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Travelers Syndicate 5000
Annual Report and Accounts for the year ended
31 December 2024
1
Contents
Directors and Administration 2
Strategic report of the Managing Agent 3
Managing Agent’s report 8
Statement of Managing Agent’s Responsibilities 9
Independent Auditor’s Report to the Members’ of Syndicate 5000 10
Statement of profit or loss and other comprehensive income 14
Balance sheet 15
Statement of changes in members’ balances 16
Statement of cash flows 16
Notes to the financial statements - (Forming part of the financial statements) 17
2
Directors and Administration
Managing Agent Syndicate
Directors
A G Coughlan
(Independent Non-Executive Chair)
P R McConnell
(Executive Director)
W A McKee
(Independent Non-Executive Director)
M Olivo
(Non-Executive Director)
G D Somerville
(Independent Non-Executive Director)
M L Wilson
(Executive Director)
M W Woods
(Non-Executive Director)
Company secretary
J Foley
Registered office
30 Fenchurch Street
London
EC3M 3BD
Company number
3207530
Active underwriter
M J Clifford
Bankers
Barclays Bank PLC
Citibank N.A
Royal Bank of Canada
Investment manager
The Travelers Indemnity Company
Registered auditor
Forvis Mazars LLP
30 Old Bailey
London
EC4M 7AU
3
Strategic report of the Managing Agent
The Directors of Travelers Syndicate Management Limited present their strategic report for the year ended 31
December 2024.
Key financial performance indicators during the year were as follows:
Percentage
Change %
2024
2023
Movement
£000
£000
£000
Gross premiums written 29.3 560,426 433,370 127,056
Net premiums earned 21.0 401,529 331,720 69,809
Total recognised profit for the year (8.1) 37,814 41,129 (3,315)
Percentage
Change %
2024 2023
% %
Key ratio’s
Claims 3.4 52.7 49.3
Expense 0.8 42.9 42.1
Combined ratio 4.2 95.6 91.4
The expense ratio includes net acquisition costs and operating expenses. All ratios are expressed as a
percentage of net premiums earned.
Principal activities
The principal activity of Syndicate 5000 (the Syndicate) during the year continued to be the transaction of
insurance in its chosen classes, namely:
Marine
Aviation
Special Risks
Energy
Cyber
Property Professional Lines
The Syndicate's business is produced through the Lloyd's broker network and written in the subscription market,
in either a lead or follow capacity.
Review of the business
The result for the year ended 31 December 2024 is a profit of £37.8m (2023: profit of £41.1m) and a combined
ratio of 95.6% (2023: 91.4%).
The deterioration in the combined ratio reflects the effect of higher catastrophe loss activity during the year, as
well as a lower benefit of favourable prior year reserve releases than in 2023. The current period includes 4.3pts
of favourable prior year reserve development compared to 5.5pts in 2023. Catastrophe losses in the year
contribute 9.0pts of the loss ratio versus 1.9pts in 2023. This is partially offset by a lower level of large loss
activity in the year, which contributes 11.3pts to the loss ratio versus 15.4pts in 2023. The combined ratio
excluding catastrophe losses and prior year development is 90.7% (2023: 95.0%) and is driven by disciplined
risk selection and a generally favourable market trading environment.
The expense ratio of 42.9% is marginally higher than 2023 (42.1%). Acquisition costs are higher, correlated to
the growth in our Portfolio Solutions business. Operating expenses are also higher due to increased investment
in technology and operational transformation. The higher premium volume results in a similar expense ratio
compared to the prior year.
4
Review of the business (continued)
Gross premiums written are up year on year by £127m (29.3%) and is mainly driven by the introduction of
several strategic delegated authority initiatives across multiple lines of business, predominantly within the
Property class of business totalling £79m and the acquisition of Corvus Agency Limited by The Travelers
Companies,Inc., which has resulted in £10m of new cyber business being written through the Syndicate.
Investment return for the year is £20.7m (2023: £14.4m), driven primarily by strong returns and growth in the
fixed income investment portfolio.
The overarching priority for 2024 and into 2025 remains to deliver sustainable profitable growth. The Syndicate
intends to invest in optimising the operating model, modernising technology and will seek to respond effectively
to changing market place dynamics in distribution and pricing
On 31 December 2024 the Member’s balances were £251.8m (2023: £198.7m). The Directors consider this
position to be satisfactory and a demonstration of resiliency through balance sheet strength.
Going concern
The Directors have assessed the suitability of using the Going Concern assumption in preparing these accounts.
In making this assessment they have looked forward for a period of twelve months from the date that these
accounts are signed. The Syndicate does not have any external debt. The Directors have prepared these
accounts on the going concern basis. In doing so the Directors considered the 2025 business plan, the likely
trading environment over the next twelve months.
The Directors concluded that it remained appropriate to continue to prepare the Syndicate’s financial statements
using the going concern assumption.
Changing climate conditions
The Syndicate follows The Travelers Companies, Inc. in its approach to climate-related risks and opportunities.
The approach is multi-faceted and allows the Syndicate to mitigate exposure to climate-related risks and provide
products and services that both help customers mitigate those risks and support the transition to a lower carbon
economy. In the latter regard, the Syndicate provides insurance coverage to the Renewable Energy sector.
As part of its regular risk management activities, the Managing Agent’s Board of Directors and its Risk and
Remuneration Committee consider changing climate conditions, including changes in frequency and severity of
catastrophe losses and uncertainty surrounding weather volatility and climate-related risk, and the effect on
investment valuations that may occur as part of the transition to a lower carbon economy.
The Syndicate’s underwriting risk appetite is dependent on the ability to understand the property and casualty
risks that it underwrites. Understanding the climate-related effects on insured perils is part of this fundamental
risk evaluation process. Core to this strategy is the incorporation of climate variability into underwriting and
pricing decisions. We are also committed to supporting our clients with meaningful risk management and
insurance capacity to help them transition to a lower carbon future.
Market Risk is managed by employing a thoughtful and responsible investment philosophy that focuses on
appropriate risk-adjusted returns. The investment strategy, approved by our Board of Directors, reflects a long-
term approach to sustainable value creation and requires that Travelers consider environmental, social and
governance (ESG) factors in the investment process to the extent relevant.
5
Investment report
The Syndicate's investment portfolio is managed by The Travelers Indemnity Company, a subsidiary of The
Travelers Companies, Inc. A summary of the invested assets and returns is as follows:
Cash & investment balance
2024
2023
£000
£000
Balance at 1 January 737,485 704,700
Balance at 31 December 851,807 737,485
Investment return profit/(loss)
2024
2023
£000
£000
Interest and realised gains & losses 20,684 14,401
Unrealised gains/(losses) 12,734 20,664
Total 33,418 35,065
The credit risk in the portfolio is actively managed. Investment guidelines are designed to mitigate credit risk by
ensuring a diversification of holdings and setting average credit rating targets across the whole portfolio.
The stratification of the portfolio’s credit quality at 31 December was:
2024
2023
AAA 31.0% 37.2%
AA 40.4% 32.0%
A 28.1% 30.7%
BBB 0.5% 0.1%
Total 100.0% 100.0%
Average credit quality AA AA
Average duration (years) 2.32 2.5
The Syndicate’s total investment return was a profit of £33.4m (2023: profit of £35.1m). The portfolio is
predominantly comprised of fixed income assets.
The currency mix of the portfolio is:
2024
2023
US dollar 73.0% 69.3%
Sterling 13.8% 18.4%
Euro 8.1% 7.6%
Canadian dollar 5.1% 4.8%
Total 100.0% 100.0%
The total investment returns achieved for the major currencies were as follow:
2024
2023
US dollar 4.8% 2.4%
Sterling 3.0% 2.2%
Euro 3.1% 1.1%
Canadian dollar 4.2% 0.9%
The Investment returns are largely driven by prevailing market yields which have improved in the year. This
applies to all currencies the Syndicate invests in.
The Syndicate does not anticipate any changes to the investment strategy in 2025.
6
Risk review
Principal Risks and Uncertainties
The Board of Directors of Travelers Syndicate Management Limited has overall responsibility for the
establishment and oversight of the Syndicate's Risk Management Framework.
The Board of Directors has established a Board Risk and Remuneration Committee and an Executive Risk
Committee responsible for setting the risk appetite and approving it annually as part of the Syndicate's business
planning process. The Board Risk and Remuneration Committee meets regularly to provide oversight of key
risks and issues and to oversee performance against risk appetite. The Executive Risk Committee meets
regularly to review and update key risks and issues arising from the risk register and to monitor performance
against risk appetite using a series of metrics.
The principal risks and uncertainties facing the Syndicate are set out below.
Insurance Risk
Insurance risk relates to underwriting and claims management and the risk that arises from the inherent
uncertainties as to the occurrence, amount, and timing of insurance liabilities, and includes catastrophe risk and
reserve risk.
The Managing Agent manages insurance risk by setting an appetite annually through the business planning
process, which sets down the Syndicate's targets for underwriting classes, underwriting volumes, pricing
sufficiency, line sizes and retentions by class of business. The Managing Agent subsequently monitors
performance against the business plan throughout the year. The Syndicate uses catastrophe modelling software
to model probabilities of loss from catastrophe exposed business.
Reserve adequacy is monitored through quarterly internal actuarial review. The Underwriting Committee
oversees underwriting and catastrophe risks, and the Finance Committee oversees reserving risk.
One aspect of underwriting risk is the risk of changing climate conditions. This is discussed further in the
Strategic report of the Managing Agent.
Credit risk
The major sources of credit risk arise from the risk of default by one or more of the Syndicate's reinsurers or
from one or more of the Syndicate's investment counterparties. The Syndicate operates a rigorous policy for
the selection of reinsurers and managing the quantum of exposure ceded to any one reinsurer. The Syndicate
has a conservative appetite to credit risk from investment counterparties and maintains a high-quality investment
portfolio with an average credit rating of AA. The Finance Committee monitors and manages the Syndicate's
exposure to credit risk.
7
Risk review (continued)
Market risk
The primary source of market risk is the risk of adverse movements in the value of assets due to movements in
interest rates, currency rates and other market factors. Market risk exposures are monitored through the Finance
Committee.
A sensitivity analysis can be found on page 29 of these accounts.
Operational risk
The primary source of operational risk is the failure of people, processes, or systems. These risks are managed
through well documented policies and procedures, sound internal control processes and business continuity
management procedures. The Executive Risk Committee oversees this risk.
Regulatory risk
Regulatory risk comprises the failure to comply with relevant regulations and laws. The Executive Risk
Committee oversee this risk.
Conduct risk
Conduct risk is the risk that the Syndicate fails to pay due regard to the interest of its customers or fails to always
treat them fairly. The Executive Risk Committee oversees this risk.
Approved by the Board of Travelers Syndicate Management Limited on 05 March 2025.
M L Wilson
Chief Executive Officer
05 March 2025
8
Managing Agent’s report
The Directors of the Managing Agent present their report for Syndicate 5000 for the year ended 31 December
2024.
This annual report is prepared using the annual basis of accounting as required by Statutory Instrument No.
1950 of 2008, the Insurance Accounts Directive (Lloyd's Syndicate and Aggregate Accounts) Regulations 2008
and applicable United Kingdom Accounting Standards, including Financial Reporting Standard 102: The
Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland (‘FRS102’) and Financial
Reporting Standard 103: Insurance Contracts (‘FRS103’).
The Managing Agent has agreed with the Syndicate's members to take advantage of the dispensation available
and will not be producing separate underwriting year accounts for the Syndicate.
Results
The result for the year ended 31 December 2024 is a profit of £37.8m (2023: profit of £41.1m).
Principal activities
The principal activities of the Syndicate are described within the Strategic report of the Managing Agent.
Business review
An analysis of the performance of the Syndicate and likely future developments in the business are described
within the Strategic report of the Managing Agent. There have been no notable events affecting the Syndicate
which have occurred since the end of the financial year.
Directors' interests
All of the Directors set out at the beginning of these accounts served throughout the year and to the date of this
report.
No director participated in the Syndicate during the period under review.
The Directors benefited from qualifying third-party indemnity provisions.
Active underwriter
Mark Clifford succeeded Chris Allison as the Active Underwriter during 2024.
Disclosure of information to the auditor
The Directors of the Managing Agent who held office at the date of approval of this Managing Agent’s report
confirm that, so far as they are each aware, there is no relevant audit information of which the Syndicate's
auditor is unaware; and each director has taken all the steps that they ought to have taken as a director to make
themselves aware of any relevant audit information and to establish that the Syndicate's auditor is aware of that
information.
Auditor
Pursuant to Section 14(2) of Schedule 1 of the Insurance Accounts Directive (Lloyd's Syndicate and Aggregate
Accounts) Regulations 2008, the auditor will be deemed to be reappointed, and Forvis Mazars LLP will therefore
continue in office.
On behalf of the Board
Jennifer Foley
Company Secretary
05 March 2025
9
Statement of Managing Agent's Responsibilities
The Directors of the Managing Agent are 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 requires the
Directors of the Managing Agent to prepare their Syndicate's annual accounts for each financial year. Under
that law they have elected to prepare the annual accounts in accordance with UK Accounting Standards and
applicable law (UK Generally Accepted Accounting Practice), including FRS 102, The Financial Reporting
Standard applicable in the UK and Republic of Ireland and Financial Reporting Standard 103 Insurance
Contracts (FRS 103).
Under Insurance Accounts Directive (Lloyd's Syndicate and Aggregate Accounts) Regulations 2008 the
Directors of the Managing Agent must not approve the annual accounts unless they are satisfied that they give
a true and fair view of the state of affairs of the Syndicate and of the profit or loss of the Syndicate for that period.
In preparing these annual accounts, the Directors of the Managing Agent are required to:
Select suitable accounting policies and then apply them consistently;
Make judgments and estimates that are reasonable and prudent;
State whether applicable UK Accounting Standards have been followed, subject to any material departures
disclosed and explained in the annual accounts;
Assess the Syndicate's ability to continue as a going concern, disclosing, as applicable, matters related to
going concern; and
Use the going concern basis of accounting unless they either intend to cease trading or have no realistic
alternative but to do so.
The Directors of the Managing Agent are responsible for keeping adequate accounting records that are sufficient
to show and explain the Syndicate's transactions and disclose with reasonable accuracy at any time the financial
position of the Syndicate and enable them to ensure that the annual accounts comply with the Insurance
Accounts Directive (Lloyd's Syndicate and Aggregate Accounts) Regulations 2008. They are responsible for
such internal control as they determine is necessary to enable the preparation of annual accounts that are free
from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps
as are reasonably open to them to safeguard the assets of the company and to prevent and detect fraud and
other irregularities.
The Directors of the Managing Agent are responsible for the maintenance and integrity of the Syndicate and
financial information included on the Syndicate's website. Legislation in the UK governing the preparation and
dissemination of annual accounts may differ from legislation in other jurisdictions.
On behalf of the Board
Jennifer Foley
Company Secretary
05 March 2025
Independent Auditor’s Report to the members of
Syndicate 5000
Opinion
We have audited the syndicate annual accounts of Syndicate 5000 (the “syndicate”) for the year ended
31/12/2024 which comprise the statement of profit and loss and other comprehensive income, balance
sheet, statement of changes in members’ balances and the statement of cash flows, and notes to the
syndicate annual accounts, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United
Kingdom Accounting Standards, including 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”, FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”
and FRS 103 “Insurance Contracts” (United Kingdom Generally Accepted Accounting Practice).
In our opinion the syndicate annual accounts:
•
give a true and fair view of the state of the syndicate’s affairs as at 31/12/2024 and of its profit
for the year then ended;
•
have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice; and
•
have been prepared in accordance with the requirements of The Insurance Accounts Directive
(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and the requirements within
Lloyd’s Syndicate Accounts Instructions.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)), The
Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, the
Lloyd’s Syndicate Accounts Instructions and other applicable law. Our responsibilities under those
standards are further described in the “Auditor’s responsibilities for the audit of the syndicate annual
accounts” section of our report. We are independent of the syndicate in accordance with the ethical
requirements that are relevant to our audit of the syndicate annual accounts in the UK, including the
FRC’s Ethical Standard as applied to other entities of public interest, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
Other matter – iXBRL tagging
In forming our opinion on the syndicate annual accounts, which is not modified, 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 the Lloyd’s Syndicate Accounts Instructions.
Conclusions relating to going concern
In auditing the syndicate annual accounts, we have concluded that the Managing Agent’s use of the
going concern basis of accounting in the preparation of the syndicate annual accounts is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast significant doubt on the syndicate's ability
to continue as a going concern for a period of at least twelve months from when the syndicate annual
accounts are authorised for issue.
Our responsibilities and the responsibilities of the Managing Agent with respect to going concern are
described in the relevant sections of this report.
Other information
The other information comprises the information included in the Syndicate Annual Report and Accounts,
other than the syndicate annual accounts and our auditor’s report thereon. The Managing Agent is
responsible for the other information. Our opinion on the syndicate annual accounts does not cover the
10
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 accounts, or our knowledge obtained in
the course of the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether this gives
rise to a material misstatement in the syndicate annual accounts. 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.
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
syndicate annual accounts are prepared is consistent with the syndicate annual accounts; and
•
the Managing Agent’s Report has been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the syndicate and its environment obtained in the course
of the audit, we have not identified material misstatements in the Managing Agent’s Report.
We have nothing to report in respect of the following matters in relation to which The Insurance Accounts
Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 requires us to report to you, if
in our opinion:
•
the Managing Agent in respect of the syndicate has not kept adequate accounting records; or
•
the syndicate annual accounts are not in agreement with the accounting records; or
•
certain disclosures of the Managing Agent’s remuneration specified by law are not made; or
•
we have not received all the information and explanations we require for our audit.
Responsibilities of the Managing Agent
As explained more fully in the Statement of Managing Agent’s Responsibilities set out on page 9, the
Managing Agent is responsible for the preparation of the syndicate annual accounts and for being
satisfied that they give a true and fair view, and for such internal control as the Managing Agent
determines is necessary to enable the preparation of the syndicate annual accounts that are free from
material misstatement, whether due to fraud or error.
In preparing the syndicate annual accounts, the Managing Agent is responsible for assessing the
syndicate’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the Managing Agent either intends for
the syndicate to cease operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the syndicate annual accounts
Our objectives are to obtain reasonable assurance about whether the syndicate annual accounts as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the syndicate annual accounts.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed
below.
11
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.
Based on our understanding of the syndicate and its industry, we considered that non-compliance with
the following laws and regulations might have a material effect on the syndicate annual accounts: Data
Protection Act, GDPR, proceeds of crime and anti-money laundering, Health and Safety act and Bribery
Act 2010.
To help us identify instances of non-compliance with these laws and regulations, and in identifying and
assessing the risks of material misstatement in respect to non-compliance, our procedures included,
but were not limited to:
•
Gaining an understanding of the legal and regulatory framework applicable to the syndicate
and the industry in which it operates, and considering the risk of acts by the syndicate which
were contrary to the applicable laws and regulations, including fraud;
•
Inquiring of directors and management of the Managing Agent and the syndicate’s
management as to whether the syndicate is in compliance with laws and regulations, and
discussing their policies and procedures regarding compliance with laws and regulations;
•
Inspecting correspondence, if any, with relevant licensing or regulatory authorities including the
PRA, FCA and the Council of Lloyd’s;
•
Reviewing minutes of meetings of the Managing Agent in the year; and
•
Discussing amongst the engagement team the laws and regulations listed above, and
remaining alert to any indications of non-compliance.
We also considered those laws and regulations that have a direct effect on the preparation of the
syndicate annual accounts such as Lloyd’s Syndicate Accounting Byelaw and Insurance Accounts
Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, UK GAAP, FCA and PRA
regulations.
In addition, we evaluated the directors’ and management of the Managing Agent’s and the syndicate
management’s incentives and opportunities for fraudulent manipulation of the syndicate annual
accounts, including the risk of management override of controls and determined that the principal risks
related to posting manual journal entries to manipulate financial performance, management bias
through judgements and assumptions in significant accounting estimates that involve more complex
assumptions and subjective in puts, in particular in relation to valuation of the provisions for the
settlement of future claims, revenue recognition (which we pinpointed to the valuation of binder business
and pipeline business), and significant one-off or unusual transactions.
Our audit procedures in relation to fraud included but were not limited to:
•
Making enquiries of the directors and management of the Managing Agent and syndicate
management on whether they had knowledge of any actual, suspected or alleged fraud;
•
Gaining an understanding of the internal controls established to mitigate risks related to fraud;
•
Discussing amongst the engagement team the risks of fraud;
•
Addressing the risks of fraud through management override of controls by performing journal
entry testing;
•
Reviewing the accounting estimate in relation to valuation of insurance liabilities for evidence
of management bias and performing procedures to respond to the fraud risk in revenue
recognition; and
•
Designing audit procedures to incorporate unpredictability around nature, timing or extent of
our testing.
The primary responsibility for the prevention and detection of irregularities, including fraud, rests with
both those charged with governance and management.
As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion,
forgery, intentional omissions, misrepresentations or the override of internal controls.
12
A further description of our responsibilities is available on the Financial Reporting Council’s website at
www.frc.org.uk/auditorsresponsibilities
. This description forms part of our auditor’s report.
Use of the audit report
This report is made solely to the syndicate’s members as a body in accordance with The Insurance
Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008. Our audit work has
been undertaken so that we might state to the syndicate’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than the syndicate and the syndicate’s
members, as a body, for our audit work, for this report, or for the opinions we have formed.
Andrew Heffron
For and on behalf of Forvis Mazars LLP
Chartered Accountants and Statutory Auditor
30 Old Bailey
London
EC4M 7AU
05/03/2025
13
14
Statement of profit or loss & other comprehensive
income:
Technical account
Note
2024
2023
£000
£000
Gross premiums written 5 560,426 433,370
Outwards reinsurance premiums (88,033 ) (77,860 )
Premiums written, net of reinsurance 472,393 355,510
Change in the gross provision for unearned premiums 18 (75,887 ) (25,564 )
Change in provision for unearned premiums, reinsurers’ share 18 5,023 1,774
Net change in provision for unearned premiums (70,864 ) (23,790 )
Earned premiums, net for reinsurance 401,529 331,720
Allocated investment return transferred from the non-technical account 9 16,119 11,547
Gross claims amount 18 (205,077 ) (216,476 )
Reinsurers' share 18 38,128 66,810
Net claims paid (166,949 ) (149,666 )
Change in the provision for claims - Gross amount 18 (34,140 ) 14,553
Change in the provision for claims - Reinsurers’ share 18 (10,175 ) (28,557 )
Net change in provisions for claims (44,315 ) (14,004 )
Claims incurred, net of reinsurance (211,264 ) (163,670 )
Net operating expenses 6 (172,421 ) (139,650 )
Other technical charges, net of reinsurance 0 0
Balance on the technical account – general business 33,963 39,947
Non-Technical account
Note
2024
2023
£000
£000
Balance on the technical account – general business 33,963 39,947
Investment income 9 23,606 16,906
Realised gains/(losses) on investments 9 (2,416 ) (2,003 )
Investment expenses and charges 9 (506 ) (502 )
Total investment return 20,684 14,401
Allocated investment return transferred to the general business technical account (16,119 ) (11,547 )
Gain/(loss) on foreign exchange (714 ) (1,672 )
Profit/(loss) for the financial year 37,814 41,129
Other comprehensive income:
Currency translation gain/(loss) 1,883 (7,243 )
Unrealised gains/(loss) on available for sale assets 12,734 20,664
Total comprehensive income/(loss) for the year 52,431 54,550
The accompanying notes from page 17 to 40 form an integral part of these financial statements.
15
Balance sheet
Assets
Note
2024
2023
£000
£000
Financial investments 11 823,044 705,846
Deposits with ceding undertakings 621 389
Investments 823,665 706,235
Provision for unearned premiums 54,725 50,020
Claims outstanding 80,317 90,326
Reinsurers’ share of technical provisions 18 135,042 140,346
Debtors arising out of direct insurance operations 12 169,894 108,599
Debtors arising out of reinsurance operations 13 17,309 41,342
Other debtors 14 4,321 3,925
Debtors 191,524 153,866
Tangible assets 16 0 0
Cash at bank and in hand 10,223 13,451
Overseas deposits 17,919 17,799
Other assets 28,142 31,250
Accrued interest and rent 7,565 5,294
Deferred acquisition costs 15 73,554 56,331
Other prepayments and accrued income 0 0
Prepayments and accrued income 81,119 61,625
Total assets 1,259,492 1,093,322
Liabilities
Note
2024
2023
£000
£000
Members’ balance 251,797 198,707
Provision for unearned premiums 338,790 262,589
Claims outstanding 626,185 587,305
Technical provisions 18 964,975 849,894
Provisions for other risks 19 0 0
Creditors arising out of direct insurance Operations 21 855 1,949
Creditors arising out of reinsurance operations 22 36,123 42,433
Reinsurers share of deferred acquisition costs 15 0 0
Other creditors 23 5,742 339
Creditors 42,720 44,721
Total liabilities 1,007,695 894,615
The Syndicate financial statements on pages 14 to 40 were approved by the board of Travelers Syndicate
Management Limited on 05 March 2025 and were signed on its behalf by:
P R McConnell
Director
05 March 2025
16
Statement of changes in members’ balances
2024 | 2023 | |
£000 | £000 | |
| Members’ balances brought forward at 1 January | ||
| Total comprehensive income/(loss) for the year | | |
| Net movement on funds in syndicate | ( | |
| Other | ( | |
| Members’ balances carried forward at 31 December |
Statement of cash flows
2024 | 2023 | ||
Note | £000 | £000 | |
| Cash flows from operating activities | |||
| Profit/(loss) for the financial year | | | |
| Adjustments: | |||
| Increase/(decrease) in gross technical provisions | ( | ||
| Increase/(decrease) in reinsurers’ share of gross technical provisions | | | |
| Increase/(decrease) in debtors | ( | ( | |
| Increase/(decrease) in creditors | ( | ( | |
| Movement in other assets/liabilities | ( | | |
| Investment return | ( | ( | |
| Other | ( | | |
| Net cash flows from operating activities | | | |
| Cash flows from investing activities | |||
| Purchase of debt instruments | ( | ( | |
| Sale of debt instruments | | ||
| Investment income received | | | |
| Other | | | |
| Net cash flows from investing activities | ( | ( | |
| Cash flows from financing activities | |||
| Distribution profit | ( | | |
| Funds In Syndicate released to members | | ( | |
| Net cash flows from financing activities | | | |
| Net increase/(decrease) in cash and cash equivalents | ( | ( | |
| Cash and cash equivalents at the beginning of the year | | | |
| Foreign exchange on cash and cash equivalents | ( | ( | |
| Cash and cash equivalents at the end of the year | 24 | |
17
Notes to the financial statements – (Forming part of
the financial statements)
1. Basis of Preparation
Syndicate 5000 (“The Syndicate”) is supported by two corporate members' of the Society of Lloyd's and
underwrites insurance business in the London market. The Syndicate's Managing Agent is Travelers Syndicate
Management Limited. The registered address of the Syndicate's Managing Agent is 30 Fenchurch Street,
London, EC3M 3BD.
The financial statements have been prepared in accordance with the Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008 and applicable Accounting Standards in the United
Kingdom and the Republic of Ireland, including Financial Reporting Standard 102 (FRS 102). FRS 102 requires
the application of Financial Reporting Standard 103 (FRS 103) in relation to insurance contracts.
These annual accounts are prepared under the historical cost convention, as modified by the recognition of
certain financial assets and liabilities measured at fair value.
The financial statements are presented in Pound Sterling (GBP), which is the Syndicate's presentational
currency. The functional currency of the Syndicate is US Dollars (USD). The Syndicate has chosen to have a
presentational currency of sterling, which is different to its functional currency of dollars, as its regulatory
reporting to Lloyd’s is required in sterling and this allows for consistency between the Syndicate’s Report and
Accounts and its regulatory reporting to Lloyd’s. All amounts have been rounded to the nearest thousand, unless
otherwise indicated.
Going concern
The Directors have assessed the suitability of using the Going Concern assumption in preparing these accounts.
In making this assessment they have looked forward for a period of twelve months from the date that these
accounts are signed. The Syndicate does not have any external debt. The Directors have prepared these
accounts on the going concern basis. In doing so the Directors considered the 2025 business plan, the likely
trading environment over the next twelve months.
The Directors concluded that it remained appropriate to continue to prepare the Syndicate’s financial statements
using the going concern assumption.
Restatement of comparative information
During 2024, Lloyd's introduced changes to the syndicate accounts process to rationalise and standardise
financial reporting across the market. As a result, certain comparative information has been restated to ensure
consistency with current year presentation and compliance with the Lloyd's Syndicate Accounts Instructions.
2. Use of Critical Accounting Estimates and Judgements
The preparation of the annual accounts requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Syndicate’s accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant
to the annual accounts are those listed below.
Incurred but not reported claims (IBNR)
The estimation of claims IBNR is generally subject to a greater degree of uncertainty than the estimation of the
cost of settling claims already notified to the Syndicate, where more information about the claim event is
generally available. In calculating the estimated cost of unpaid claims, the Syndicate uses a variety of estimation
techniques, generally based upon statistical analyses of historical experience, which assumes that the
development pattern of the current claims will be consistent with experience. Allowance is made, however, for
changes or uncertainties which may create distortions in the underlying statistics, or which might cause the cost
of unsettled claims to increase or reduce when compared with the cost of previously settled claims including:
18
2. Use of Critical Accounting Estimates and Judgements (continued)
The effect of large losses.
Changes in processes which might accelerate or slow down the development and/or recording of paid or
incurred claims compared with the statistics from previous periods.
Changes in the legal environment.
The effects of inflation.
Changes in the mix of business.
Movements in industry benchmarks.
A component of these estimation techniques is the estimation of the cost of notified but not paid claims. In
estimating the cost of these claims, regard is given to the claim circumstance as reported, any information
available from loss adjusters and information on the cost of settling claims with similar characteristics in previous
periods. Large claims affecting each relevant business class are generally assessed separately, either
measured on a case-by-case basis or projected separately, in order to allow for the possible distorting effect of
the development and incidence of these large claims. Where possible, multiple techniques are adopted in order
to estimate the required level of provisions. This assists in giving greater understanding of the trends inherent
in the data being projected. The projections given by the various methodologies also assist in setting the range
of possible outcomes. The most appropriate estimation technique is selected considering the characteristics of
the business class and the extent of the development of each accident year. The directors consider that the
provisions for gross claims and related reinsurance recoveries are fairly stated on the basis of the information
currently available to them. However, the ultimate liability will vary as a result of subsequent information and
events, and this may result in significant adjustments to the amounts provided. Adjustments to the amounts of
claims provisions established in prior years are reflected in the financial statements in the period in which the
adjustments are made. The methods used, and the estimates made, are reviewed regularly. Provisions are
calculated gross of any reinsurance recoveries. A separate estimate is made of the amounts that will be
recoverable from reinsurers based upon the gross provisions and having due regard to collectability. An
estimate of the future cost of indirect claims handling is calculated as a percentage of the claims reserves held
at the balance sheet date.
The gross IBNR held at 31 December 2024 was £382.8m (2023: £301.9m). This is disclosed in note 18 to these
accounts. The increase in IBNR is driven by a combination of a higher volume of catastrophe losses in 2024,
that occurred in the later part of the year and therefore the majority of these loss provisions are within IBNR and
a lower proportion of the 2024 loss ratio being made up from incurred losses.
A sensitivity of the results and members balances to a 5% increase or decrease in net claims liabilities is
disclosed on page 24 of these accounts.
Premiums written
Written premium is reported according to management estimation of when risks will be attaching. An estimate
of premiums written during the year that have not yet been booked by the financial year-end ‘pipeline premiums’
is made on a risk-by-risk basis. The pipeline premium is booked as written, and an assessment is made of the
related unearned premium provision and an estimate of claims incurred but not reported in respect of the earned
element. For delegated authority business the underwriters estimate how much business will attach to a facility
based on information provided by the broker and using their experience with reference to the trading conditions
of the market. This estimate is updated on a regular basis. It is assumed that risks attaching to the master facility
incept evenly across the period of the facility and therefore only the proportion of risks which have incepted to
the master facility by the year-end date are reported within written premium in these financial statements.
The premium debtors receivable held at 31 December 2024 was £169.9m (2023: £108.6m). This is disclosed
in note 12 of these accounts.
19
3. Significant Accounting Policies
The following principal accounting policies have been applied consistently in dealing with items which are
considered material in relation to the Syndicate's financial statements.
Premiums written
Gross premiums written comprise premiums written on direct insurance contracts and inwards reinsurance
contracts incepting during the financial year. Written premiums are disclosed gross of commission payable to
intermediaries and exclude taxes and duties levied on these premiums.
Written premium is reported according to management estimation of when risks will be attaching. An estimate
of premiums written during the year that have not yet been booked by the financial year-end, ‘pipeline
premiums’, is made on a risk-by-risk basis. The pipeline premium is booked as written and an assessment is
made of the related unearned premium provision.
For delegated authority business the underwriters estimate how much business will attach to a facility based on
information provided by the broker and using their experience with reference to the trading conditions of the
market. This estimate is updated on a regular basis. It is assumed that risks attaching to the master facility
incept evenly across the period of the facility and therefore only the proportion of risks which have incepted to
the master facility by the year-end date are reported within written premium in these financial statements.
Unearned premiums
For open market risks premiums are assumed to earn evenly over the duration of the policy. For facilities, on
the whole the underlying risks are assumed to attach evenly through the policy period of the facility and period
of the underlying risk.
No adjustments are made for seasonal exposures. A bespoke long tail earning pattern is used in proportion to
the release of risk for the Transactional Liability line of business.
Outward reinsurance premiums
Outwards reinsurance premiums are accounted for in the accounting period in which the underlying reinsurance
treaty or facultative contract incepts.
Reinstatement premiums arise when a loss has been incurred that affects our reinsurances and there is a clause
in the underlying reinsurance policy which requires the reinstatement of the policy with the payment of a further
premium.
Reinstatement premiums are recognised as written and earned in full at the date of the event giving rise to the
reinstatement premium.
Claims paid, claims incurred, claims provisions
Paid claims represent all claims paid during the year and include claims handling expenses. Claims incurred
comprise paid claims and changes in the provisions for outstanding claims, including provisions for claims
incurred but not reported (IBNR) and related expenses, together with any adjustments to claims from previous
years.
The provision for claims outstanding is assessed on an individual case basis for reported claims 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 claims incurred by
the balance sheet date but not reported until after the year end (IBNR), based on statistical methods.
These methods generally involve projecting from past experience the development of claims over time to form
a view of the likely ultimate claims to be experienced from more recent underwriting, having regard to variations
in the business accepted and the underlying terms and conditions. For the most recent years, where a high
degree of volatility arises from projections, estimates may be based in part on output from rating and other
models of the business accepted, and assessments of underwriting conditions, together with a contract-by-
contract assessment of problematical areas and major catastrophes that do not lend themselves to projection
based methods.
20
3. Significant Accounting Policies (continued)
The two most critical assumptions as regards claims provisions are that the past is a reasonable predictor of
the likely level of claims development in the future and that the rating and other models used for current business
are fair reflections of the likely level and cost of ultimate claims to be incurred.
The reinsurers' share of provisions for claims is based on the amounts of outstanding claims and projections for
IBNR, net of estimated irrecoverable amounts, having regard to the reinsurance programme in place for the
class of business, the claims experience for the year and the current security rating of the reinsurance
companies involved. A number of statistical methods are used to assist in making these estimates.
Reinsurance assets are assessed for impairment at each balance sheet date. A reinsurance asset is deemed
impaired if there is objective evidence, as a result of an event that occurred after its initial recognition, that the
Syndicate may not recover all amounts due, and that event has a reliably measurable effect on the amount that
the Syndicate will receive from the reinsurer. Impairment losses are recognised in profit or loss in the period in
which the impairment loss is recognised.
In arriving at the level of claims provisions a margin is applied over and above the actuarial best estimate, to
reduce the likelihood of adverse run-off deviation.
The directors consider that the provisions for gross claims and related reinsurance recoveries are fairly stated
on the basis of the information currently available to them. However, the ultimate liability will vary as a result of
subsequent information and events, and this may result in significant adjustments to the amounts provided.
Adjustments to the amounts of claims provisions established in prior years are reflected in the financial
statements for the period in which the adjustments are made. The methods used, and the estimates made, are
reviewed regularly.
Unexpired risks provision
A provision for unexpired risks is made where claims and related expenses arising after the end of the financial
period, in respect of contracts concluded before that date, are expected to exceed the unearned premiums after
the deduction of any deferred acquisition costs. The provision for unexpired risks is calculated at a reporting
year of account level which is the level the contracts are managed together, after taking into account the future
investment return on investments held to back the unearned premiums.
If an unexpired risk provision is required, it will be disclosed as a component of technical provisions. The
calculation is based upon statistical analyses of historical experience, which assumes that the development
pattern of premiums and claims will be similar to past experience. However, given the uncertainty in establishing
a provision for unexpired risks, it is likely that the final outcome will prove to be different from the original liability
established.
Acquisition costs
Acquisition costs are comprised of commission and fees paid to brokers and coverholders. They are deferred
to the extent that they are attributable to premiums unearned at the balance sheet date, with the exception of
contingent profit commissions that are accrued in line with earned premium using actuarial estimates. Where
proportional reinsurances are bought the relevant share of gross commission is treated as commissions ceded
to reinsurers.
Foreign currencies
Transactions in foreign currencies are translated to the functional currency using exchange rates at the date of
transactions. 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. For the purposes of foreign
currency translation, unearned premiums and deferred acquisition costs are treated as if they are monetary
items.
Differences arising on translation of foreign currency amounts into the functional currency are included in the
non-technical account.
Differences arising from the conversion of the functional to the presentational currency are included in the
statement of comprehensive income.
21
3. Significant Accounting Policies (continued)
Financial assets and liabilities
The Syndicate chose to apply recognition and measurement provisions of IAS 39 Financial Instruments:
Recognition and Measurement (as adopted in the relevant jurisdiction), the disclosure requirements of Sections
11 and 12 and the presentation requirements of paragraphs 11.38A and 12.25W.
Classification
The accounting classification of financial assets and liabilities determines the way in which they are measured
and changes in those values presented in the statement of profit and loss or the statement of comprehensive
income. Financial assets and liabilities are classified on their initial recognition. Subsequent reclassifications are
permitted only in restricted circumstances.
Debt and other fixed-income securities are designated as available for sale and initially recognised at cost which
equates to fair value at initial recognition. After initial measurement, these assets are subsequently measured
at fair value. Interest earned whilst holding available for sale financial assets is reported as interest income.
Other fair value changes are recognised in other comprehensive income.
If an available-for-sale investment is sold or impaired, the net cumulative gain or loss accumulated in other
comprehensive income is reclassified to profit or loss. Impairment losses on available-for-sale financial assets
are recognised by reclassifying the losses accumulated in other comprehensive income to profit or loss. The
net cumulative loss that is reclassified from other comprehensive income to profit or loss is the difference
between the acquisition cost, net of any principal repayment, and the current fair value, less any impairment
loss recognised previously in profit or loss.
If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the
increase can be related objectively to an event occurring after the impairment loss was recognised, the
impairment loss is reversed through profit or loss. Otherwise, it is reversed through the statement of
comprehensive income.
Deposits with credit institutions, overseas deposits, debtors, and accrued interest are classified as loans and
receivables.
When loans and receivables are recognised initially, they are measured at the transaction price that
approximates fair value. After initial recognition loans and receivables are measured at amortised cost using
effective interest rate.
Recognition
Financial instruments are recognised when the Syndicate becomes a party to the contractual provisions of the
instrument. Financial instruments are derecognised if the Syndicate's contractual rights to the cash flows from
the financial instruments expire or the Syndicate transfers the financial asset to another party without retaining
control of substantially all risks and rewards of the asset. A financial liability is derecognised when the
Syndicate's contractual obligations are discharged, cancelled, or expire.
Identification & measurement of impairment
The Syndicate conducts a periodic review to identify invested assets that are impaired. Some of the factors
considered in identifying assets that are impaired include:
(1) whether the Syndicate intends to sell the investment or whether it is more likely than not that the Syndicate
will be required to sell the investment prior to an anticipated recovery in value;
(2) the likelihood of the recoveries in full of the principal and interest;
(3) the financial condition, near-term and long-term prospects for the issuer, including the relevant industry
conditions and trends, and implications of rating agency actions and offering prices.
Financial assets are impaired when objective evidence demonstrates that a loss event has occurred after initial
recognition of an asset, and that the loss event has an effect of future cash flows on the asset that can be
estimated reliably. All impairment losses are recognised in full in the profit and loss account.
22
3. Significant Accounting Policies (continued)
Off-setting
Financial assets and liabilities are set off 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.
Investment return
Investment return comprises investment income, and realised investment gains and losses, net of investment
expenses and charges.
Realised gains and losses on investments are calculated as the difference between sale proceeds and the
purchase price.
Interest income is recognised on an accruals basis in the profit and loss account.
Investment return is initially recorded in the non-technical account. The investment return relating to the profits
on closed years retained within the Syndicate is allocated to the non-technical account. The balance of the
investment return is allocated to the technical account.
Movements in unrealised gains and losses on investments are reported in the statement of comprehensive
income. They represent the difference between their valuation at the balance sheet date and their purchase
price or, if they have been previously valued, their valuation at the last balance sheet date, as well as the
reversal of previously recognised unrealised gains and losses in respect of investments disposed of in the
current period.
Overseas deposits
Overseas deposits are stated at market value at the balance sheet date. US Situs trust funds are classified as
investments.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less
that are subject to insignificant risk of changes in valuation and are used by the Syndicate in the management
of its short-term commitments.
Taxation
Under Schedule 19 of the Finance Act of 1993 Managing Agents are not required to deduct basic income tax
from trading income, including capital appreciation, of syndicates.
It remains the responsibility of members to agree their corporation tax liabilities with HM Revenue & Customs.
No provision has been made for any United States Federal Income Tax or Canadian Federal Income Tax
payable on underwriting results and investment income. The Syndicate is required to fund on account
assessments of US Dollar and Canadian Dollar source income and these amounts are then recovered by
reimbursements from the Member Services Unit. Any payments on account made by the Syndicate during the
year are included in the balance sheet under the heading 'Other debtors'.
No provision has been made for any overseas tax payable by members on underwriting results.
Syndicate operating expenses
Where expenses are incurred by the Managing Agent, or on behalf of the Managing Agent, on the administration
of the managed Syndicate, these expenses are apportioned using various methods depending on the type of
expense. Expenses which are incurred jointly for the Managing Agent and managed Syndicate are apportioned
between the Managing Agent and the Syndicate depending on the amount of work performed, resources used,
and the volume of business transacted.
23
3. Significant Accounting Policies (continued)
Pension costs
Travelers Management Limited, a service company and fellow group subsidiary, operates a group personal
pension plan. Pension contributions relating to syndicate staff are charged to the Syndicate and included within
net operating expenses or, where in respect of claims handling staff, as claims handling costs within gross
claims paid.
Contingencies and commitments
Contingent liabilities arise as a result of past events when either it is not probable that there will be an outflow
of resources or that the amount cannot be reliably measured at the reporting date or when the existence will be
confirmed by the occurrence or non-occurrence of uncertain future events not wholly within the Syndicate’s
control. Contingent liabilities are disclosed in the annual accounts unless the probability of an outflow of
resources is remote.
Debtors and creditors arising out of direct and reinsurance operations
Debtors and creditors arising out of direct and reinsurance operations are initially recognised at transaction price
and are subsequently carried at the recoverable amount. The carrying value is reviewed for impairment
whenever events or circumstances indicate that the carrying amount is greater than the recoverable amount,
with the impairment adjustment recorded in the profit and loss account. Debtors arising out of direct insurance
and reinsurance operations are stated net of specific provisions against doubtful debts which are made on the
basis of reviews conducted by management.
Other debtors and creditors
Any other debtors and creditors are recognised initially at transaction price and subsequently carried at the
recoverable amount. The carrying value of other debtors is reviewed for impairment whenever events or
circumstances indicate that the carrying amount is greater than the recoverable amount, with the impairment
adjustment recorded in the profit and loss account. All other debtors and creditors are due within one year,
unless otherwise stated.
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 and the Managing Agent's objectives, policies and processes for measuring and managing
these risks and for managing the Syndicate's capital.
Risk management framework
As described in the Managing Agent’s report, the Board of Directors has overall responsibility for the
establishment and oversight of the Syndicate's risk management framework.
Risk management policies are established to identify and analyse the risks faced by the Syndicate, to set
appropriate risk limits and controls, and to monitor risks and adherence to limits.
Insurance Risk
Management of insurance risk
A key component of the management of underwriting risk for the Syndicate is a disciplined underwriting strategy
that is focused on writing quality business and not writing for 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 and classes of business, together with limits on geographical
and industry exposures.
The aim is to ensure that a well-diversified book is maintained with no over-exposure in any one geographical
region, class or industry. Insurance contracts can contain a number of features which help to manage the
underwriting risk, such as the use of deductibles, or capping the maximum permitted loss, or number of claims
(subject to local regulatory and legislative requirements).
24
4. Risk and Capital Management (continued)
The Syndicate makes use of reinsurance to mitigate the risk of incurring significant losses linked to one risk or
event, including excess of loss, quota share and catastrophe reinsurance. Where an individual exposure is
deemed to be in excess of the Syndicate's appetite additional facultative reinsurance is also purchased.
The Underwriting Committee oversees the management of insurance risk, whilst the Finance Committee
oversees reserving risk. The use of proprietary and standardised modelling techniques, internal and external
benchmarking, and the quarterly reviews of claims development are all instrumental in mitigating reserving risk.
The Managing Agent's in-house actuaries perform a reserving analysis on a quarterly basis, liaising closely with
underwriters, claims and reinsurance technicians. 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. These projections
include an analysis of claims development compared to the previous 'best estimate' projections. The Finance
Committee performs a review of the results from the reserving analysis, both gross and net of reinsurance.
Following the quarterly reviews, the Finance Committee makes recommendations to the Managing Agent's
Board of Directors of the claims provisions to be established.
In arriving at the level of claims provisions a margin is applied over and above the actuarial best estimate to
reduce the probability of adverse run-off deviation.
Concentration of insurance risk
The liabilities established as at 31 December 2024 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 reserves for large losses and catastrophes,
or from changes in estimates of claims incurred but not reported (IBNR). A five per cent increase or decrease
in the ultimate cost of settling claims arising is considered to be reasonably possible at the reporting date.
The amount disclosed in the table represents the profit of loss effect of an increase or decrease in the insurance
liability as a result of applying the sensitivity. The amount disclosed for the effect on claims outstanding – net of
reinsurance represents the effect on both the profit and loss for the year and member balance.
General insurance business sensitivities as at 31 December 2024
+5.0%
-
5.0%
£000
£000
Claims outstanding - gross of reinsurance 31,309 (31,309)
Claims outstanding - net of reinsurance 27,293 (27,293)
General insurance business sensitivities as at 31 December 2023
+5.0%
-
5.0%
£000
£000
Claims outstanding - gross of reinsurance 29,365 (29,365)
Claims outstanding - net of reinsurance 24,849 (24,849)
Credit Risk
Credit risk is the risk of financial loss to the Syndicate if a counterparty fails to discharge a contractual obligation.
The Syndicate is exposed to credit risk in respect of the following:
Debt securities; Amounts due from reinsurers in respect of settled claims;
Reinsurers’ share of claims outstanding; Cash and cash equivalents; and
Premiums due from intermediaries; Other debtors and accrued interest.
The nature of the Syndicate’s exposures to credit risk and its objectives, policies and processes for managing
credit risk have not changed significantly from the prior year.
Management of credit risk
The Syndicate's credit risk in respect of debt securities is managed by placing limits on its exposure to a single
counterparty by reference to the credit rating of the counterparty. Financial assets are graded according to
current credit ratings issued by rating agencies. The Syndicate has maintained its commitment to high quality
assets with 72% of bonds having credit ratings of AA or higher.
25
4. Risk and Capital Management (continued)
The Syndicate limits the amount of cash and cash equivalents that can be deposited with a single counterparty
and maintains an authorised list of acceptable counterparties.
The Syndicate's exposure to intermediaries is monitored as part of its credit control processes. All intermediaries
must meet minimum requirements established by the Syndicate. The credit ratings and payment histories of
intermediaries are monitored on a regular basis.
The Syndicate assesses the creditworthiness of all reinsurers by reviewing public rating information and by
internal investigations. The effect of reinsurer default is regularly assessed and managed accordingly. The
Syndicate only uses reinsurers that have been pre-approved by its internal credit processes.
Exposure to credit risk
The carrying amount of financial assets and reinsurance assets represents the maximum credit risk exposure.
The Syndicate does not hold any collateral as security or purchase any credit enhancements (such as
guarantees, credit derivatives and netting arrangements that do not qualify for offset).
The following table provides counterparty credit exposure by credit rating:
2024
AAA
AA
A
BBB
Other
NR
Total
£000
£000
£000
£000
£000
£000
£000
Debt securities and other fixed income
securities
249,854 325,278 226,042 3,885 0 0 805,059
Loans & deposits with credit institutions 0 0 0 0 0 2,743 2,743
Other investments 1,985 8,133 797 728 0 3,598 15,242
Deposits with ceding undertakings 0 0 621 0 0 0 621
Reinsurers' share of claims outstanding 0 44,174 36,143 0 0 0 80,317
Debtors arising out of direct insurance
operations
0 0 0 0 0 169,894 169,894
Debtors arising out of reinsurance
operations
0 9,520 7,789 0 0 0 17,309
Cash at bank and in hand 0 1,391 8,314 0 0 518 10,223
Overseas deposits 8,542 2,031 1,798 1,375 4,138 35 17,919
Other debtors and accrued interest 0 0 0 0 0 11,886 11,886
Total 260,381 390,527 281,504 5,989 4,138 188,674 1,131,213
2023
AAA
AA
A
BBB
Other
NR
Total
£000
£000
£000
£000
£000
£000
£000
Debt securities and other fixed income
securities
253,131 217,493 209,091 761 0 0 680,476
Loans & deposits with credit institutions 0 0 0 0 0 3,837 3,837
Other investments 5,704 8,511 1,133 805 0 5,380 21,533
Deposits with ceding undertakings 0 0 389 0 0 0 389
Reinsurers' share of claims outstanding 0 50,583 33,421 0 0 6,323 90,326
Debtors arising out of direct insurance
operations
0 0 0 0 0 108,599 108,599
Debtors arising out of reinsurance
operations
0 23,152 15,297 0 0 2,894 41,342
Cash at bank and in hand 0 1,208 12,243 0 0 0 13,451
Overseas deposits 10,093 1,570 1,410 1,266 3,285 175 17,799
Other debtors and accrued interest 0 0 0 0 0 9,219 9,219
Total 268,928 302,516 272,984 2,832 3,285 136,427 986,971
On 31 December 2024 the largest concentration of risk within the investment portfolio was to the Canadian
government and amounted to £55m (2023: Canadian government £40m).
26
4. Risk and Capital Management (continued)
Financial assets that are past due or impaired
The Syndicate has debtors arising from direct insurance and reinsurance operations that are past due but not
impaired at the reporting date.
2024
Neither past
due nor
impaired
Past due but
not impaired
Gross value
of impaired
Total
£000
£000
£000
£000
Debt securities 805,059 0 0 805,059
Loans with credit and other institutions 2,743 0 0 2,743
Other investments 621 0 0 621
Reinsurers' share of claims outstanding 80,317 0 0 80,317
Debtors arising out of direct insurance operations 152,629 17,265 0 169,894
Debtors arising out of reinsurance operations 13,611 3,983 (285) 17,309
Other debtors and accrued interest 154,871 0 0 154,871
Cash at bank and in hand 10,223 0 0 10,223
Overseas deposits 33,161 0 0 33,161
Total 1,253,235 21,248 (285) 1,274,198
2023
Neither past
due nor
impaired
Past due but
not impaired
Gross value
of impaired
Total
£000
£000
£000
£000
Debt securities 680,476 0 0 680,476
Loans with credit and other institutions 3,837 0 0 3,837
Other investments 389 0 0 389
Reinsurers' share of claims outstanding 90,326 0 0 90,326
Debtors arising out of direct insurance operations 88,284 20,316 0 108,600
Debtors arising out of reinsurance operations 32,866 8,631 (155) 41,342
Other debtors and accrued interest 128,600 0 0 128,600
Cash at bank and in hand 13,451 0 0 13,451
Overseas deposits 39,332 0 0 39,332
Total 1,077,561 28,947 (155) 1,106,353
The table below sets out the age analysis of financial assets that are past due but not impaired at the balance
sheet date:
2024
Past due but not impaired
0-3
months
3-6
months
6-12
months
Greater
than 1 year
Total
£000
£000
£000
£000
£000
Debtors arising out of direct insurance operations 11,761 2,939 1,710 855 17,265
Debtors arising out of reinsurance operations 1,775 833 842 533 3,983
Total 13,536 3,772 2,552 1,388 21,248
2023
Past due but not impaired
0-3
months
3-6
months
6-12
months
Greater
than 1 year
Total
£000
£000
£000
£000
£000
Debtors arising out of direct insurance operations 12,607 5,112 1,731 866 20,316
Debtors arising out of reinsurance operations 1,703 6,639 190 99 8,631
Total 14,310 11,751 1,921 965 28,947
27
4. Risk and Capital Management (continued)
Liquidity Risk
Liquidity risk is the risk that the Syndicate will encounter difficulty in meeting obligations arising from its insurance
contracts and financial liabilities. The Syndicate is exposed to daily calls on its available cash resources mainly
from claims arising from insurance contracts.
The nature of the Syndicate’s exposures to liquidity risk and its objectives, policies and processes for managing
liquidity risk have not changed significantly from the prior year.
Management of liquidity risk
The Syndicate's approach to managing liquidity risk is to ensure, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when they fall due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the Syndicate's reputation.
The Syndicate’s approach to managing its liquidity risk is as follows:
Forecasts are prepared and revised on a regular basis to predict cash outflows from insurance contracts
over the short, medium and long term;
The Syndicate maintains cash and liquid assets to meet daily calls on its insurance contracts;
Liquidity risk is not considered to be a principal risk to the Syndicate and therefore is not specifically quantified
within these accounts.
The maturity analysis presented in the table below shows the remaining contractual maturities for the
Syndicate’s insurance contracts.
2024
No
maturity
stated
0
-
1 yrs
1
-
3 yrs
3
-
5 yrs
>5 yrs
Total
£000
£000
£000
£000
£000
£000
Claims outstanding 0 187,856 250,474 93,928 93,928 626,185
Creditors 0 42,720 0 0 0 42,720
Total 0 230,576 250,474 93,928 93,928 668,905
2023
No
maturity
stated
0
-
1 yrs
1
-
3 yrs
3
-
5 yrs
>5 yrs
Total
£000
£000
£000
£000
£000
£000
Claims outstanding 0 176,191 234,922 88,096 88,096 587,305
Creditors 0 44,720 0 0 0 44,720
Total 0 220,911 234,922 88,096 88,096 632,025
Market Risk
Market risk is the risk that the fair value or future cash flows of a financial instrument or insurance contract will
fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk and
currency risk.
The objective of market risk management is to manage and control market risk exposures within acceptable
parameters, while optimising the return on risk. The nature of the Syndicate's exposure to market risk and its
objectives, policies, and processes for managing market risk have not changed significantly from the prior year.
Management of market risks
For each of the major components of market risk the Syndicate has policies and procedures in place which
detail how each risk should be managed and monitored. The management of each of these major components
of market risk and the exposure of the Syndicate at the reporting date to each of these major components are
addressed below.
28
4. Risk and Capital Management (continued)
Interest rate risk
Interest rate risk arises from primarily from the Syndicate's financial investments, cash and overseas deposits.
The risk of changes in the fair value of these assets is managed by primarily investing in short-term financial
investments and cash and cash equivalents. The Finance Committee monitors the duration of these assets on
a regular basis and ensures the asset duration approximates the duration of the underlying liabilities.
Currency risk
The Syndicate primarily writes business in Sterling, Euros, and US dollars and is therefore exposed to currency
risk arising from fluctuations in the exchange rates of these currencies.
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. Any surplus assets are held in US
dollars.
The table below summarises the carrying value of the Syndicate's assets and liabilities, at the reporting date:
2024
Sterling
US
dollar
Euro
Canadian
dollar
Australian
dollar
Other
Total
£000
£000
£000
£000
£000
£000
£000
Investments 113,800 587,742 65,572 40,733 3 15,194 823,044
Reinsurers' share of
technical provisions
22,227 91,993 13,935 6,887 0 0 135,042
Debtors 22,386 156,111 6,570 2,136 0 0 187,203
Other assets 17,940 63,733 13,943 7,116 7,332 4,140 114,204
Total assets 176,353 899,579 100,020 56,872 7,335 19,334 1,259,493
Technical provisions (199,956) (648,358) (92,309) (24,352) 0 0 (964,975)
Creditors (21,279) (11,051) (7,724) (2,667) 0 0 (42,721)
Total liabilities (221,235) (659,409) (100,033) (27,019) 0 0 (1,007,696)
Total capital and reserves (44,882) 240,170 (13) 29,853 7,335 19,334 251,797
2023
Sterling
US
dollar
Euro
Canadian
dollar
Australian
dollar
Other
Total
£000
£000
£000
£000
£000
£000
£000
Investments 128,821 471,351 51,400 32,763 4 21,507 705,846
Reinsurers' share of
technical provisions
23,890 99,929 10,240 6,287 0 0 140,346
Debtors 16,714 128,242 2,238 2,747 0 0 149,941
Other assets 17,606 49,467 12,832 7,015 7,439 2,830 97,189
Total assets 187,031 748,989 76,710 48,812 7,443 24,337 1,093,322
Technical provisions (200,688) (557,399) (68,091) (23,716) 0 (849,894)
Creditors (2,005) (36,471) (4,206) (2,039) 0 (44,721)
Total liabilities (202,693) (593,870) (72,297) (25,755) 0 0 (894,615)
Total capital and reserves (15,662) 155,119 4,413 23,057 7,443 24,337 198,707
29
4. Risk and Capital Management (continued)
Sensitivity analysis to market risks
An analysis of the Syndicate's sensitivity to interest rate and currency price risk is presented in the table below.
The table shows the effect on the result and net assets of reasonably possible changes in the relevant risk
variable, assuming that all other variables remain constant, if that change had occurred at the end of the
reporting period and had been applied to the risk exposures at that date.
2024
2023
£000
£000
Interest rate risk
50 basis points
Increase on result and net assets (9,133) (6,890)
Decrease on result and net assets 9,316 7,011
200 basis points
Increase on result and net assets (35,460) (26,862)
Decrease on result and net assets 38,397 28,787
Currency risk
15% increase in GBP 41,603 28,505
15% decrease in GBP (36,175) (24,787)
50 and 200 basis points increase/(decrease) in yield curves and a 15% increase/(decrease) in exchange rates
have been selected on the basis that these are considered to be reasonably possible changes in these risk
variables over the following year.
The sensitivity analysis demonstrates the effect of a change in a key variable while other assumptions remain
unchanged. However, the occurrence of a change in a single market factor may lead to changes in other market
factors as a result of correlations.
Capital Management
Capital framework at Lloyd’s
The Society of Lloyd’s (Lloyd’s) is a regulated undertaking and subject to supervision by the Prudential
Regulatory Authority (PRA) under the Financial Services and Markets Act 2000, and in accordance with the
Solvency II Framework.
Within this supervisory framework, Lloyd’s applies capital requirements at member level and centrally to ensure
that Lloyd’s would comply with the Solvency II requirements, and beyond that to meet its own financial strength,
licence and ratings objectives.
Although, as described below, Lloyd’s capital setting processes use a capital requirement set at syndicate level
as a starting point, the requirement to meet Solvency II and Lloyd’s capital requirements apply at overall and
member level only respectively, not at syndicate level. Accordingly, the capital requirement in respect of
Syndicate 5000 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 be comprised of one or more underwriting members of Lloyd’s. Each member is liable for its
own share of underwriting liabilities on the Syndicates on which it is participating but not other members’ shares.
Accordingly, the capital requirements that Lloyd’s sets for each member operates on a similar basis.
30
4. Risk and Capital Management (continued)
Each member’s SCR shall thus be determined by the sum of the member’s share of the Syndicate SCR ‘to
ultimate’. Where a member participates on more than one syndicate, a credit for diversification is provided to
reflect the spread of risk, but consistent with determining an SCR which reflects the capital requirement to cover
a 1 in 200 loss ‘to ultimate’ for that member. Over and above this, Lloyd’s applies a capital uplift to the member’s
capital requirement, known as the Economic Capital Assessment (ECA). The purpose of this uplift, which is a
Lloyd’s not a Solvency II requirement, is to meet Lloyd’s financial strength, licence and ratings objectives. The
capital uplift applied for 2024 was 35% (2023: 35%) of the member’s SCR ‘to ultimate’.
In the case of Syndicate 5000, the Funds at Lloyd's ("FAL") is wholly provided by Aprilgrange Limited and F&G
UK Underwriters Limited, which are both wholly owned subsidiaries of The Travelers Companies, Inc.
5. Analysis of underwriting result
An analysis of the underwriting result before investment return is presented in the table below:
2024
Gross
premiums
written
Gross
premiums
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwriting
result
£000
£000
£000
£000
£000
£000
Direct insurance
Accident & health 12,772 9,054 (1,619) (4,348) (1,309) 1,778
Marine, aviation, & transport 139,657 114,271 (57,565) (43,469) (22,648) (9,411)
Fire & other damage to property 157,421 120,732 (55,151) (36,056) (12,849) 16,676
Third party liability 92,206 77,871 (45,540) (26,418) (8,386) (2,473)
Miscellaneous 3,484 3,699 (2,257) (1,783) (1,019) (1,360)
Total direct insurance 405,540 325,627 (162,132) (112,074) (46,211) 5,210
Reinsurance acceptances 154,886 158,912 (77,085) (60,347) (8,846) 12,634
Total 560,426 484,539 (239,217) (172,421) (55,057) 17,844
The below is an additional disclosure for Lloyd’s reporting purposes and is included to facilitate the classification
of the above segments into the Lloyd’s aggregate classes of business:
2024
Gross
premiums
written
Gross
premiums
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwriting
result
£000
£000
£000
£000
£000
£000
Additional analysis
Fire & other damage to property
of which is:
Specialities 10,587 8,120 (3,709) (2,425) (864) 1,122
Energy 31,776 24,370 (11,133) (7,278) (2,594) 3,366
Third party liability of which is:
Energy 17,338 14,643 (8,563) (4,968) (1,577) (465)
31
5. Analysis of underwriting result (continued)
2023
Gross
premiums
written
Gross
premiums
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwriting
result
£000
£000
£000
£000
£000
£000
Direct insurance
Accident & health 11,442 8,677 (1,144) (4,607) (1,528) 1,398
Marine, aviation, & transport 112,865 112,619 (49,094) (49,594) (12,185) 1,746
Fire & other damage to property 98,293 83,235 (43,340) (27,226) (4,034) 8,635
Third party liability 72,208 40,998 (18,363) (16,181) 1,153 7,607
Miscellaneous 4,156 3,627 (1,319) (1,958) (922) (572)
Total direct insurance 298,964 249,156 (113,260) (99,566) (17,516) 18,814
Reinsurance acceptances 134,406 158,650 (88,663) (53,612) (6,789) 9,586
Total 433,370 407,806 (201,923) (153,178) (24,305) 28,400
The below is an additional disclosure for Lloyd’s reporting purposes and is included to facilitate the classification
of the above segments into the Lloyd’s aggregate classes of business:
2023
Gross
premiums
written
Gross
premiums
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwriting
result
£000
£000
£000
£000
£000
£000
Additional analysis
Fire & other damage to property
of which is:
Specialities 11,846 10,031 (5,223) (3,281) (486) 1,041
Energy 29,414 24,908 (12,969) (8,147) (1,207) 2,584
Third party liability of which is:
Energy 15,081 8,563 (3,835) (3,380) 241 1,589
The gross premiums written for direct insurance by destination of risk is presented in the table below:
2024
2023
£000
£000
United Kingdom 199,357 145,178
European Union Member States 50,354 39,772
US 164,304 129,109
Rest of the world 146,411 119,311
Total 560,426 433,370
32
6. Net operating expenses
2024
2023
£000
£000
Acquisition costs 140,954 103,914
Change in deferred acquisition costs (17,341) (1,305)
Administrative expenses 57,605 47,253
Members’ standard personal expenses 4,687 3,316
Reinsurance commissions and profit participation (13,484) (13,528)
Total 172,421 139,650
Total commissions for direct insurance business for the year amounted to:
2024
2023
£000
£000
Total commission for direct insurance business 101,998 71,450
Administrative expenses include:
2024
2023
£000
£000
Auditors’ remuneration:
Fees payable to the Syndicate’s auditor for the audit of these financial statements 243 228
Fees payable to the Syndicate’s auditor and its associates in respect of other services
pursuant to legislation
199 172
Total 442 400
7. Key management personnel compensation
The directors of Travelers Syndicate Management Limited received the following aggregate remuneration
charged to the Syndicate and included within net operating expenses:
2024
2023
£000
£000
Directors’ emoluments 915 684
Fees 108 104
Total 1,022 788
The active underwriter received the following aggregate remuneration charged to the Syndicate.
2024
2023
£000
£000
Emoluments 703 800
8. Staff numbers and costs
The Syndicate and managing agent have no employees. Staff are employed by Travelers Management Limited
(TML). During the year the Syndicate did not directly incur staff costs (2023: nil).
The following amounts were recharged by the managing agency to the Syndicate in respect of payroll costs:
2024
2023
£000
£000
Wages and salaries 37,034 29,130
Social security costs 6,116 5,407
Total 43,150 34,537
33
9. Investment return
2024
2023
£000
£000
Interest and similar income
From financial instruments designated at fair value through profit or loss 23,413 16,705
Interest on cash at bank 193 201
Total Interest and similar income 23,606 16,906
Other income from investments
From financial instruments designated at fair value through profit or loss
Gains on the realisation of investments 1,017 1,736
Losses on the realisation of investments (3,433) (3,739)
Total gains & losses on the realisation of investments (2,416) (2,003)
Investment management expenses (506) (502)
Total investment return 20,684 14,401
Transferred to the technical account from the non-technical account 16,119 11,547
10. Distribution
A distribution to members of £78,066,993 will be proposed in relation to the closing year of account 2022 (2023:
£43,064,265 distribution in relation to the closing year of account 2021).
11. Financial investments
Carrying value
Cost
2024
2023
2024
2023
£000
£000
£000
£000
Debt securities and other fixed income securities 805,059 680,476 815,178 701,388
Syndicate loan to central fund 2,743 3,837 2,840 4,555
Other investments 15,242 21,533 15,242 21,533
Total financial investments 823,044 705,846 833,260 727,476
The table below presents an analysis of financial investments by their measurement classification.
2024
2023
£000
£000
Financial assets measured at fair value as available for sale 823,044 705,846
Total financial investments 823,044 705,846
As the Syndicate is fully aligned, the Syndicate holds the capital supporting their underwriting in their Syndicate’s
premium trust funds. These funds are known as funds in syndicate (FIS). At 31 December 2024, the following
amount was held as funds in syndicate:
2024
2023
£000
£000
Funds in Syndicate (FIS) 198,494 143,722
Total funds in syndicate 198,494 143,722
34
11. Financial investments (continued)
The Syndicate classifies its financial instruments held at fair value in its balance sheet using a fair value
hierarchy based on the inputs used in the valuation techniques as follows:
Level 1 – The unadjusted quoted price in an active market for identical assets or liabilities that the entity
can access at the measurement date.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable (i.e. developed using
market data) for the asset or liability, either directly or indirectly.
Level 3 – Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability and
therefore, prices are determined using a valuation technique.
The Syndicate utilised a pricing service to estimate the fair value of its investments at both 31 December 2024
and 31 December 2023.
The fair value of a financial instrument is the estimated amount at which the instrument could be exchanged in
an orderly transaction between knowledgeable, unrelated, willing parties, i.e. not in a forced transaction. The
estimated fair value of a financial instrument may differ from the amount that could be realised if the security
was sold in an immediate sale, e.g. a forced transaction. Additionally, the valuation of investments is more
subjective when markets are less liquid due to the lack of market based inputs, which may increase the potential
that the estimated fair value of an investment is not reflective of the price at which an actual transaction would
occur.
For investments that have quoted market prices in active markets, the Syndicate uses the unadjusted quoted
market prices as fair value and includes these prices in the amounts disclosed in Level 1 of the hierarchy. The
Syndicate receives the quoted market prices from third party, nationally recognised, pricing services.
When quoted market prices are unavailable, the Syndicate utilises these pricing services to determine an
estimate of fair value. The fair value estimates provided from these pricing services are included in the amount
disclosed in Level 2 of the hierarchy. If quoted market prices and an estimate from a pricing service are
unavailable, the Syndicate produces an estimate of fair value based on internally developed valuation
techniques, which, depending on the level of observable market inputs, will render the fair value estimate as
Level 2 or Level 3. The Syndicate bases all its estimates of fair value for assets on the bid price as it represents
what a third-party market participant would be willing to pay in an arm's length transaction.
Syndicate loans to the Lloyd’s Central Fund are classified as Level 3, these loans are not tradeable. Their
valuation is at as fair value.
The table below analyses financial instruments held at fair value in the Syndicate’s balance sheet at the reporting
date by its level in the fair value hierarchy.
2024
Level 1
Level 2
Level 3
Total
£000
£000
£000
£000
Debt securities and other fixed income securities 27,386 777,673 0 805,059
Syndicate loans to central fund 0 0 2,743 2,743
Other investments 12,449 2,793 0 15,242
Total 39,835 780,466 2,743 823,044
2023
Level 1
Level 2
Level 3
Total
£000
£000
£000
£000
Debt securities and other fixed income securities 34,190 646,286 0 680,476
Syndicate loans to central fund 0 0 3,837 3,837
Other investments 18,096 3,437 0 21,533
Total 52,286 649,723 3,837 705,846
35
12. Debtors arising out of direct insurance operations
2024
2023
£000
£000
Due within one year 169,894 108,599
Due after one year 0 0
Total 169,894 108,599
13. Debtors arising out of reinsurance operations
2024
2023
£000
£000
Due within one year 17,243 41,279
Due after one year 66 63
Total 17,309 41,342
14. Other debtors
2024
2023
£000
£000
Other 4,321 3,925
Total 4,321 3,925
15. Deferred acquisition costs
The table below shows changes in deferred acquisition costs assets from the beginning of the period to the end
of the period.
2024
2023
Gross
Reinsurance
Net
Gross
Reinsurance
Net
£000
£000
£000
£000
£000
£000
Balance at 1 January 69,361 (13,030) 56,331 66,061 (8,836) 57,225
Incurred deferred acquisition costs 142,406 (15,194) 127,212 108,462 (18,077) 90,385
Amortised deferred acquisition costs (123,355) 13,484 (109,871) (102,609) 13,528 (89,081)
Foreign exchange movements (152) 33 (118) (2,553) 355 (2,198)
Balance at 31 December 88,260 (14,706) 73,554 69,361 (13,030) 56,331
16. Tangible fixed assets
The Syndicate does not own any tangible fixed assets at 31 December 2024: £ Nil (2023: £ Nil).
36
17. Claims development
The following tables illustrate the development of the estimates of earned ultimate cumulative claims incurred,
including claims notified and IBNR, for each successive underwriting year, illustrating how amounts estimated
have changed from the first estimates made.
As these tables are on an underwriting year basis, there is an apparent large increase from amounts reported
for the end of the underwriting year to one year later as a large proportion of premiums are earned in the year
of account’s second year of development.
Balances have been translated at exchange rates prevailing at 31 December 2024 in all cases.
Gross
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Total
Pure underwriting year £m £m £m £m £m £m £m £m £m £m £m
at end of underwriting year 85 78 141 96 92 86 56 77 91 131
one year later 185 218 260 286 217 173 173 181 207
two years later 204 243 313 300 233 195 196 200
three years later 208 256 314 306 236 176 190
four years later 211 252 316 318 254 169
five years later 210 253 318 312 254
six years later 211 255 313 309
seven years later 213 263 309
eight years later 222 259
nine years later 220
Estimate of gross claims reserve 220 259 309 309 254 169 190 200 207 131 2,248
Provision in respect of prior
years
12
Less gross claims paid 205 251 292 261 208 120 122 97 60 18 1,634
Gross claims reserve 15 8 17 48 46 49 68 103 147 113 626
Net
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Total
Pure underwriting year £m £m £m £m £m £m £m £m £m £m £m
at end of underwriting year 79 86 125 89 86 76 51 65 83 114
one year later 162 209 227 255 196 158 136 155 187
two years later 182 237 276 265 198 167 148 170
three years later 185 249 283 268 200 156 144
four years later 196 242 283 271 205 151
five years later 195 242 296 263 202
six years later 195 247 291 260
seven years later 198 244 288
eight years later 207 240
nine years later 205
Estimate of net claims reserve 205 240 288 260 202 151 144 170 187 114 1,961
Provision in respect of prior
years
16
Less net claims paid 190 231 273 223 165 107 90 81 56 14 1,431
Net claims reserve 15 9 15 37 37 44 54 89 131 100 546
37
18. Technical provisions
The table below shows changes in the insurance contract liabilities and assets from the beginning of the period
to the end of the period.
2024
2023
Gross
Reinsurance
Net
Gross
Reinsurance
Net
provisions
assets
provisions
provisions
assets
provisions
Claims outstanding
£000
£000
£000
£000
£000
£000
Balance at 1 January 587,305 (90,326) 496,979 625,990 (124,276) 501,714
Claims paid during the year (205,077) 38,128 (166,949) (216,476) 66,810 (149,666)
Expected cost of current year
claims
239,217 (27,953) 211,264 201,923 (38,253) 163,670
Change in claims outstanding 34,140 10,175 44,315 (14,553) 28,557 14,004
Effect of movements in
exchange rate
4,739 (166) 4,574 (24,132) 5,393 (18,739)
Balance at 31 December 626,185 (80,317) 545,868 587,305 (90,326) 496,979
Claims notified 229,939 (32,101) 197,838 272,544 (44,722) 227,822
Claims incurred but not
reported
382,798 (48,216) 334,582 301,914 (45,604) 256,310
Unallocated loss adjusted
expenses
13,449 0 13,449 12,847 0 12,847
Unexpired risk provision 0 0 0 0 0 0
Balance at 31 December 626,185 (80,317) 545,868 587,305 (90,326) 496,979
2024
2023
Gross
Reinsurance
Net
Gross
Reinsurance
Net
provisions
assets
provisions
provisions
assets
provisions
Unearned premiums
£000
£000
£000
£000
£000
£000
Balance at 1 January 262,589 (50,020) 212,569 246,811 (50,400) 196,411
Premiums written during the
year
560,426 (88,033) 472,393 433,370 (77,860) 355,510
Premiums earned during the
year
(484,539) 83,010 (401,529) (407,806) 76,086 (331,720)
Change in unearned
premiums
75,887 (5,023) 70,864 25,564 (1,774) 23,790
Effect of movements in
exchange rate
314 319 633 (9,786) 2,154 (7,632)
Balance at 31 December 338,790 (54,725) 284,065 262,589 (50,020) 212,569
38
19. Provisions for other risks
No provisions were held at 31 December 2024: £ Nil (2023: £ Nil).
20. Discounted claims
The Syndicate does not discount claims, 2024: £ Nil (2023: £ Nil).
21. Creditors arising out of direct insurance operations
2024
2023
£000
£000
Due within one year 855 1,949
Due after one year 0 0
Total 855 1,949
22. Creditors arising out of reinsurance operations
2024
2023
£000
£000
Due within one year 36,123 42,433
Due after one year 0 0
Total 36,123 42,433
23. Other creditors
2024
2023
£000
£000
Other related party balances (non-syndicates) 4,665 0
Other liabilities 1,077 339
Total 5,742 339
24. Cash and cash equivalents
2024
2023
£000
£000
Cash at bank and in hand 10,223 13,451
Total 10,223 13,451
25. Analysis of net debt
The Syndicate does not have any debt at 31 December 2024: £ Nil (2023: £ Nil).
39
26. Related parties
No guarantees were given to, or received from, related parties during the year (2023: £ Nil). No provision was
held for uncollectible receivables from related parties at 31 December 2024 (2023: £ Nil) and no bad debt
expense in relation to such balances recognised during the year (2023: £ Nil).
The Syndicate is related to Travelers Underwriting Agency Limited (TUAL) by virtue of common control. TUAL
acts as a coverholder to Lloyd's underwriters. During the year TUAL placed inwards premium income with the
Syndicate on normal commercial terms. Brokerage and commissions paid by the Syndicate to TUAL in the year
amounted to £0.3m (2023: £0.3m).
The Syndicate is related to The Travelers Indemnity Company (TIC) by virtue of common control. Investment
Management fees paid by the Syndicate to TIC in the year amounted to £0.5m (2023: £0.5m). Intercompany
reinsurance premiums ceded to TIC in the year amounted to £4.5m (2023: £9.6m).
The Syndicate is also related to Travelers Casualty and Surety Company of America by virtue of common
control. Intercompany reinsurance premiums ceded to Travelers Casualty and Surety Company of America
amounted to £35k (2023: £0.4m).
The Syndicate is also related to Travelers Syndicate Management Limited (TSML) by virtue of common control.
The agency fees charged to the Syndicate amounted to £0.2m (2023: £0.2m).
The Syndicate is also related to Travelers Management Limited (TML) by virtue of common control. The
recharged expenses amounted to £62m (2023: £53m).
The Syndicate is related to Corvus Agency Limited by virtue of common control. Corvus Agency Limited acts
as a Coverholder to Lloyd's underwriters. During the year Corvus placed inwards premium income with the
Syndicate on normal commercial terms. Brokerage and commissions paid by the Syndicate to Corvus Agency
Limited in the year amounted to £0.2m (2023: nil).
The following balance sheet amounts were outstanding at year end with related parties:
2024
2023
£000
£000
Travelers Underwriting Agency Limited (TUAL) 530 319
The Travelers Indemnity Company (TIC) (3,984) (7,709)
Travelers Casualty and Surety Company of America (1,213) (426)
Travelers Syndicate Management Limited (TSML) 0 0
Travelers Management Limited (TML) (5,195) 86
Corvus Agency Limited (882) 0
40
27. Off-balance sheet items
The Syndicate has not been party to an arrangement, which is not reflected in its balance sheet, where material
risks and benefits arise for the Syndicate.
28. Post balance sheet events
There were no post balance sheet events.
29. Contingencies and commitments
At 31 December 2024 the Syndicate had no contingent liabilities (2023: £ Nil).
30. Foreign exchange rates
The following currency exchange rates have been used for principal foreign currency transactions:
2024 | 2023 | |||||
Start of period rate | End of period rate | Average rate | Start of period rate | End of period rate | Average rate | |
| Sterling | | | | | | |
| Euro | | | | | | |
| US dollar | | | | | | |
| Canadian dollar |
31. Funds at Lloyd’s
Every member is required to hold capital at Lloyd’s which is held in trust and known as Funds at Lloyd’s (‘FAL’).
These funds are intended primarily to cover circumstances where Syndicate assets prove insufficient to meet
participating members’ underwriting liabilities. The level of FAL that Lloyd’s requires a member to maintain is
determined by Lloyd’s based on Prudential Regulatory Authority requirements and resource criteria. The
determination of FAL has regard to a number of factors including the nature and amount of risk to be
underwritten by the member and the assessment of the reserving risk in respect of business that has been
underwritten. Since FAL is not under the management of the Managing Agent, no amount has been shown in
these Financial Statements by way of such capital resources. However, the Managing Agent is able to make a
call on the Member’s FAL to meet liquidity requirements or to settle losses.
32. Ultimate Controlling Party
The immediate and ultimate parent company of Travelers Syndicate Management Limited (TSML) is The
Travelers Companies, Inc. (TRV), a company registered in the USA. Group accounts for TRV are available from
the Company Secretary of TSML, at 30 Fenchurch, London, EC3M 3BD.
