Syndicate 3939

Annual report and accounts

For the year ended 31 December 2024

Apollo Syndicate 3939| Annual Report and Accounts 2024

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Contents

Apollo Syndicate 3939| Annual Report and Accounts 2024

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Directors and Administration

Managing agent

Apollo Syndicate Management Limited

Registered office

One Bishopsgate

London

EC2N 3AQ

Company registration number

09181578

Company secretary

PC Bowden

Directors

AC Winther

(Non-Executive Chair)

FA Buckley

(Non-Executive Director)

M Cramér Manhem

(Non-Executive Director)

SR Davies

(Non-Executive Director)

SE Hill

(Non-Executive Director)

RD Littlemore

(Non-Executive Director)

DCB Ibeson

(Chief Executive Officer)

TL McHarg

VVV Mistry

JR Slaughter

Active underwriter

Stuart Newcombe

Registered auditor

Deloitte LLP

Statutory Auditor

2 New Street Square

London

EC4A 3BZ

Apollo Syndicate 3939| Annual Report and Accounts 2024

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Managing Agent’s report

The directors of the managing agent (together, “the Board”) present their audited report, which

incorporates the strategic review, for Syndicate 3939

(“the syndicate”) for the year ended 31 December

2024.

This Annual Report is prepared using the annual basis of accounting as required by Statutory

Instrument No. 1950 of 2008, The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate

Accounts) Regulations 2008 (“Lloyd’s Regulations 2008”) and applicab

le United Kingdom Accounting

Standards, including Financial Reporting Standard 102: The Financial Reporting Standard applicable

in the United Kingdom and Republic of Ireland (“FRS102”) and Financial Reporting Standard 103:

Insurance Contracts (”FRS103”)

. In addition, in preparing the annual accounts, the Directors of the

managing agent are required to comply with the requirements of Section 1 of the Lloyd’s Syndicate

Accounts Instructions V2.0 as modified by the Frequently Asked Questions Version 1.1 issued by

Lloyd’s (the Syndicate Accounts Instructions).

Principal activity

In partnership with NormanMax Insurance Holdings, the US based parametric (re)insurance group,

Apollo launched syndicate 3939 on the 10

th

May 2024, focusing on natural catastrophe parametric

(re)insurance products for hurricane, tropical cyclone, typhoon and earthquake. NormanMax will

combine 21st century data science and technology to create parametric solutions for clients around the

globe to address the natural disaster protection gap, at a time of increased climate risk and volatility.

Syndicate 3939

trades through the Society of Lloyd’s (‘’Lloyd’s'’) worldwide licences and has the benefit

of the Lloyd’s brand

and rating. Lloyd’s has an A+ (Superior) rating from A.M. Best, AA

- (Very Strong)

from Standard & Poor’s and AA

- (Very Strong) from Fitch.

The syndicate’s capacity for the 2024 year of account was £

64.9m ($82.4

m at the Lloyd’s planning rate

of $1.27). Capacity for the 2025 year of account is £108m ($136.1

m at the Lloyd’s planning rate of

$1.26).

Apollo Syndicate Management Limited (“ASML”) is approved as a managing agency at Lloyd’s and is

authorised by the Prudential Regulation Authority (‘’PRA’’). ASML is regulated by the Financial Conduct

Authority (‘’FCA’’) and the PRA.

Results

Notes:

The claims ratio is the ratio of net claims incurred to net premiums earned.

The expense ratio is the ratio of net operating expenses to net premiums earned.

The combined ratio is the sum of the claims and expense ratios.

The expense and combined ratios exclude investment return and foreign exchanges gains and losses.

ASML uses the key performance indicators shown in the table above, to measure the performance of

the syndicate against its objectives and overall strategy. These are assessed against plan and prior

year outcomes and are subject to regular review. The syndicate predominantly writes business

denominated in US Dollars and therefore its functional currency is US dollars.

Apollo Syndicate 3939| Annual Report and Accounts 2024

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Managing Agent’s report

(continued)

Review of the business

Syndicate 3939 achieved gross written premium in 2024 of $6.0m. The syndicate experienced lower

than predicted premium growth during 2024. This was primarily due to a later than planned start to the

underwriting year, which meant that we missed the primary parametric sales period which occurs

throughout quarter two. The majority of 2024 was therefore spent in further product development and

building market awareness of the Syndicate 3939 product offering in advance of 2025. Rating conditions

remain favourable for parametric products, which sit outside of the traditional market pricing cycle. The

softening of rates on more traditional insurance products has in fact released a small amount of

budgeted reinsurance spend which we have seen directed towards supporting parametric purchases.

The syndicate portfolio is considered to be resilient and well positioned for profitable growth in 2025.

2024 calendar year result

The result for the 2024 calendar year is a loss of $13.8m with a combined ratio of 289.3%. The 2024

calendar year result has been adversely affected by the lower than expected written premium and the

losses incurred from Hurricane Milton, which made landfall in the US as a category 3 hurricane in

October 2024. Hurricane Milton was the only claim event during 2024 for the syndicate. This is further

exacerbated by the impact of fixed expenses against a significantly reduced premium base. Whilst a

disappointing result, the 2024 year has set the conditions for the delivery of a balanced and diverse

portfolio that can absorb losses and deliver profit within expectations for subsequent underwriting years.

The earned result for the 2024 year of account in the calendar year was a loss of $13.8m. In light of this

loss the ASML board has approved a cash call of $15.0m to provide appropriate levels of liquidity to the

syndicate.

Capital

One of the advantages of operating in the Lloyd’s market is the favourable capital ratios that are

available due to the diversification of business written in Syndicate 3939

and in Lloyd’s as a whole. For

Syndicate 3939

, ASML assesses the syndicate’s capital using the Lloyd’s Standard Model (LSM). The

ultimate Solvency Capital Requirement (“SCR”) is subject to an uplift determined by Lloyd’s based on

their assessment of the economic capital requirements for the Lloyd’s m

arket in total. The SCR, together

wit

h the Lloyd’s uplift, is referred to as the Economic Capital Assessment (“ECA”).

Lloyd’s unique capital structure provides excellent financial security to policyholders and capital

efficiency for members. The Lloyd’s chain of security underlies the financial strength that ultimately

backs insurance policies written at Lloyd’s and has t

hree links:

1. All premiums received by syndicates are held in trust as the first resource for settling

policyholders’ claims;

2.

Every member is required to hold capital in trust funds at Lloyd’s which are known as Funds at

Lloyd’s (“FAL”). FAL is intended primarily to cover circumstances where syndicate assets are

insufficient to meet participating members’ underwriting liabilities

. FAL is set with reference to

the ECAs of the syndicates that the member participates on. Since member FAL is not under

the control of the managing agent, it is not shown in the syndicate accounts. The managing

agent is, however, able to make a call on me

mbers’ FAL to meet liquidity requirements or to

settle underwriting losses if required; and

3.

Lloyd’s central assets are available at the discretion of the Council of Lloyd’s to meet any valid

claim that cannot be met through the resources of any member further up the chain. Lloyd’s

also retains the right to request a callable contribution equal to 5% of members’ capacity on the

syndicate.

Apollo Syndicate 3939| Annual Report and Accounts 2024

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Managing Agent’s report

(continued)

Principal risks and uncertainties

ASML has established an Enterprise Risk Management (“ERM”) function for the syndicate with clear

terms of reference from the ASML Board and its committees as part of a three lines of defence model.

The ASML Board and its committees review and approve the risk management policies and meet

regularly to approve any commercial, regulatory and organisational requirements of these policies.

The syndicate’s risk appetites are set annually as part of the syndicate business planning and solvency

capital requirement setting process. The ERM function is also responsible for maintaining the

syndicate’s Own Risk and Solvency Assessment (“ORSA”) proc

esses and provides regular updates to

the ASML Board. The syndicate ORSA report is approved by the Board annually.

ASML recognises that the syndicate’s business is to accept risk which is appropriate to enable it to

meet its objectives and that it is not realistic or possible to eliminate risk entirely. The principal risks and

uncertainties facing the syndicate have been identified as strategic risk, insurance risk, regulatory risk,

operational risk, and financial risk (comprising credit risk, liquidity risk and market risk). A risk owner

has been assigned responsibility for each risk, and it is the responsibility of that individual periodically

to assess the impact of the risk and to ensure appropriate risk mitigation procedures and controls are

in place and operating effectively. External factors facing the business and the internal controls in place

are routinely reassessed and changes made when necessary. The overarching risk framework is

overseen by the ASML Risk Committee on behalf of the ASML Board. The risk culture of the business

is Board led, with new initiatives requiring an objective risk assessment and opinion prior to approval.

Strategic risk is the risk that inadequate, ineffective, or inappropriate business decisions result in

negative impacts on the ability to execute the business objectives/strategy, and hence on the

performance of the syndicate. The ASML Board has ultimate responsibility for overseeing the execution

of the approved strategy and consequently the associated strategic risk. All areas of the business are

encouraged to identify areas of potential uncertainty that could impact plan execution and to identify

emerging risks.

Insurance risk refers to fluctuations in the timing, frequency and severity of insured events, relative to

expectations at the time of underwriting. It comprises premium risk and reserving risk. The ASML

Underwriting Committee oversees the management of premium risk and the implementation of a

disciplined Underwriting Strategy with a robust control and governance framework that is focused on

writing quality business

at an acceptable price, and the purchase of a comprehensive outwards

reinsurance programme.

The Board sets limits to the syndicate’s exposure to underwriting risk and accumulation events both on

a gross and net of reinsurance basis and adherence to these limits is reported monthly to the ASML

Underwriting Committee. The ASML Reserving Committee oversees the overall management of

reserving risk. Reserving risk is managed through the use of proprietary and standardised modelling

techniques, internal and external benchmarking, review of claims development and the ongoing

oversight from an independent external reserving process. An independent Statement of Actuarial

Opinion is commissioned each year in line with Lloyd’s Valuation of Liabilities requirements. The

reserving process is overseen by and reports through the ASML Audit Committee.

Regulatory risk is the financial loss or inability to conduct normal business activities owing to a breach

of regulatory requirements or failure to respond to regulatory change. ASML is a regulated entity and

therefore is required to comply with the requir

ements of the PRA, FCA and Lloyd’s. Lloyd’s requirements

include those imposed on the Lloyd’s market by overseas regulators. ASML ensures that there is an

appropriate level of skilled resources in place to meet its regulatory obligations, including compliance,

risk management and internal audit functions.

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Managing Agent’s report

(continued)

Principal risks and uncertainties (continued)

Operational risk is the risk of a loss resulting from inadequate or failed internal processes, people and

systems or from external events. The syndicate is constantly exposed to operational risk as this covers

the uncertainties and hazards of undertaking day-to-day business. Controls have been put in place and

documented to try to ensure that these risks are managed on a proportionate basis and within risk

appetite. As operational risks apply across the entire business, all committees have some level of

oversight for operational risk. However, the ASML Change Committee manage risks relating to changes

in systems and processes, and the ASML Board Risk Committee have oversight of any risk events

which require escalation.

Financial risk for the syndicate covers all risks related to financial investment and the ability to pay

creditors, and includes credit risk, liquidity risk and market risk. In relation to assets held, an investment

mandate reflecting the syndicate’s risk

appetite is in place and has been approved by the Board.

Compliance with this is controlled through the investment manager’s systems and monitored through

the Investment and Treasury Oversight Group.

Credit risk is the risk of financial loss to the syndicate if a counterparty to a financial instrument or a

reinsurance agreement fails to discharge a contractual obligation. ASML manages credit risk by placing

limits on exposure to a single counterparty by reference to the credit rating of the counterparty. On a

quarterly basis the Finance Committee reviews credit exposures, reinsurer security and counterparty

limits, with further oversight provided by the Board and Audit Committee.

Liquidity risk is the risk that the syndicate’s assets are insufficient to fund the obligations arising from

its insurance contracts and financial liabilities as they fall due, or that they can only be met by incurring

additional costs. ASML’s approach to managing liquidity risk includes use of daily liquidity monitoring,

quarterly cash flow forecasts and management of asset duration. Contingency funding plans are in

place to ensure that adequate liquid financial resources are available to meet obligations as they fall

due in the event of reasonably foreseeable abnormal circumstances.

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

because of changes in market prices, excluding those that are caused by credit downgrades which are

included under credit risk. Market risk comprises three key components: interest rate risk, currency risk

and investment risk. For each of the major components of market risk the syndicate has policies and

procedures in place which detail how each risk should be managed and monitored. Investment

management is outsourced and an investment mandate reflecting the syndicate’s risk appetite is in

place and has been approved by the Board. Compliance with this is controlled through the investment

manager’s systems and monitored through the monthly and qu

arterly reporting process. The use of

financial derivates is governed by ASML’s risk management policies and ASML does not use such

instruments for speculative purposes. The Board has agreed key risk indicators and approved the

corresponding risk appetite for each measure.

A quantitative analysis of the risks set out above is included in note 4 to the annual accounts. A traffic

light indicator is used for monitoring current levels of risk based upon agreed thresholds and tolerances.

Apollo Syndicate 3939| Annual Report and Accounts 2024

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M

anaging Agent’s report

(continued)

Emerging risks

An emerging risk is defined as a risk that is new, unforeseen, or unfamiliar. It may result from new or

increased exposure that could pose both as an opportunity or threat to the existing business risk

appetite or tolerance

The Emerging Risk Working Group, is a cross-agency forum, that enables a diverse set of practitioners

to review thematic risk considerations. The results of these reviews can lead to further deep dive

assessments that in turn are reported through the governance structures to the ASML Board Risk

Committee.

Corporate governance

The ASML Board is chaired by Angus Winther, who is supported by five further non-executive directors

and all except Stuart Davies are independent. Monica Cramér Manhem were appointed as Non-

Executive Director on 6 June 2024. Martin Hudson stepped down on 28 February 2025. Robert

Littlemore was appointed as a Non-Executive Director on 28 February 2025. David Ibeson is the Chief

Executive Officer and there were three further executive directors.

With effect from 1 January 2024,

Taryn McHarg, the Apollo Group Chief Financial Officer, was appointed as an executive director and

James MacDiarmid, Hayley Spink and Simon White stepped down from the Board, whilst remaining on

the Executive Committee of ASML.

Defined operational and management structures are in place and terms of reference exist for the Board

and all Management Committees. Syndicate 3939 has a specific Syndicate Management Committee,

comprising members from ASML and NormanMax, that is responsible for the day to day running of the

syndicate.

The ASML Board meets at least four times a year and more frequently when business needs require.

The Board has a schedule of matters reserved for its decision and is supported by the Audit Committee,

the Risk Committee and the Remuneration and Nominations Committee. These supporting committees

are comprised of non-executive directors and with the exception of Stuart Davies, all members of the

Audit Committee and Risk Committee are independent. All members of the Remuneration and

Nominations Committee are independent.

Section 172 statement

The directors adopt the responsibilities to promote the success of the syndicate as if s172 of the

Companies Act 2006 were applicable and have acted in accordance with these responsibilities during

the year. The Board has identified the following key stakeholders: capital providers to the managed

syndicates, employees, the shareholder of ASML, Lloyd’s regulators, policyholders and brokers.

Throughout the year the Board considered the wider impact of strategic and operational decisions on

its stakeholders. Examples include the development and execution of the business plans for the

syndicate; the assessment and raising of capital; communications with capital providers; and changes

to Board composition. The Board considers that the interests of all stakeholders were aligned for these

decisions.

The support and engagement of capital providers of the syndicate is imperative to the future success

of the business. NomanMax leads liaison

with capital providers and members’ agents throughout the

year to discuss the performance and future prospects for the syndicate, with oversight from Apollo.

Apollo Syndicate 3939| Annual Report and Accounts 2024

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Managing Agent’s report

(continued)

Section 172 statement (continued)

Developing and maintaining relationships with brokers and policyholders is central to the success of the

syndicate. Underwriters travel widely with our broking partners to visit clients and attend industry events

to promote the syndicates and the Lloyd’s b

rand and to ensure we continue to provide an excellent

service to our policyholders. In developing insurance propositions, marketing them with our broking

partners, and in settling claims, we always seek to ensure fair customer outcomes and provide products

that deliver value.

ASML maintain open and transparent relationships with our regulators and Lloyd’s, with these

relationships being managed through our compliance team. Regular meetings are held with

representatives of Lloyd’s and the PRA and significant regulatory engagemen

ts are reported to the

Board.

Apollo’s stated purpose is “Enabling a resilient and sustainable world”. Through 2024 we continued our

work to develop and document our ESG principles and standards and assess our current business

model against these standards. There is a defined referral process for underwriting risks to adhere to

our ESG appetite and manage potential reputational risk. ESG considerations are integrated into the

design of the investment strategy and asset allocation, and ongoing attention is given to staff

engagement, particularly around

Diversity, Equity & Inclusion (‘’DEI’’)

. Further work on ESG activities

will continue through 2025.

We have put in place arrangements to assist in managing the financial risks and opportunities

associated with the effects of climate change and to ensure adequate oversight and control of this area

in relation to underwriting, reserving, investment management and operations. The business meets the

requirements for PRA Supervisory Statement 3/19. Whilst the ASML Chief Risk Officer retains overall

accountability for coordinating the approach to managing this risk within ASML, the responsibility is

allocated to relevant managers of each business area. Further developments to ensure appropriate

management of these risks and opportunities will continue through 2025.

Staff matters

We believe that our people are our most valuable asset. Attracting, retaining and nurturing talent is

essential to our success. We are committed, to creating a work environment where employees feel

engaged through communication, acknowledgment and ongoing growth opportunities. We actively

support and promote DEI as well as mental health and wellbeing to ensure that all staff members feel

appreciated, supported and can perform at their best.

We aspire to function as a team where respect and collaboration are standard practices. Our hybrid

working aims to empower employees and to encourage a culture of communication and cooperation.

We have channels for staff to express concerns and to share making our workplace safe, encouraging

and innovative.

ASML’s people practices remain highly competitive in the London Insurance Market,

providing

compensation, benefits, and terms designed to attract and retain top talent. A key focus is on ensuring

our employees perform at their best with opportunities for skill enhancement, to develop their

capabilities and advance their careers within ASML. This is an integral focus of our succession planning

Strategy.

Business operations

ASML aims to maintain a lean, efficient operating model utilising technology and outsourcing

arrangements enabling flexibility and scalability to meet the demands of the business. We continue to

invest in resources across the business in order to ensure that there is an effective operating model

and robust three lines of defence model.

Apollo Syndicate 3939| Annual Report and Accounts 2024

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Managing Agent’s report (continued)

Business operations (continued)

Lloyd’s

Blueprint Two initiatives offer several processing efficiency gains for the market, and we believe

we are well positioned to adopt the new digital services to maximise the benefit to ASML, its syndicates

and its capital providers.

ASML continues to successfully maintain a hybrid working environment with all employees able to work

effectively, both remotely and from the office, with suitable access to business systems.

Aligned with the FCA’s and PRA’s Operational Resilience and Third

-Party Oversight policies, Apollo

maintains a disciplined approach to operational resilience. We continue to focus on ensuring we

maintain robust and resilient plans to prevent, respond and recover from operational disruptions with

the primary objective to protect our customers and the integrity of our business.

Environmental, Social and Governance

ASML’s Board approved ESG strategy was reviewed in November 2024. The ASML Board drives the

strategy, which is aligned with our vision statement and purpose; “Enabling a resilient and sustainable

world”.

ASML’s ESG Committee reports directly to the

Executive Committee and coordinates ESG-related

activities within ASML. The ESG Committee’s mandate is set out within ASML’s ESG Policy, but at a

high-level seeks to identify areas of improvement and to ensure progress against the ESG strategy

approved by the ASML Board.

ASML is committed to a long-term sustainable approach to protecting the environment, balancing

environmental considerations and social responsibility with our overall business goals. ASML’s

underwriting and investment practices are governed by ESG risk appetites that were originally

implemented in 2022 and are reviewed at least annually. ASML is also working to identify new

opportunities that support the transition to a low carbon sustainable economy, including through the

Lloyd’s Transition TCX class.

The ESG strategy is reviewed by the ASML Board annually. During 2024, ASML’s key achievements

have included:

•

Integrating climate risk formally into the ERM and governance frameworks which included

enhancements to climate related stress and scenario testing,

•

Implementing new Investment Guidelines to avoid investing in sectors that do not align with the

ESG risk appetites,

•

Joining the Partnership for Carbon Accounting Financials and commenced work to baseline

ASML’s insurance

-associated emissions, and

•

Enhancing ASML’s approach to managing ESG risks in the underwriting process.

At Apollo our people are at the heart of everything we do. We operate a zero-tolerance policy to bullying,

harassment, and discrimination. This includes protected characteristics under the Equality Act of 2010,

as well as neurodiversity, parental and caring responsibilities, socio-economic status, and working

patterns.

ASML is dedicated to fostering a diverse, equitable, and inclusive workplace, with a focus on inclusive

hiring practices. We are proud sponsors and supporters of six Lloyd’s market inclusion networks. As

such, we have implemented several inclusion initiatives and have a comprehensive DEI strategy in

place. Employees have access to mental health and wellbeing resources through independent partners,

as well as additional support through private medical services.

Apollo Syndicate 3939| Annual Report and Accounts 2024

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Managing Agent’s report

(continued)

Environmental, Social and Governance (continued)

ASML monitors gender and racial diversity metrics, employee satisfaction, and governance related

metrics. This information is used by the ASML Board to track progress against the ESG Strategy.

Several DEI related metrics at year-end 2024 are summarised below.

Notes:

At the end of 2024, ASML had 281 employees in total (2023: 234), of which 45 (2023: 36) were senior managers. There were 10

Board directors (2023: 11).

From an environmental perspective, ASML’s carbon footprint is monitored across different types of

emissions sources, and we have separately aligned with greenhouse gas emissions (“GHG”) Protocol

scopes 1 and 2 and several scope 3 categories (which cover purchased goods and services, fuel and

energy-related activities, waste generated in operations, employee commuting, and upstream leased

assets). GHG emissions currently exclude our scope 3 underwriting emissions as we look to develop

an appropriate methodology. Our Scope 1 and 2 GHG are reported to UK Companies House under the

Streamline Energy and

Carbon Reporting framework. ASML’s scope 1, 2,

and 3 GHG emissions for

year-end 2024 are disaggregated by source below.

Apollo Syndicate 3939| Annual Report and Accounts 2024

13

Managing Agent’s report

(continued)

Directors

The directors who held office at the date of signing this report are shown on page 3.

Annual general meeting

The directors do not propose to hold an Annual General Meeting for the syndicate. If any members’

agent or direct corporate supporter of the syndicate wishes to meet with them the directors are happy

to do so.

Disclosure of information to the auditor

Each person who is a director of the managing agent at the date of approving this report confirms that:

•

so far as the director is aware, there is no relevant audit information of which the syndicate's

auditor is unaware; and

•

each director has taken all the steps that they ought to have taken as a director in order to make

themselves aware of any relevant audit information and to establish that the syndicate's auditor

is aware of that information.

Auditor

Deloitte LLP has indicated its willingness to continue in office as the syndicate’s auditor. The managing

agent hereby gives formal notification of a proposal to re-appoint Deloitte LLP as auditor of Syndicate

3939 for a further year.

Events after the balance sheet date

The Board has considered events after the balance sheet date which, by their nature, are material to

the syndicate and no items have been identified for disclosure.

Future developments

The 2025 business plan for the syndicate focuses on writing the existing portfolio of specialist lines of

business profitably. The syndicate will maintain a comprehensive outwards reinsurance programme

across all classes of business. The majority of the natural catastrophe property exposures continue to

be covered by an excess of loss programme placed with both fully collateralised and traditional

reinsurance vehicles. Other peril level risk appetites will continue to be managed using a combination

of excess of loss, quota share and facultative covers.

I would like to take this opportunity to thank our staff for their hard work and commitment to the business

during the last year.

Approved by the Board.

DCB Ibeson

Chief Executive Officer

5 March 2025

Apollo Syndicate 3939| Annual Report and Accounts 2024

14

Statement of Managing Agent’s Responsibilities

The Managing Agent is responsible for preparing the syndicate annual accounts in accordance with

applicable law and regulations. In addition, in preparing the annual accounts, the Directors of the

managing agent are required to comply with the requirements of Section 1 of the Lloyd’s Syndicate

Accounts Instructions V2.0 as modified by the Frequently Asked Questions Version 1.1 issued by

Lloyd’s (the Syndicate Accounts Instructions).

The Directors of the Managing Agent are responsible for the preparation and review of the iXBRL

tagging that has been applied to the Syndicate Accounts in accordance with the instructions issued by

Lloyd’s, including designing, implementing and maintaining

systems, processes and internal controls to

result in tagging that is free from material non-

compliance with the instructions issued by Lloyd’s,

whether due to fraud or error.'

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

require the managing agent to prepare syndicate annual accounts as 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:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

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

departures disclosed and explained in the notes to the syndicate annual accounts; and

• 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 Managing Agent is responsible for the preparation and review of the iXBRL tagging that has been

applied to the Syndicate Accounts in accordance with the instructions issued by Lloyd’s, including

designing, implementing, and maintaining systems, processes and internal controls to result in tagging

that is free from material non-

compliance with the instructions issued by Lloyd’s, whether due to fraud

or error.

The managing agent is responsible for keeping proper accounting records which disclose with

reasonable accuracy at any time the financial position of the syndicate and enable it to ensure that the

syndicate annual accounts comply with the 2008 Regulations. It is also responsible for safeguarding

the assets of the syndicate and hence for taking reasonable steps for prevention and detection of fraud

and other irregularities.

Legislation in the UK governing the preparation and dissemination of annual accounts may differ from

legislation in other jurisdictions.

Apollo Syndicate 3939| Annual Report and Accounts 2024

15

Independent Auditor’s Report to the Member

s of

Syndicate 3939

Report on the audit of the syndicate annual financial statements

Opinion

In our opinion the syndicate annual financial statements of Syndicate 3939 (the ‘syndicate’):

•

give a true and fair view of the state of the syndicate’s affairs as at 31 December 2024 and of

its loss for the year then ended;

•

have been properly prepared in accordance with United Kingdom Generally Accepted

Accounting Practice, including Financial Reporting Standard 102 “The Financial Reporting

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

•

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

(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and sections 1 and 5 of the

Syndicate Accounts Instructions Version 2.0 as modified by the Frequently Asked Questions

Version 1.1 issued by Lloyd’s (the “Lloyd’s Syndicate Accounts Instructions”).

We have audited the syndicate annual financial statements which comprise:

•

the statement of profit or loss and comprehensive income;

•

the statement of changes in members’ balances;

•

the balance sheet;

•

the statement of cash flows; and

•

the notes to the annual accounts 1 to 22.

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

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

Standard applicable in the UK and Republic of Irelan

d” (United Kingdom Generally Accepted

Accounting Practice).

Basis for opinion

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

applicable law and the Syndicates Accounts Instructions. Our responsibilities under those standards

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

statements section of our report.

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

our audit of the syndicate annual financial statements in the UK, including the Financial Reporting

Council’s (the ‘FRC’s’) Ethical Standard, and we have f

ulfilled our other ethical responsibilities in

accordance with these requirements. We believe that the audit evidence we have obtained is sufficient

and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

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

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

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

events or conditions that, individually or collectively, may cast significant doubt on the syndicate’s ability

to continue in operations for a period of at least twelve months from when the syndicate financial

statements are authorised for issue.

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

described in the relevant sections of this report.

Apollo Syndicate 3939| Annual Report and Accounts 2024

16

Independent Auditor’s Report to the Member

s of

Syndicate 3939

Other information

The other information comprises the information included in the Annual Report and Accounts (the

“annual report”) other than the syndicate annual financial statements and our auditor’s report thereon.

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

opinion on the syndicate annual financial statements does not cover the other information and, except

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

conclusion thereon.

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

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

obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such

material inconsistencies or apparent material misstatements, we are required to determine whether this

gives rise to a material misstatement themselves. If, based on the work we have performed, we

conclude that there is a material misstatement of this other information, we are required to report that

fact.

We have nothing to report in this regard.

Responsibilities of managing agent

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

responsible for the preparation of the syndicate annual financial statements and for being satisfied that

they give a true and fair view, and for such internal control as the managing agent determines is

necessary to enable the preparation of syndicate annual financial statements that are free from material

misstatement, whether due to fraud or error.

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

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

syndicate’s ability to continue in operation and to

use the going concern basis of accounting unless the

managing agent intends to cease the syndicate’s operations, or has no realistic alternative but to do so.

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

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

statements as a whole are free from material misstatement, whether due to fraud or error, and to issue

an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is

not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material

misstatement when it exists. Misstatements can arise from fraud or error and are considered material

if, individually or in the aggregate, they could reasonably be expected to influence the economic

decisions of users taken on the basis of these syndicate annual financial statements.

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

located on the FRC’s website at:

www.frc.org.uk/auditorsresponsibilities

. This description forms part of

our auditor’s report.

Apollo Syndicate 3939| Annual Report and Accounts 2024

17

Independent Auditor’s Report to the Member

s of

Syndicate 3939

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

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

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

of irregularities, including fraud. The extent to which our procedures are capable of detecting

irregularities, including fraud is detailed below.

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

documentation of their policies and procedures relating to fraud and compliance with laws and

regulations. We also enquired of management about their own identification and assessment of the

risks of irregularities.

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

and identified the key laws and regulations that:

•

Had a direct effect on the determination of material amounts and disclosures in the financial

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

Aggregate

Accounts) Regulations 2008 and the Lloyd’s Syndicate Accounting Byelaw (no. 8 of

2005); and

•

Do not have a direct effect on the financial statements but compliance with which may be

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

the requirements of Solvency II.

We discussed among the audit engagement team including actuarial specialists and IT specialists

regarding the opportunities and incentives that may exist within the organisation for fraud and how and

where fraud might occur in the financial statements.

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

and our procedures performed to address them are described below:

•

The syndicate is in its first year of account and has limited estimation in its gross written

premium.

We focused our work over the risk of fraud in revenue recognition to the gross written

premium that had not yet been signed through to the syndicate as cash receipts. In response

to the risk identified, we tested a significant sample of the unsigned policies, agreeing premium

data used to underlying contracts, confirming that these are genuine contracts and have been

accurately recorded in the reporting period.

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

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

override of controls, we tested the appropriateness of journal entries and other adjustments; assessed

whether the judgements made in making accounting estimates are indicative of a potential bias; and

evaluated the business rationale of any significant transactions that are unusual or outside the normal

course of business.

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

•

reviewing financial statement disclosures by testing to supporting documentation to assess

compliance with provisions of relevant laws and regulations described as having a direct effect

on the financial statements;

Apollo Syndicate 3939| Annual Report and Accounts 2024

18

Independent Auditor’s Report to the Member

s of

Syndicate 3939

•

performing analytical procedures to identify any unusual or unexpected relationships that may

indicate risks of material misstatement due to fraud;

•

enquiring of management concerning actual and potential litigation and claims, and instances

of non-compliance with laws and regulations; and

•

reading minutes of meetings of those charged with governance, reviewing internal audit reports

and reviewing correspondence with Lloyd’s.

Report on other legal and regulatory requirements

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

Aggregate Accounts) Regulations 2008

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

•

The information given in the managing agent’s report

for the financial year for which the

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

•

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

requirements.

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

course of the audit, we have not identified any material misstatements in the managing agent’s report.

Matters on which we are required to report by exception

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

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

•

the managing agent in respect of the syndicate has not kept adequate accounting records; or

•

the syndicate annual financial statements are not in agreement with the accounting records; or

•

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

We have nothing to report in respect of these matters.

Use of our report

This report is made solely to the syndicate’s members, as a body, in accordance with regulation 10 of

The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008. Our

audit work has been undertaken so that we might state to

the syndicate’s members those matters we

are required to state to them in an auditor’s report and for no other purpose. To the fullest extent

permitted by law, we do not accept or assume responsibility to anyone other than the syndicate’s

members as a body, for our audit work, for this report, or for the opinions we have formed.

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

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

on the Lloyd’s website. This auditors’ report provi

des no assurance over whether the Electronic Format

Annual Syndicate Accounts have been prepared in compliance with Section 2 of the Syndicate

Accounts Instructions Version 2. We have been engaged to provide assurance on whether the

Electronic Format Annual Syndicate Accounts has been prepared in compliance with Section 2 of the

Syndicate Accounts Instructions Version 2 and will privately report to the Council of Lloyd’s on this.

Apollo Syndicate 3939| Annual Report and Accounts 2024

19

Independent Auditor’s Report to the Member

s of

Syndicate 3939

Kirstie Hanley (Senior statutory auditor)

For and on behalf of Deloitte LLP

Statutory Auditor

London, United Kingdom

5 March 2025

Apollo Syndicate 3939| Annual Report and Accounts 2024

20

Statement of profit or loss and comprehensive

Income:

for the year ended 31 December 2024

All operations relate to continuing activities.

The accompanying notes on pages 26 to 46 form an integral part of these annual accounts.

Apollo Syndicate 3939| Annual Report and Accounts 2024

21

Statement of profit or loss and comprehensive

income: (continued)

for the year ended 31 December 2024

The accompanying notes from page 26 to 46 form an integral part of these financial statements

.

Apollo Syndicate 3939| Annual Report and Accounts 2024

22

Balance sheet

as at 31 December 2024

Apollo Syndicate 3939| Annual Report and Accounts 2024

23

Balance sheet (continued)

as at 31 December 2024

The syndicate annual accounts on pages 20 to 46 were approved by the Board of Apollo Syndicate

Management Limited and signed on its behalf by:

TL McHarg

Chief Financial Officer

5 March 2025

Apollo Syndicate 3939| Annual Report and Accounts 2024

24

Statement of changes in members’

balances

for the year ended 31 December 2024

Members participate on syndicates by reference to years of account and their ultimate result, assets

and liabilities are assessed with reference to policies incepting in that year of account in respect of their

membership of a particular year.

Apollo Syndicate 3939| Annual Report and Accounts 2024

25

Statement of cash flows

for the year ended 31 December 2024

Apollo Syndicate 3939| Annual Report and Accounts 2024

26

N

otes to the financial statements

for the year ended 31 December 2024

1. Basis of preparation

Syndicate 3939

comprises a group of members of the Society of Lloyd’s that underwrite insurance

business in the London Market. The address of the syndicate’s managing agent, Apollo Syndicate

Management Limited, is One Bishopsgate, London EC2N 3AQ.

The annual accounts have been prepared in accordance with The Insurance Accounts Directive (Lloyd’s

Syndicate and Aggregate Accounts) Regulations 2008, Financial Reporting Standard 102 The Financial

Reporting Standard applicable in the UK and Republic of I

reland (“FRS 102”) and Financial Reporting

Standard 103 Insurance Contracts (“FRS 103”) issued by the Financial Reporting Council

.

In addition,

in preparing the annual accounts, the Directors of the managing agent are required to comply with the

requirements of Section 1 of the Lloyd’s Syndicate Accounts Instructions V2.0 as modified by the

Frequently Asked Questions Version 1.1 issue

d by Lloyd’s (the Syndicate Accounts Instructions).

The annual accounts have been prepared on the historical cost basis, except for financial assets which

are measured at fair value through profit or loss.

The syndicate’s functional and presentation currency is US Dollars. All amounts have been rounded to

the nearest thousand and are stated in US Dollars unless otherwise indicated.

The syndicate has resources to meet its financial needs, including access to bank credit facilities and

the ability to manage its portfolio of insurance risk. The directors have continued to review the business

plans, liquidity and operational resilience of the syndicate and are satisfied that the syndicate is well

positioned to manage its business risks in the current economic environment. The syndicate 2025 year

of account has opened, and the directors have concluded that the syndicate has a reasonable

expectation that it will open a 2026 year of account in partnership with NormanMax the syndicate

’s

largest capital backer. The syndicate has sufficient capital for each year of account provided by the

syndicate

’s

members as FAL. There is no intention to cease underwriting or cease the operations of

the syndicate.

Accordingly, the directors of the managing agent have adopted the going concern basis in preparing

the annual accounts.

2. Critical accounting judgements and key sources of estimation uncertainty

In preparing these annual accounts, the directors of the managing agent have made judgements,

estimates and assumptions that affect the application of the syndicate’s accounting policies and the

reported amounts of assets, liabilities, income, and expenses. Several of the estimates are based on

actuarial assumptions underpinned by historical experience, market data, and other factors that are

considered to be relevant.

Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on

an ongoing basis. Revisions to estimates are recognised in the period in which they are identified where

the revision affects only that period and future periods.

There are no critical judgements due to the nature of the policy form and coverage provided by the

syndicate.

Apollo Syndicate 3939| Annual Report and Accounts 2024

27

Notes to the financial statements (continued)

for the year ended 31 December 2024

3. Significant accounting policies

The following principal accounting policies have been applied consistently in accounting for items which

are considered material in relation to the syndicate’s annual accounts.

Gross premiums written

Premiums written comprise premiums on contracts of insurance incepted during the financial year as

well as adjustments made in the year to premiums on policies incepted in prior accounting periods.

Additional or return premiums are treated as a re-measurement of the initial premium. Estimates are

made for pipeline premiums, representing amounts due to the syndicate not yet received or notified.

Premiums are shown gross of brokerage payable and are exclusive of taxes and duties thereon.

Outwards reinsurance premiums

Written outwards reinsurance premiums comprise the estimated premiums payable for contracts

entered into during the period. Non-proportional reinsurance contracts are recognised on the date on

which the policy incepts, and proportional reinsurance is recognised when the underlying gross

premium is written.

Premiums are shown gross of brokerage payable and are exclusive of taxes and duties thereon. The

reported outwards reinsurance premiums include adjustments for variations in cover relating to

contracts incepting in prior accounting periods.

Under some policies, reinsurance premiums payable are adjusted retrospectively in the light of claims

experience. Where written premiums are subject to an increase retrospectively, any potential increase

is recognised as soon as there is an obligation to the reinsurer.

Provisions for unearned premiums

Written premiums are recognised as earned over the life of the policy. Unearned premiums represent

the proportion of premiums written that relate to unexpired terms of policies in force at the balance sheet

date, calculated on the basis of earnings patterns reflecting the risk profile of the underlying policies or

time apportionment as appropriate.

Outwards reinsurance premiums are earned in the same accounting period as the premiums for the

related direct or inwards business being reinsured.

Apollo Syndicate 3939| Annual Report and Accounts 2024

28

Notes to the financial statements (continued)

for the year ended 31 December 2024

3. Significant accounting policies (continued)

Claims provisions and related recoveries

Gross claims incurred comprise the estimated cost of all claims occurring during the year, whether

reported or not, including related direct and indirect claims handling costs and adjustments to claims

outstanding from previous years.

Incurred claims outstanding are reduced by anticipated salvage and other recoveries from third parties.

The amount of any salvage and subrogation recoveries is separately identified and, where material,

reported as a receivable.

The provision for claims outstanding is assessed on an individual case by case basis and is based on

the estimated ultimate cost of all claims notified but not settled by the balance sheet date, together with

the provision for related claims handling costs. The provision also includes the estimated cost of IBNR

claims as well as claims incurred but not enough reported (“IBNER”)

.

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

for IBNR, net of estimated irrecoverable amounts, having regard to the reinsurance programme in place

for the class of business, the claims experience for the year and the current security rating of the

reinsurance companies involved.

Where the security rating provides an indication that the recoverable amount may be impaired a

proportion of the balance will be provided for as a provision for bad debt by applying a percentage

based on historical experience.

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

accounts for the period in which the adjustments are made. The provisions are not discounted for the

investment earnings that may be expected to arise in the future on the funds retained to meet the future

liabilities. The methods used, and the estimates made, are reviewed regularly.

Unexpired risks provision

A provision for unexpired risks is made where claims and related expenses likely to arise after the end

of the financial period in respect of contracts concluded before that date are expected, in the normal

course of events, to exceed the unearned premiums and premiums receivable under these contracts

after the deduction of any acquisition costs deferred.

A provision for unexpired risks is calculated separately by reference to classes of business which are

regarded as managed together after taking into account relevant investment return. All the classes of

the syndicate are considered to be managed together.

Debtors and creditors

Debtors and creditors are recognised when due. Which are classified as debtors and creditors as they

are non-derivative financial assets with fixed or determinable payments that are not quoted on an active

market. Debtors are measured at amortised cost less any provision for impairments. Creditors are

stated at amortised cost less any provision for impairments.

Off-setting

Financial assets and financial liabilities are off-set, and the net amount presented in the balance sheet

when, and only when, the syndicate has a legal right to set off the amounts and intends either to settle

on a net basis or to realise the asset and settle the liability simultaneously.

Apollo Syndicate 3939| Annual Report and Accounts 2024

29

Notes to the financial statements (continued)

for the year ended 31 December 2024

3. Significant accounting policies (continued)

Investment return

Investment return is comprised of interest earned on the cash held at bank.

Net operating expenses

Net operating expenses include acquisition costs, administrative expenses and members’ standard

personal expenses. Operating expenses are paid by ASML and recharged to the syndicate. No mark-

up is applied.

Acquisition costs

Acquisition costs represent costs arising from the conclusion of insurance contracts. They include both

direct costs such as brokerage and commission, and indirect costs such as administrative expenses

connected with the processing of proposals and the issuing of policies.

Acquisition costs are earned in line with the earning of the gross premiums to which they relate. The

deferred acquisition cost asset represents the proportion of acquisition costs which corresponds to the

proportion of gross premiums written that is unearned at the balance sheet date.

Managing agent’s fees

The managing agent has agreed contractual terms designating the management fee. This expense is

recognised over the 12 months following commencement of the underwriting year to which it relates.

The managing agent has agreed contractual terms with the capital providers to the syndicate for the

payment of profit commission based on the performance of the individual years of account of the

syndicate. Profit commission is accrued in line with the contractual terms and the development of the

result of the underlying years of account which is reassessed regularly.

Amounts charged to the syndicate do not become payable until after the appropriate year of account

closes, normally at 36 months, although the managing agent may receive payments on account of

anticipated profit commission if interim profits are released to members.

Foreign currencies

Transactions in foreign currencies are translated into US Dollars which is the functional and

presentational currency of the syndicate. Transactions in foreign currencies are translated using the

exchange rates at the date of the transactions if significant or otherwise at the appropriate average

rates of exchange for the period.

The syndicate’s monetary assets and liabilities denominated in foreign currencies are translated into

the functional currency at the rates of exchange at the balance sheet date. Non-monetary assets and

liabilities denominated in foreign currencies that are measured at fair value are retranslated to the

functional currency at the exchange rate at the date that the fair value was determined.

Non-monetary items denominated in foreign currencies that are measured at historic cost are translated

to the functional currency using the exchange rate at the date of the transaction. For the purposes of

foreign currency translation, unearned premiums and deferred acquisition costs are treated as

monetary items.

Foreign exchange differences arising on translation of foreign currency amounts are included in the

non-technical account.

Apollo Syndicate 3939| Annual Report and Accounts 2024

30

Notes to the financial statements (continued)

for the year ended 31 December 2024

3. Significant accounting policies (continued)

Pension costs

Apollo operates a defined contribution pension scheme. Pension contributions relating to managing

agency staff working on behalf of the syndicate are charged to the syndicate and included within net

operating expenses.

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 on behalf of

members have been included in the balance sheet under the heading ‘other debtors’. No provision has

been made for any other overseas tax payable by members on underwriting results.

Classification of insurance and reinsurance contracts

Insurance and reinsurance contracts are classified as insurance contracts where they transfer

significant insurance risk. If a contract does not transfer significant insurance risk it is classified as a

financial instrument. All of the syndicate

’

s written contracts and purchased reinsurance contracts

transfer significant insurance risk and therefore are recognised as insurance contracts.

4. Risk and capital management

Introduction and overview

This note presents information about the nature and extent of insurance and financial risks to which the

syndicate is exposed, the managing agent’s objectives, policies and processes for measuring and

managing insurance and financial risks, and for managing the syndicate’s capital.

Enterprise Risk Management framework

The ASML ERM framework has been adopted and embedded by the syndicate. The primary objective

of the ERM framework is to protect the syndicate’s members from events that could impede sustainable

growth and achievement of a consistent financial performance, including failing to maximise

opportunities through informed and appropriate risk taking.

The Board of ASML has overall responsibility for the establishment and oversight of the ERM framework.

The Board has established an Audit Committee and a Risk Committee which oversee the operation of

the syndicate’s ERM framework and review and monitor the

management of the risks to which the

syndicate is exposed.

Apollo Syndicate 3939| Annual Report and Accounts 2024

31

Notes to the financial statements (continued)

for the year ended 31 December 2024

4. Risk and capital management (continued)

Enterprise Risk Management framework (continued)

ASML has established an ERM function, together with terms of reference for the Board, its committees

and the associated Executive Management Committees which identify the risk management obligations

of each.

The function is supported by a clear organisational structure with documented authorities and

responsibilities from the Board to Executive Management Committees and senior managers using a

standard ‘three lines of defence’ model. The framework sets out the

risk appetites for the syndicate and

includes controls and business conduct standards.

Under the ERM framework, ASML’s Risk and Capital Committee oversees the ERM function at an

Executive level. The management of specific risk grouping is delegated to several executive committees:

the Reserving Committee is responsible for developing and monitoring insurance risk management

policies; the management of aspects of financial risks is the responsibility of the Finance Committee.

In addition, the syndicate is exposed to potential operational risks and the management of aspects of

these risks is the responsibility of the Operations and Change Committee. Accordingly, the ERM

function and the Risk and Capital Committee operates as the second line of defence above these

committees. The ERM function reports quarterly to the ASML Board and Risk Committee on its activities

during the quarter and provides a forward-looking view of the upcoming assurance activities

.

Insurance risk

Management of insurance risk

Insurance risk refers to fluctuations in the timing, frequency, and severity of insured events, relative to

expectations at the time of underwriting. It is comprised of premium risk and reserving risk and is the

principal risk the syndicate faces in the writing of insurance contracts.

A key component of the management of insurance risk for the syndicate is a disciplined underwriting

strategy that is focused on writing quality business and not writing for premium volume.

Product pricing is designed to incorporate appropriate premiums for each type of assumed risk. The

underwriting strategy includes underwriting limits on the syndicate’s total exposure to specific risks

together with

limits on geographical and industry exposures to ensure that a well-diversified book is

maintained.

Contracts can contain a number of features which help to manage the insurance risk such as the use

of deductibles, or capping the maximum permitted loss, or number of claims (subject to local regulatory

and legislative requirements).

The syndicate makes use of parametric reinsurance to mitigate the risk of incurring significant losses.

Education on how parametric policies are structured in order to reduce basis risk, will foster adoption

and strengthen climate resiliency globally.

Apollo Syndicate 3939| Annual Report and Accounts 2024

32

Notes to the financial statements (continued)

for the year ended 31 December 2024

4. Risk and capital management (continued)

Management of insurance risk (continued)

Combining multiple trigger types within a parametric solution greatly reduces the “miss” factor and

provides for multiple opportunities for the insured to recover after a covered event. We use a

combination of 60 second sustained windspeed escalating triggers coupled with a trigger based on

storm track. If the NHC storm track intersects a pre-defined area/region then there is an escalating

payout by Saffir-Simpson category. The higher the category the higher the recovery. If both structures

are triggered in a covered event the highest recovery percent would be available to pay the insured.

Since parametric solutions are priced and monitored on a frequency basis and not a severity basis for

catastrophic risk, the risk appetite is highly dependent on proper aggregate distribution and diligent

monitoring of aggregate caps. Aggregate caps will be pre-determined and managed by peril (i.e.

hurricane or earthquake), within the technology platform to ensure compliance. The aggregate

distribution will be continuously updated and monitored based on an in-depth review of market

conditions and opportunity within each territory.

Exposure management in parametric solutions is also very dependent on aggregate limit distribution by

territory since parametric policies are bought and sold for a pre-defined limit of coverage and not the

actual total insurable value of the insured. Parametric solutions are meant to bridge the gap that is left

with traditional property policies. Third Party catastrophe modelling companies (i.e. RMS, Karen Clark

and Company) are the basis for both exposure management and performing calculation agent services.

The Board sets limits to the syndicate’s exposure to catastrophe events both on a gross and net of

reinsurance basis and adherence to these limits is regularly monitored by the ASML Exposure

Management team which reports monthly to the Underwriting Committee and quarterly to the Risk and

Capital Committee. The syndicate monitors its catastrophe exposures against a range of probabilistic

and scenario-based outputs. A range of natural and man-made catastrophe risk appetites that reflect

the syndicate’s risk p

rofile are in place, which are reported to the Risk Committee on a quarterly basis

and escalated to the Board by exception.

The table below shows the gross premium by the location of the insured as a proxy for risk location.

This gives an indication of the syndicate’s

exposure to loss written in the calendar year by geographic

area.

Apollo Syndicate 3939| Annual Report and Accounts 2024

33

Notes to the financial statements (continued)

for the year ended 31 December 2024

4. Risk and capital management (continued)

Management of insurance risk (continued)

The Reserving Committee oversees the management of reserving risk. The use of proprietary and

standardised modelling techniques, internal and external benchmarking and the review of claims

development are all instrumental in mitigating reserving risk.

ASML actuaries perform a reserving analysis on a quarterly basis, liaising closely with underwriters,

claims and reinsurance personnel. The aim of this exercise is to produce a probability-weighted average

of the expected future cash outflows arising from the settlement of incurred claims and claims on

unearned premium. These projections include an analysis of claims development compared to the

previous ‘best estimate’ projections.

The Reserving Committee performs a comprehensive review of the projections, both gross and net of

reinsurance. Following this review, the Reserving Committee makes recommendations to the Audit

Committee and Board as to the claims provisions to be established.

In arriving at the level of claims provisions a margin may be applied over and above the actuarial best

estimate to increase the probability that the reserves are sufficient to meet liabilities.

The level of year end reserves is validated by external consulting actuaries through their report to

management and their provision of a Statement of Actuarial Opinion to ASML and Lloyd’s on gross and

net reserves by year of account at 31 December 2024.

Sensitivity to insurance risk

The liabilities established could be significantly lower or higher than the ultimate cost of settling the

claims arising. This level of uncertainty varies between the classes of business and the nature of the

risk being underwritten and can arise from developments in case reserving for attritional losses, large

losses and catastrophes, or from changes in estimates of IBNR claims.

The following table presents the sensitivity of the value of insurance liabilities disclosed in the accounts

to potential movements in the assumptions applied within the technical provisions. Given the nature of

the business underwritten by the syndicate.

On a net of reinsurance basis the effects are more complex depending on the nature of the loss and its

interaction with other losses already incurred. The incidence of profit commission payable to

intermediaries may also affect the gross and net impact on

results and members’ balance.

Apollo Syndicate 3939| Annual Report and Accounts 2024

34

Notes to the financial statements (continued)

for the year ended 31 December 2024

4. Risk and capital management (continued)

Exposure to credit risk

The carrying amount of financial assets and reinsurance assets represents the maximum credit risk

exposure.

The following table analyses the credit rating by investment grade of financial investments, reinsurers’

share of technical provisions, debtors arising out of direct insurance operations, debtors arising out of

reinsurance operations, cash and cash equivalents and overseas deposits that are neither past due,

nor impaired.

Debtors arising out of direct and reinsurance operations are comprised of pipeline premiums and

balances relating to outstanding receipts from Lloyd’s Central Accounting (‘LCA’). By their nature, it is

not possible to classify these balances by credit rating and therefore they are included as not rated in

the following tables.

Financial assets that are past due or impaired

The syndicate does not have any directly held receivables that are past due and impaired or any other

impaired assets at the reporting date. These debtors have been individually assessed for impairment

by considering information such as the occurrence of s

ignificant changes in the counterparty’s financial

position, patterns of historical payment information, disputes and compliance with ASML terms and

conditions.

Apollo Syndicate 3939| Annual Report and Accounts 2024

35

Notes to the financial statements (continued)

for the year ended 31 December 2024

4. Risk and capital management (continued)

Financial assets that are past due or impaired (continued)

There are no impaired debtors arising from direct insurance or reinsurance operations.

Liquidity risk

Liquidity risk is the risk that the syndicate’s assets are insufficient to fund the obligations arising from

its insurance contracts and financial liabilities as they fall due or can only be met by incurring additional

costs.

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

•

forecasts are prepared and revised on a regular basis to predict cash outflows from insurance

contracts and overheads over the short, medium and long term;

•

the syndicate purchases assets with durations not greater than its estimated insurance contract

liabilities and expense outflows;

•

assets purchased by the syndicate are required to satisfy specified marketability requirements;

•

the syndicate maintains cash and liquid assets to meet daily calls; and

•

the syndicate regularly updates its contingency funding plans to ensure that adequate liquid

financial resources are in place to meet obligations as they fall due in the event of reasonably

foreseeable abnormal circumstances.

•

liquidity stress testing is performed for the syndicate, looking both at cash flow liquidity and shock

loss scenarios.

ASML maintains sufficient premium trust funds in money market funds to meet daily liquidity

requirements. On 28 February 2025 ASML made a cash call of $15.0m on the members of the syndicate

to help manage the syndicate’s liquidity. C

ash calls from the members of managed syndicates are used

to fund losses in the event that these are needed ahead of closing the year of account. For insurance

and reinsurance contracts, the contractual maturity is the estimated date when the gross undiscounted

contractually required cash flows will occur. Unearned premium and deferred acquisition cost maturities

reflect the expected claim payment profile. The Syndicate also has access to borrowing facilities to help

support syndicate liquidity.

Apollo Syndicate 3939| Annual Report and Accounts 2024

36

Notes to the financial statements (continued)

for the year ended 31 December 2024

4. Risk and capital management (continued)

Liquidity risk (continued)

Market risk

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

contract will fluctuate because of changes in market prices, excluding those that are caused by credit

downgrades which are included under credit risk. Market risk comprises three types of risk: interest rate

risk, currency risk and other price risk.

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

acceptable parameters, while optimising the return on risk within the framework set by the managing

agent’s investment policy.

Management of Market risk

For each of the major components of market risk the syndicate has policies and procedures in place

which detail how each risk should be managed and monitored. The management of each of these major

components of market risk and the exposure of the syndicate at the reporting date to each major

component are addressed below.

Interest rate risk

Interest rate risk arises primarily from the exposure to financial investments and overseas deposits.

Currency risk

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

because of changes in foreign exchange rates.

The syndicate writes business primarily in Sterling, Euros, US Dollars and Canadian Dollars and is

therefore exposed to currency risk arising from fluctuations in the exchange rates of its functional

currency (US Dollars) against these currencies.

Apollo Syndicate 3939| Annual Report and Accounts 2024

37

Notes to the financial statements (continued)

for the year ended 31 December 2024

4. Risk and capital management (continued)

Currency risk (continued)

The foreign exchange policy is to maintain assets in the currency in which the cash flows from liabilities

are to be settled in order to hedge the currency risk inherent in these contracts so far as is allowed by

regulatory requirements and for any profit or loss to be reflected in the net assets of the functional

currency.

An analysis of the syndicate’s sensitivity to currency risk is presented in the table below. The table

shows the effect on profit or loss of reasonably possible changes in the relevant risk variable. The

sensitivity analysis assumes that all other variables remain constant and that the exchange rate

movement occurs at the end of the reporting period. The impact of exchange rate fluctuations could

differ significantly over a longer period. The occurrence of a change in foreign exchange rates may lead

to changes in other market factors as a result of correlations.

Apollo Syndicate 3939| Annual Report and Accounts 2024

38

Notes to the financial statements (continued)

for the year ended 31 December 2024

4. Risk and capital management (continued)

Capital Management

Capital framework at Lloyd’s

Lloyd’s is a regulated undertaking and subject to supervision by the 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 the Solvency II requirements, and beyond that to meet its own

financial strength, licence and ratings objectives.

Although, as described below, Lloyd’s capital setting processes use a capital requirement set at

syndicate level as a starting point, the requirement to meet Solvency II and Lloyd’s capital requirements

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

requirement in respect of the syndicate’s members is not disclosed in these annual accounts.

Lloyd’s capital setting process

In order to meet Lloyd’s requirements, each syndicate is required to calculate its 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 liabi

lities (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 and approval by Lloyd’s.

Initially ASML calculates the syndicate’s SCR using the Lloyd’s Standard Model. Once a syndicate

becomes sufficiently established ASML develops an internal model in house to calculate the SCR for

the syndicate.

Provision of capital by members

Each member may provide capital to meet their ECA by assets held in trust by Lloyd’s specifically for

that member

’s FAL, or as the member’s share of the members’ balances on each syndicate on which

they participate.

Accordingly, all of the assets less liabilities of the syndicate, as represented in the members’ balances

reported on the balance sheet,

represent resources available to meet members’ and Lloyd’s capital

requirements.

Apollo Syndicate 3939| Annual Report and Accounts 2024

39

Notes to the financial statements (continued)

for the year ended 31 December 2024

4. Risk and capital management (continued)

Claims development

The syndicate’s current catastrophe exposure is predominantly windstorm and earthquake related in

the US and Internationally. The nature of products with a parametric trigger provides benefits to both

policyholders and the syndicate. Simplicity of coverage (including a pre-determined payout) increases

customer understanding of product and reduces disputes. Expedited claims payments process

providing a streamlined and efficient proof of loss through the use of technology, allowing payment to

usually be made within a few weeks after the event.

To date, the syndicate has been exposed to one weather event, Hurricane Milton. The following tables

show the estimates of cumulative incurred claims, including both claims notified and IBNR for each

successive underwriting year at each reporting date, together with cumulative payments to date.

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

Apollo Syndicate 3939| Annual Report and Accounts 2024

40

Notes to the financial statements (continued)

for the year ended 31 December 2024

5. Analysis of underwriting result

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

All of the $6.0m gross premium written were underwritten in the United Kingdom.

Apollo Syndicate 3939| Annual Report and Accounts 2024

41

Notes to the financial statements (continued)

for the year ended 31 December 2024

6. Technical provisions

The table below shows changes in the insurance contract liabilities and assets from the beginning of

the period to the end of the period.

Apollo Syndicate 3939| Annual Report and Accounts 2024

42

Notes to the financial statements (continued)

for the year ended 31 December 2024

7. Net operating expenses

Total commissions for direct insurance business for the year amounted to $0.7m.

8

. Auditor’s remuneration

Administrative expenses include fees payable to the auditors and their associates (exclusive of VAT).

ASML incurred audit fees

payable to the syndicate’s auditors of $46,000 and other assurance services

of $6,000.

9. Staff numbers and costs

All staff are employed by a related company of ASML. ASML recharges expenses for services these

services include wages and salaries, the following amounts were incurred by the syndicate:

Apollo Syndicate 3939| Annual Report and Accounts 2024

43

Notes to the financial statements (continued)

for the year ended 31 December 2024

9. Staff numbers and costs (continued)

10.

Director’s emoluments

For the period ending 31 December 2024, the remuneration recharged to the syndicate for the directors

of ASML is $18,300 which is charged as a syndicate expense.

Included in the remuneration are emoluments paid to the highest paid director amounting to $6,800.

The remuneration amount recharged to the syndicate for the Active Underwriter, is $236,700 which is

charged as a syndicate expense.

11. Investment return

12. Debtors arising out of insurance operations

13. Debtors arising out of reinsurance operations

14. Other debtors

Apollo Syndicate 3939| Annual Report and Accounts 2024

44

Notes to the financial statements (continued)

for the year ended 31 December 2024

15. Creditors arising out of insurance operations

16. Other creditors

17. Other assets

18. Cash

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

overseas jurisdictions $0.1m.

Apollo Syndicate 3939| Annual Report and Accounts 2024

45

Notes to the financial statements (continued)

for the year ended 31 December 2024

19. Foreign exchange rates

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

20. Related parties

Apollo Syndicate Management Limited acts as the managing agent for Syndicate 3939. In accordance

with the Third Party Syndicate Management Agreement (

“

TPSMA

”

) for services provided to the

syndicate a managing agency fee is charged. The syndicate paid $0.9m managing agency fee during

the year. There were no outstanding balances as at 31 December 2024.

Apollo Partners LLP

(“

APL

”

)

is a wholly owned subsidiary of Apollo Group Holdings Limited (“AGHL”)

which employs all Apollo group staff, including underwriters, claims and reinsurance staff. APL provides

the services of these staff to ASML to enable it to function as managing agent for the syndicate.

APL is

an appointed representative of ASML. APL also incurs a large proportion of the expenses in respect of

operating the syndicate. The cost of these services and expenses is recharged to ASML which in turn

recharges these to the syndicate on a basis that reflects its usage of resources, all recharges being

without any mark up on cost. The syndicate paid recharged expenses of $1.9m during the year. There

were no outstanding balances as at 31 December 2024

NormanMax Strategic Parametrics Limited, provided 59% of the capacity for the 2024 year of account.

Business was written through NormanMax Insurance Services as a cover holder under a binding

authority with Syndicate 3939. This operated in a similar fashion to other cover holders, although they

are related parties to NormanMax Strategic Parametrics corporate member. The NormanMax cover

holder was remunerated with a fee based on gross written premium, at normal commercial rates for

these services. The syndicate paid a $94,700 fee during in the year. There were no balances

outstanding as at 31

st

December 2024.

21

. Funds at Lloyd’s

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

(

“

FAL

”

). These funds are intended primarily to cover circumstances where syndicate assets prove

insufficient to meet participating members’ underwriting liabilities. The level of FAL that Lloyd’s requires

a member to maintain is determined by Lloyd’s based on Prudential Regulatory Authority requirements

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

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

of business that has been underwritten. Since FAL is not under the management of the managing agent,

no amount has been shown in these Financial Statements by way of such capital resources. However,

the managing a

gent is able to make a call on the Member’s FAL to meet liquidity requirements or to

settle losses

Apollo Syndicate 3939| Annual Report and Accounts 2024

46

Notes to the financial statements (continued)

for the year ended 31 December 2024

22. Subsequent events

On 28 February 2025 the Board approved a cash call of $15m in accordance with Lloyd's regulations.