall Street
London
EC3V 4AB
Independent Auditors
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
7 More London, Riverside
London
SE1 2RT
