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SYNDICATE 1947
Syndicate
Annual Report and Accounts for the year ended
SYNDICATE 1947
CONTENTS
Directors and Administration
1
Managing Agent’s Report
2
Statement of Managing Agent’s Responsibilities
8
Independent Auditor’s Report to the Member of Syndicate 1947
9
Statement of Profit or Loss and Other Comprehensive Income
13
Balance Sheet - Assets
15
Balance Sheet - Liabilities
16
Statement of Changes in Member’s Balances
Statement of Cash Flows
17
18
Notes to the Financial Statements
19
SYNDICATE 1947
1
DIRECTORS AND ADMINISTRATION
Managing Agent
Registered Office
Level 3, 8 Fenchurch Place, London, EC3M 4AJ
Registered Number
05832065
Directors
A. J. Baker
Executive
P. Billingham
Independent Non-Executive
A. J. Daws
Executive
K. Forte
Independent Non-Executive
P. C. F. Haynes
Independent Non-Executive
R. S. Vetch
Executive
Company Secretary
L. McCammond
Syndicate
Active Underwriter
N. Attwood
Bankers
Citibank N.A.
HSBC
Royal Bank of Canada
Investment Managers
Conning Asset Management Limited
Auditor
Ernst & Young LLP
25 Churchill Place
London
E14 5EY
SYNDICATE 1947
2
MANAGING AGENT’S REPORT
The Directors of Hamilton Managing Agency Limited (“HMA”) present the Managing Agent’s Report for
Syndicate 1947 (“the Syndicate”) for the year ended 31 December 2024. HMA also manages Syndicate
4000, which is capitalised by Hamilton Corporate Member Limited.
Principal Activity
The principal activity of the Syndicate is the underwriting of general insurance and reinsurance business at
Lloyd’s. The Syndicate commenced underwriting on 1 April 2018.
The Syndicate’s allocated capacity for the 2025 year of account is £127.5m. The capacity for both the 2024
and 2023 years of account was £125.0m.
Capital provider to the Syndicate
Capital to support the underwriting of the Syndicate is provided by GIC Re, India, Corporate Member
Limited, which is ultimately owned by General Insurance Corporation of India (“GIC Re”).
Business of the Syndicate
The Syndicate is a provider of specialist insurance and reinsurance products. In 2018-2023 this included
inwards cession of domestic Indian business from GIC Re. In 2023 the business ceded from GIC Re was
restricted only to an Indian agriculture portfolio, with the Property – Domestic line being in run-off since
2021. For 2024 there was no business ceded directly from GIC Re.
During the 2024 financial year gross written premium by product area was as follows:
Gross premium written by product area
2024
2023
£000
£000
Property – London Market
76,961
74,781
Specialty
43,432
27,972
Space
8,012
6,104
Personal Accident/Personal Lines
2,144
1,859
Agriculture (in run-off)
94
6,543
Property – Domestic (in run-off)
(115)
(213)
Total
130,528
117,046
Further details of the product areas are provided below.
Property – London Market
This comprises Property D&F and Property Treaty portfolios. The Property D&F portfolio is written to
achieve a blend and balance of both excess and primary layer, catastrophe (“CAT”) and non-CAT exposed,
across both US and international portfolios. The business written is predominantly open market, with two
binding authorities written during 2024 (2023: two).
The Property Treaty portfolio is written worldwide but the main exposures are very much US weighted,
driven by the CAT covers purchased by US cedants. The portfolio is driven by exposures written at high
return periods helping to reduce the non-peak exposures and maintain a low attrition loss ratio. The
syndicate also has exposures in Europe and Japan.
SYNDICATE 1947
3
MANAGING AGENT’S REPORT (continued)
Specialty
This product area comprises:
•
A Specialty Reinsurance portfolio including worldwide terrorism and complemented by a range of
specialty Marine contracts;
•
A Casualty portfolio consisting of blue-chip insurers writing a broad and diversified portfolio; and
•
In October 2024 the Syndicate commenced underwriting a book of International Casualty Insurance
with exposures concentrated in Canada and the Caribbean.
Space
This product is written via two Lloyd’s consortium arrangements which comprises both launch and in-orbit
risks (2023: two consortia). The syndicate has withdrawn from this class for the 2025 year of account.
Personal Accident/Personal Lines
Ongoing business relates to Personal Accident, which is a quota share of niche risks. No new business
incepted for Personal Lines since 2022. The business bound in prior years arises from an inwards quota
share cession in relation to risks across a diversified portfolio, covering homeowners, motor, liability,
collections and yacht exposures. The portfolio focused on ultra-high net worth US clients.
Agriculture
This book of business, now in run-off, related to The Prime Minister’s Agriculture Insurance Scheme. The
Syndicate wrote a proportional treaty reinsurance of the GIC Re portfolio of Indian domestic agriculture
insurance companies. No Agriculture business was written for the 2024 year of account.
Property – Domestic
The premiums allocated to Property – Domestic relates to adjustments on the previously written quota
share business (up to 2021) protecting large property risks for Indian domestic exposures as well as a
selection of treaty business protecting Indian domestic insurers.
Review of Financial Performance
The Syndicate’s key financial indicators are as follows:
KPI’s
2024
2023
£000
£000
Syndicate capacity
125,000
125,000
Gross written premium
130,528
117,046
Profit for the financial year
9,838
11,954
Combined ratio (being total of net loss ratio and net expense ratio)
94.7%
92.6%
Investments, cash and deposits
154,520
110,716
The Syndicate’s profit comprises an underwriting profit of £5.2m (2023: £7.7m), a return on investment of
£4.9m (2023: return of £4.3m) and foreign exchange losses of £0.3m (2023: losses of £0.1m).
SYNDICATE 1947
4
MANAGING AGENT’S REPORT
(continued)
Review of Financial Performance (continued)
Gross Written Premiums
The Syndicate reports gross written premium for the financial year of £130.5m (2023: £117.0m). This
increase is predominantly driven by new Proportional Casualty business.
Claims Incurred
The net loss ratio improved to 56.6% (2023: 63.6%). During the year net CAT losses of £11.7m (2023:
£10.8m) were recorded. The main 2024 events were Baltimore Bridge Collision, Hurricane Milton,
Hurricane Helene and Hurricane Beryl. Net CAT losses in the prior year related to the Turkish Earthquakes,
Hurricane Idalia, Fort Lauderdale flooding, UK Winter storms and Storm Ciaran.
Balance Sheet
Syndicate assets have increased by £24.2m to £236.7m (2023: £212.5m). Syndicate liabilities have
decreased by £0.5m to £225.9m (2023: £226.4m*). The increase in assets is driven by strong positive
cashflow in the year.
*The 2023 comparative has been restated. Refer to note 23 for further details.
Future Prospects
The stamp capacity has increased to £127.5m for 2025. This includes a full year of writing the new
International Casualty book, adjusted by the withdrawal from writing Space.
As the inflationary environment is expected to continue at current levels, the Syndicate is exposed to
additional insurance and market risks, which management consider within its overall risk framework.
Research and Development
The Syndicate has not participated in any research and development activity during the period.
Staff Matters: Hamilton Managing Agency
Recognising that attracting, retaining and engaging talent is critical to achieving Hamilton Group’s (of
which HMA is a subsidiary) strategy and long-term success, being a 'magnet for talent' is one of its core
business imperatives. A pivotable part of that goal is an ongoing focus on a positive workplace culture
where employee wellbeing, engagement and a sense of purpose are prioritised, alongside having a safe
and legally compliant workplace and environment.
Hamilton measures key aspects of culture regularly. For example, the average scores from HMA’s
engagement surveys conducted during 2024 include an 87% response rate, with 91% of respondents
feeling Hamilton is a great place to work. Positive responses were also reported on Diversity, Equity, &
Inclusivity (“DE&I”) questions, where 85% of respondents reported that they feel they can be themselves
at work, and 77% indicated that HMA actively encourages diversity and inclusion.
SYNDICATE 1947
5
MANAGING AGENT’S REPORT
(continued)
Staff Matters: Hamilton Managing Agency (continued)
Hamilton remains dedicated to building a diverse workforce and believes in the benefits of doing so in
cultural terms across decision-making, innovation, and profitability, with the company diversity statement
encapsulating this approach: 'Open Minds Open Doors'. Hamilton believes that by welcoming and
respecting differences, the business will continue to attract, retain and engage the best talent in the
market. This approach is supported by an executive-sponsored DE&I group led by the DE&I Steering
Committee and supported by local DE&I Forums focusing on localised DE&I initiatives. The London DE&I
Forum has recently conducted an extensive survey to understand and prioritise key focus areas, with plans
underway to focus on a range of initiatives to promote DE&I.
Hamilton's DE&I commitment is shown in the most recent Lloyd's 2024 Market Policies and Practices
report, where HMA continues to meet the Lloyd's 1 in 3 Hiring Ambition, focused on bringing more ethnic
diversity into the Lloyd's market. The 35% Women in Leadership target was, again, surpassed at 39%.
Furthermore, the 2024 Culture Survey placed Hamilton in the second quartile of the market.
Hamilton appreciates the importance of employees' physical and mental wellbeing and has support
mechanisms in place across both areas, providing employees with:
Specialised confidential external support via the Employee Assistance Programme
Access to a leading online workplace mental health platform
A monthly Wellness Update with information on wellness webinars and in-person events in
partnership with our workplace mental health platform and Wellbeing at Lloyd's
Bi-annual health assessments
Private medical insurance
A cycle-to-work scheme
A gym subsidy to support the ongoing physical health of employees
Hamilton's Crisis Management Team supports the safety and continuity of business operations. There
have been no significant injuries to staff in the workplace during the year or any significant actions taken
by regulatory bodies regarding staff matters.
Hamilton's "Magnet for Talent" business imperative promotes employee learning and development to
support HMA's talent pipeline and succession plans. Annual talent and performance reviews track
performance and potential, supported by training in software, leadership, management, essential skills,
and technical expertise. The recently launched mentoring programme has attracted strong interest, while
parental transition coaching supports talent retention, and Lloyd's and LMA training further enhance
development opportunities. Plans are also underway to introduce an early career curriculum to nurture
emerging talent and further support our established early career initiatives, such as our annual internships
and partnership with the Futures Academy for work experience.
Regular employee communication continues to be key to Hamilton's approach to employee engagement.
Current initiatives include quarterly group and local town halls where leadership teams provide employee-
focused updates on financial results and Hamilton’s strategic progress. The recent introduction of a new
email management platform offering real-time engagement data and analytics has enhanced the focus,
quality, and effectiveness of email communications.
Human Resources' key performance metrics are reviewed periodically by committees of the Board, and all
such indicators align with the expectations of the Directors.
HMA has entered into a service agreement with Hamilton UK Services Limited to provide services in
relation to its role as managing agent, including for Syndicate 4000. HMA and Hamilton UK Services Limited
are wholly owned subsidiaries of Hamilton UK Holdings Limited.
SYNDICATE 1947
6
MANAGING AGENT’S REPORT
(continued)
Environmental Matters
HMA is aligned with the strategy of the Hamilton Group, which strives to be a responsible (re)insurer in all
aspects of its operations and business practices by considering and recognising the impact to society and
communities, the environment and climate change for current and future generations and for all its
stakeholders. Cognisant of the uncertainty abundant in these areas, each are embedded in HMA’s risk
management framework.
Oversight of HMA’s approach to environmental matters is provided on a local level by HMA’s Board, with
additional governance coming from the Hamilton Group ESG Working Group. Further information on the
overall Group strategy can be found on the Hamilton Group website.
Business Relationships
HMA is committed to being a conscientious business and doing the right thing for its customers and
business partners. The Board recognises that relationships with stakeholders are key to the delivery of the
strategy. As such, HMA looks to conduct business with like-minded firms by undertaking the appropriate
due diligence to ensure they have good prospects for future and longevity in the market. HMA ensures
compliance with all applicable laws and has in place various internal policies, processes and procedures
covering all aspects of the business to ensure outcomes of business practice achieve consistently high
business and ethical standards. These policies, procedures and processes are reviewed and renewed,
where applicable, regularly.
Suppliers
HMA recognises that its impact on society and ability to operate in a sustainable manner extends beyond
its direct business practices to the practices of all parties in its value chain. As such, it is cognisant of the
need for appropriate methods of engaging with and monitoring suppliers. Supplier interactions are led by
the Procurement/Finance function with processes for managing supplier relationships dictated by the
Hamilton Group Procurement & Outsourcing Policy, which mandates a risk-based approach for all
supplier engagement and subsequent due diligence.
Oversight for the procurement processes, supplier selection, compliance with the Policy, and supplier
performance is provided by the Hamilton Group Vendor Management Working Group, which reports to
local boards and ultimately to the Hamilton Group Board.
Business Conduct
The Board recognises that a commitment to a high standard of business conduct is critical to the delivery
of the strategy and aspires to complete honesty and transparency in all its selling practices, product
labelling and other dealings. In addition to this, it is mindful of the fact that the insurance industry offers
unique risk to the financial system on account of its complexity and intercorrelation. Among key
documents reviewed and approved by the Board annually are the Conduct Management Framework, the
Product Governance Framework (which references Consumer Duty), Whistleblowing Policy, Financial
Crime Prevention Policy, and the Code of Conduct & Ethics. The Board further monitors conduct
management at each meeting and is committed to maintaining high ethical standards.
Regulators
HMA has transparent communication with its key regulators which is facilitated through the compliance
team. Any significant regulatory engagements are reported to the Board of HMA. The Company is aware
that legislation relating to climate and sustainability-related matters is becoming increasingly pertinent
and monitors the regulatory landscape closely.
SYNDICATE 1947
7
MANAGING AGENT’S REPORT
(continued)
Principal Risks and Uncertainties
The Board sets risk appetite annually as part of the Syndicate’s business planning and capacity setting
process. HMA has established a Risk Committee which meets at least quarterly to review and to monitor
performance against risk appetite using a series of key risk indicators. An Own Risk and Solvency
Assessment (“ORSA”) report is completed annually. The ORSA is used to identify the key risks to the
Syndicate and to ensure the Syndicate meets its current and future capital requirements.
The principal risks and uncertainties facing the Syndicate are set out in note 4 to the Annual Report.
Directors and Officers Serving During the Year
The Directors who served during the year ended 31 December 2024 and up to the date of this report (and
the current Company Secretary) are detailed on page 1.
Going Concern Basis
These financial statements are prepared on a going concern basis, for at least 12 months from the date of
authorising these accounts for issuance. Further details on this are set out in note 1 to the Annual Report.
Annual General Meeting
The Directors do not propose to hold an annual general meeting for the Syndicate.
Auditor
Ernst & Young LLP has signified its willingness to continue in office as auditor.
Disclosure of Information to the Auditor
The Directors who held office at the date of the approval of this Managing Agent’s Report confirm that, so
far as they are individually aware, there is no relevant audit information of which the Syndicate’s auditor is
unaware and each director has taken all the steps that he ought to have taken as director to make himself
aware of any relevant audit information and to establish that the Syndicate’s auditor is aware of that
information.
Board Approval
Approved by order of the Board of Hamilton Managing Agency Limited.
A. J. Daws
Chief Executive Officer
4 March 2025
SYNDICATE 1947
8
STATEMENT OF MANAGING AGENT’S RESPONSIBILITIES
The managing agent is responsible for preparing the Syndicate Annual Accounts in accordance with
applicable law and regulations.
The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 (the 2008
Regulations) and the Syndicate Accounts Instructions require the managing agent to prepare Syndicate
Annual Accounts at 31 December each year in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and applicable law).
The Syndicate annual
accounts are required by law to give a true and fair view of the state of affairs of the Syndicate as at that
date and of its profit or loss for that year.
In preparing the Syndicate Annual Accounts, the managing agent is required to:
•
select suitable accounting policies and then apply them consistently;
•
make judgements and estimates that are reasonable and prudent;
•
state whether applicable UK Accounting Standards have been followed, subject to any material
departures disclosed and explained in the notes to the Syndicate accounts; and
•
prepare the Syndicate accounts on the basis that the Syndicate will continue to write future business
unless it is inappropriate to presume the Syndicate will do so.
The managing agent is responsible for keeping adequate accounting records which disclose with
reasonable accuracy at any time the financial position of the Syndicate and enable it to comply with the
2008 Regulations. It is also responsible for safeguarding the assets of the Syndicate and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
The managing agent is responsible for the maintenance and integrity of the corporate and financial
information included on the business’s website. Legislation in the United Kingdom governing the
preparation and dissemination of annual accounts may differ from legislation in other jurisdictions.
SYNDICATE 1947
9
INDEPENDENT AUDITOR’S REPORT TO THE MEMBER OF SYNDICATE 1947
Opinion
We have audited the syndicate annual accounts of syndicate 1947 (‘the syndicate’) for the year ended 31
December 2024 which comprise the Statement of profit or loss and other comprehensive income, the
Balance sheet, the Statement of changes in member’s balances, the Statement of cash flow and
the
related notes 1 to 26, including a summary of significant accounting policies. The financial reporting
framework that has been applied in their preparation is applicable law including The Insurance Accounts
Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, United Kingdom Accounting
Standards including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of
Ireland” and FRS 103 “Insurance Contracts” (United Kingdom Generally Accepted Accounting Practice),
and Section 1 of the Lloyd’s Syndicate Accounts Instructions V2.0 as modified by the Frequently Asked
Questions Version issued by Lloyd’s (the Syndicate Accounts Instructions).
In our opinion, the syndicate annual accounts:
give a true and fair view of the syndicate’s affairs as at 31 December 2024 and of its profit for the year
then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice; and
have been prepared in accordance with the requirements of The Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008 and the Syndicate Accounts Instructions.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)), The
Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008, the Syndicate
Accounts Instructions, and other applicable law. Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit of the syndicate annual accounts section of our
report. We are independent of the syndicate in accordance with the ethical requirements that are relevant
to our audit of the syndicate annual accounts in the UK, including the FRC’s Ethical Standard as applied to
other entities of public interest, and we have fulfilled our other ethical responsibilities in accordance with
these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Conclusions relating to going concern
In auditing the syndicate annual accounts, we have concluded that the managing agent’s use of the going
concern basis of accounting in the preparation of the syndicate annual accounts is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast significant doubt on the syndicate’s ability to
continue as a going concern for a period of 12 months from when the syndicate annual accounts are
authorised for issue.
Our responsibilities and the responsibilities of the managing agent with respect to going concern are
described in the relevant sections of this report. However, because not all future events or conditions can
be predicted, this statement is not a guarantee as to the syndicate’s ability to continue as a going concern.
SYNDICATE 1947
10
INDEPENDENT AUDITOR’S REPORT TO THE MEMBER OF SYNDICATE 1947 (continued)
Other information
The other information comprises the information included in the annual report set out on pages 2 to 7,
other than the syndicate annual accounts and our auditor’s report thereon. The directors of the managing
agent are responsible for the other information contained within the annual report set out on page 1.
Our opinion on the syndicate annual accounts does not cover the other information and, except to the
extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion
thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information
is materially inconsistent with the syndicate annual accounts, or our knowledge obtained in the course of
the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or
apparent material misstatements, we are required to determine whether this gives rise to a material
misstatement in the syndicate annual accounts themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of the other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by The Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008
In our opinion, based on the work undertaken in the course of the audit:
the information given in the managing agent’s report for the financial year in which the syndicate
annual accounts are prepared is consistent with the syndicate annual accounts; and
the managing agent’s report has been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the syndicate and its environment obtained in the course
of the audit, we have not identified material misstatements in the managing agent’s report.
We have nothing to report in respect of the following matters where The Insurance Accounts Directive
(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 requires us to report to you, if in our opinion:
the managing agent in respect of the syndicate has not kept adequate accounting records; or
the syndicate annual accounts are not in agreement with the accounting records; or
certain disclosures of the managing agents’ emoluments specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of the managing agent
As explained more fully in the Statement of Managing Agent’s Responsibilities page 8, 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.
SYNDICATE 1947
11
INDEPENDENT AUDITOR’S REPORT TO THE MEMBER OF SYNDICATE 1947 (continued)
In preparing the syndicate annual accounts, the managing agent is responsible for assessing the
syndicate’s ability to continue in operation, disclosing, as applicable, matters related to its ability to
continue in operation and using the going concern basis of accounting unless the managing agent either
intends to cease to operate the syndicate, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the syndicate annual accounts
Our objectives are to obtain reasonable assurance about whether the syndicate annual accounts as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of
these syndicate annual accounts.
Explanation as to what extent the audit was considered capable of detecting irregularities, including
fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud. The
risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed
below. However, the primary responsibility for the prevention and detection of fraud rests with both those
charged with governance of the managing agent and management.
Our approach was as follows:
•
We obtained a general understanding of the legal and regulatory frameworks that are applicable to
the syndicate and determined that the most significant are direct laws and regulations related to
elements of Lloyd’s Byelaws and Regulations, and the financial reporting framework (UK GAAP), and
requirements referred to by Lloyd’s in the Syndicate Accounts instructions. Our considerations of
other laws and regulations that may have a material effect on the syndicate annual accounts included
permissions and supervisory requirements of Lloyd’s of London, the Prudential Regulation Authority
(‘PRA’) and the Financial Conduct Authority (‘FCA’).
•
We obtained a general understanding of how the syndicate is complying with those frameworks by
making enquiries of management, internal audit, and those responsible for legal and compliance
matters of the syndicate. In assessing the effectiveness of the control environment, we also reviewed
significant correspondence between the syndicate, Lloyd’s of London and other UK regulatory bodies;
reviewed minutes of the Board and Risk Committee of the managing agent; and gained an
understanding of the managing agent’s approach to governance.
•
For direct laws and regulations, we considered the extent of compliance with those laws and
regulations as part of our procedures on the related syndicate annual accounts’ items.
•
For both direct and other laws and regulations, our procedures involved: making enquiries of the
directors of the managing agent and senior management for their awareness of any non-compliance
of laws or regulations, enquiring about the policies that have been established to prevent non-
compliance with laws and regulations by officers and employees, enquiring about the managing
agent’s methods of enforcing and monitoring compliance with such policies, and inspecting
significant correspondence with Lloyd’s, the FCA and the PRA.
SYNDICATE 1947
12
INDEPENDENT AUDITOR’S REPORT TO THE MEMBER OF SYNDICATE 1947 (continued)
•
The syndicate operates in the insurance industry which is a highly regulated environment. As such the
Senior Statutory Auditor considered the experience and expertise of the engagement team to ensure
that the team had the appropriate competence and capabilities, which included the use of specialists
where appropriate.
•
We assessed the susceptibility of the syndicate’s annual accounts to material misstatement,
including how fraud might occur by considering the controls that the managing agent has established
to address risks identified by the managing agent, or that otherwise seek to prevent, deter or detect
fraud. We also considered areas of significant judgement, complex transactions, performance
targets, economic or external pressures and the impact these have on the control environment.
Where this risk was considered to be higher, we performed audit procedures to address each
identified fraud risk. The risk of fraud was considered to be higher in respect of inadequate reserving
for gross and net claims incurred but not reported (‘IBNR’) and improper revenue recognition in
relation to insurance premiums. Our audit procedures include:
•
Reviewing accounting estimates for evidence of management bias. Supported by our
actuarial professionals we assessed if there were any indicators of management bias in the
valuation of gross and net IBNR reserves and the recognition of estimated and earned
premium income;
•
Evaluating the business rationale for significant and/or unusual transactions;
•
Testing the appropriateness of journal entries recorded in the general ledger, particularly in
respect of judgemental areas including gross and net IBNR reserves and estimated and
earned premium income.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
Other matter
Our opinion on the syndicate annual accounts does not cover the iXBRL tagging included within these
syndicate annual accounts, and we do not express any form of assurance conclusion thereon.
Use of our report
This report is made solely to the syndicate’s members, as a body, in accordance with The Insurance
Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008. Our audit work has been
undertaken so that we might state to the syndicate’s members those matters we are required to state to
them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the syndicate and the syndicate’s members as a body, for
our audit work, for this report, or for the opinions we have formed.
Joseph Warrender (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
4 March 2025
SYNDICATE 1947
13
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Technical account – General business
For the year ended 31 December 2024
Note
2024
2023
£000
£000
Gross premiums written
5
Outwards reinsurance premiums
(23,342 )
(22,451 )
Premiums written, net of reinsurance
Changes in unearned premium
17
Change in the gross provision for unearned premiums
(8,555 )
Change in the provision for unearned premiums reinsurers’ share
(1,300 )
Net change in provisions for unearned premiums
(8,481 )
Earned premiums, net of reinsurance
Allocated investment return transferred from the non-technical
account
9
Claims paid
17
Gross amount
(65,772 )
(72,439 )
Reinsurers’ share
Net claims paid
(63,187 )
(69,883 )
Change in the provision for claims
17
Gross amount
Reinsurers’ share
(723 )
Net change in provisions for claims
Claims incurred, net of reinsurance
(55,904 )
(66,507 )
Net operating expenses
6
(37,562 )
(30,341 )
Balance on the technical account – general business
All the amounts above are in respect of continuing operations.
SYNDICATE 1947
14
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (CONTINUED)
Non-technical account – General business
For the year ended 31 December 2024
Note
2024
2023
£000
£000
Balance on the technical account – general business
Investment income
9
Realised gains on investments
9
Unrealised gains/(losses) on investments
9
(402 )
Investment expenses and charges
9
(65 )
(61 )
Total investment return
Allocated investment return transferred to the general business
technical account
(4,880 )
(4,279 )
Loss on foreign exchange
(281 )
(66 )
Profit for the financial year
Total comprehensive income for the year
The accompanying notes from page 19 to 47 form an integral part of these financial statements.
SYNDICATE 1947
15
BALANCE SHEET – ASSETS
As at 31 December 2024
Note
2024
2023 (restated)*
£000
£000
Financial investments
Deposits with ceding undertakings
Investments
10
Provision for unearned premiums
Claims outstanding
Reinsurers' share of technical provisions
17
Debtors arising out of direct insurance operations
11
Debtors arising out of reinsurance operations
12
Other debtors
13
Debtors
Cash at bank and in hand
20
Other assets
14
Other assets
Deferred acquisition costs
15
Other prepayments and accrued income
Prepayments and accrued income
Total assets
*
The 2023 comparative has been restated. Refer to Note 1 – Basis of preparation for further details.
SYNDICATE 1947
16
BALANCE SHEET – LIABILITIES
As at 31 December 2024
Note
2024
2023
(restated)*
£000
£000
Member’s balances
(13,924 )
Total capital and reserves
(13,924 )
Provision for unearned premiums
Claims outstanding
Technical provisions
17
Creditors arising out of reinsurance operations
18
Other creditors including taxation and social security
19
Creditors
Accruals and deferred income
Total liabilities
Total liabilities, capital and reserves
*The 2023 comparative has been restated. Refer to note 23 for further details.
The Syndicate Annual Accounts on pages 13 to 47 were approved by the Board of Hamilton Managing
Agency Limited on 4 March 2025 and were signed on its behalf by:
R. S. Vetch
Chief Financial Officer
SYNDICATE 1947
17
STATEMENT OF CHANGES IN MEMBER’S BALANCES
For the year ended 31 December 2024
2024
2023
(restated)*
£000
£000
Member’s balances brought forward at 1 January
(13,924 )
(25,134 )
Total comprehensive income for the year
Payments of profit to member’s personal reserve funds
(744 )
Losses collected in relation to distribution on closure of underwriting year
Member’s balances carried forward at 31 December
(13,924 )
*The 2023 comparative has been restated. Refer to note 23 for further details.
SYNDICATE 1947
18
STATEMENT OF CASH FLOWS
For the year ended 31 December 2024
Note
2024
2023
(restated)*
£000
£000
Cash flows from operating activities
Total comprehensive income
Adjustments:
Increase/(decrease) in gross technical provisions
(25,972 )
Increase/(decrease) in reinsurers’ share of gross technical provisions
(116 )
Increase in debtors
Increase/(decrease) in creditors
(7,103 )
Decrease in deposits received from reinsurers
(2 )
(183 )
Movement in other assets/liabilities
Investment return
(4,880 )
(4,279 )
Foreign exchange movements
Net cash flows from operating activities
Cash flows from investing activities
Purchase of equity and debt instruments
(147,716 )
(68,135 )
Sale of equity and debt instruments
Investment income received
Net cash flows from investing activities
(23,636 )
(4,443 )
Cash flows from financing activities
Distribution of profit
(744 )
Collection of losses
Net cash flows from financing activities
(744 )
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Foreign exchange on cash and cash equivalents
(433 )
(313 )
Cash and cash equivalents at the end of the year
20
*
The 2023 comparative has been restated. Refer to Note 1 – Basis of preparation for further details.
SYNDICATE 1947
19
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
1.
Basis of Preparation
The Syndicate underwrites insurance and reinsurance business in the London market. The Syndicate is
managed by HMA, with details as set out on page 3. The sole corporate member is GIC Re, India, Corporate
Member Limited. The registered address of the corporate member is 40 Lime Street, 3rd Floor, London,
United Kingdom, EC3M 7AW.
These Financial Statements have been prepared in accordance with United Kingdom Accounting
Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of
Ireland”, FRS 103 “Insurance Contracts”, the Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008 and the provisions of Schedule 3 of the Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations relating to insurance companies. There were
no material departures from those standards.
The financial statements have been prepared on a historical cost basis, except for certain financial
instruments which are measured at fair value.
The financial statements are presented in pounds sterling, which is the Syndicate’s functional currency.
All amounts have been rounded to the nearest thousand, unless otherwise indicated.
Going Concern Basis
These financial statements are prepared on a going concern basis.
Syndicates by their nature only underwrite for single underwriting years on behalf of their supporting
members. However, this is within a context of not finalising results until after 36 months so that typically
there are three underwriting years in progress at any given time. In addition, syndicates will normally expect
to continue to trade for more underwriting years into the future.
The Syndicate has capacity for the 2025 year of account and is continuing to underwrite. The member and
its corporate sponsor have confirmed its support for the 2025 year of account. The Syndicate’s business
activities, together with the factors likely to affect its future development are set out in the Business Review
contained within the Managing Agent’s Report. In addition, note 4 to the Annual Report provides details of
the financial risks the Syndicate is exposed to and how those risks are managed.
The Syndicate has considerable financial resources together with long term relationships with a number
of brokers and policyholders across different classes of business and geographical areas. As a
consequence, the Directors believe that the Syndicate is well placed to manage its business risks
successfully despite the current volatile geo-political and economic outlook.
The Directors have a reasonable expectation that the Syndicate has adequate resources including the
Funds at Lloyd’s of the member supporting the Syndicate (as detailed in note 26) to continue in operational
existence for the foreseeable future and for at least 12 months from the date of authorising these accounts
for issuance.
Restatement of comparative information
During 2024, Lloyd's introduced changes to the syndicate accounts process to rationalise and standardise
financial reporting across the market. As a result, certain comparative information has been restated to
ensure consistency with current year presentation and compliance with the Lloyd's Syndicate Accounts
Instructions. The changes comprise:
SYNDICATE 1947
20
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
1.
Basis of preparation (continued)
Restatement of comparative information (continued)
a) Reclassification changes: Certain financial statement line items have been reclassified whilst the
underlying amounts remain unchanged. The principal change is:
i) Overseas deposits of £2.2m have been reclassified from other asset balance sheet item to
financial investments, with comparative balances in notes 4 and 10 adjusted accordingly.
ii) Deposits with ceded undertakings of £17k have been reclassified from reinsurance debtors
balance sheet item to financial investments, with comparative balances in notes 4 and 10 adjusted
accordingly.
b) Aggregation changes to align with Lloyd's reporting requirements whilst maintaining FRS 102
compliance, certain items have been aggregated or disaggregated within the financial statements and
related notes. This includes the presentation of realised and unrealised gains and losses on investments,
which are now shown on a disaggregated basis in the Non-technical account of the Statement of profit or
loss and other comprehensive income and in Note 9.
The reclassification and aggregation changes have been applied retrospectively and had no impact on
previously reported profit, total comprehensive income, total assets, total liabilities, or total capital and
reserves.
The Balance sheet - Liabilities, Statement of Changes in Member's Balances and Note 18 are labelled
'Restated'. The explanation for the restatement is set out in Note 23: Prior year restatement.
2.
Use of judgements and estimates
In preparing these financial statements, the Directors of the managing agent have made judgements,
estimates and assumptions that affect the application of the Syndicate’s accounting policies and the
reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an
ongoing basis.
Provision for Claims Outstanding
The measurement of the provision for claims outstanding involves judgements and assumptions about the
future that have the most significant effect on the amounts recognised in the financial statements.
The provision for claims outstanding comprises the estimated cost of settling all claims incurred but
unpaid at the balance sheet date, whether reported or not. This is a judgemental and complex area due to
the subjectivity inherent in estimating the impact of claims events that have occurred but for which the
eventual outcome remains uncertain. In particular, judgement is applied when estimating the value of
amounts that should be provided for claims that have been incurred at the reporting date but have not yet
been reported (“IBNR”) to the Syndicate.
The amount included in respect of IBNR is based on statistical techniques of estimation applied by the
Syndicate managing agent’s actuaries and reviewed by external consulting actuaries. These techniques
generally involve projecting from past experience the development of claims over time in view of the likely
ultimate claims to be experienced and for more recent underwriting, having regard to variations in business
accepted and the underlying terms and conditions. The provision for claims also includes amounts in
respect of internal and external claims handling costs. 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 business accepted and assessments of underwriting conditions.
SYNDICATE 1947
21
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.
Use of judgements and estimates (continued)
Provision for Claims Outstanding (continued)
Further information about the risk that the provision for claims outstanding could be materially different
from the ultimate cost of claims settlement is included in note 4.
Estimated Premium Income
For certain insurance contracts, premium is initially recognised based on an estimate. Where premium is
sourced through delegated underwriting, the premium estimate is pro-rated across the facility period. This
is calculated on a straight-line basis unless the underlying writing pattern is understood to differ materially
from this. Underwriters adjust the premium estimates as the year of account matures and after a set
period, the premiums are adjusted to match the actual signed premium. These are management best
estimates based on available information at the year-end and are involving expert judgement. This
estimation could result in revisions in future accounting periods when new information is received and a
revision to the estimate is required, which will be accounted for prospectively.
3.
Significant accounting policies
The underwriting results are determined on an annual basis of accounting. Under the annual basis of
accounting, the incurred cost of claims, commission and related expenses are charged against the earned
proportion of premiums, net of reinsurance. The significant accounting policies are detailed below.
Premiums Written
Premiums written comprise direct and inwards reinsurance premiums on contracts incepted during the
financial year. Premiums are shown gross of brokerage payable to intermediaries and exclude taxes and
duties levied on them. Estimates are made for pipeline premiums, representing amounts due to the
Syndicate not yet notified. These estimates are subsequently updated based on underwriting experience
and contract performance.
Unearned Premiums
Written premiums are recognised as earned according to the risk profile of the policy. Unearned premiums
represent the proportion of premiums written that relate to unexpired claims exposure from policies in
force at the balance sheet date, calculated on the basis of established earnings patterns or time
apportionment as appropriate.
Reinsurance Premiums Ceded
Outwards reinsurance premiums are accounted for and earned in the same accounting period as the
premiums for the related direct or inwards business being reinsured.
Acquisition Costs
Acquisition costs include direct costs such as brokerage and commission, and indirect costs such as
administrative expenses connected with the processing of proposals and the issuing of policies. The
deferred acquisition cost asset represents the proportion of acquisition costs which corresponds to the
proportion of gross premiums written that is unearned at the balance sheet date; this is then earned in
future periods in line with the associated premium income.
SYNDICATE 1947
22
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
3.
Significant accounting policies (continued)
Claims Provisions and Related Recoveries
Gross claims incurred comprise the estimated cost of all claims occurring during the year, whether
reported or not, including related direct and indirect claims handling costs.
The provision for claims outstanding is assessed on an individual case by case basis and is based on the
estimated ultimate cost of all claims notified but not settled by the balance sheet date, together with the
provision for related claims handling costs. The provision also includes the estimated IBNR at the balance
sheet date 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 for 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. The
amount of salvage and subrogation recoveries is separately identified and where material reported as an
asset.
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.
The two most critical assumptions with regards to claims provisions are that the past is a reasonable
predictor of the likely level of claims development and the rating and other models used for current
business are fair reflections of the likely level of ultimate claims to be incurred. To the extent we do not
believe this to be true in specific areas, adjustments are made by the actuarial team.
The Directors consider that the provisions for gross claims and related reinsurance recoveries are fairly
stated based on 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. 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 and premiums receivable under these contracts, after the deduction of any acquisition cost
deferred. The provision for unexpired risks is calculated by reference to classes of business which are
managed together, after taking into account relevant investment return. As at 31 December 2024 and 31
December 2023, the Syndicate did not have an unexpired risk provision.
Foreign Currencies
The Syndicate’s functional and presentation currency is pounds sterling.
Transactions in US dollars, Canadian dollars, Australian dollars, euros and Japanese yen are translated at
the average rates of exchange for the period. Transactions denominated in other foreign currencies are
included at the rate of exchange ruling at the date the transaction is processed.
SYNDICATE 1947
23
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
3.
Significant accounting policies (continued)
Foreign Currencies (continued)
Monetary assets and liabilities (which include all assets and liabilities arising from insurance contracts
including unearned premiums and deferred acquisitions costs) denominated in foreign currencies are
translated at the rate of exchange at the balance sheet date.
Exchange differences arising on the retranslation of opening balance sheet items at the closing balance
sheet rate and the retranslation of the profit and loss account for the year are recorded in the non-technical
account.
Financial Investments
In applying FRS 102, the Syndicate has chosen to apply the recognition and measurement provisions of IAS
39 Financial Instruments: Recognition and Measurement (as adopted for use in the UK) as per chapters 11
and 12 of FRS 102.
The Syndicate classifies its financial investments as financial assets at fair value through profit or loss
(“FVPL”). The Syndicate determines the classification of its financial assets at initial recognition. Financial
assets are initially recognised at fair value plus, in the case of instruments not at FVPL, directly attributable
transaction costs.
FVPL assets comprise two subcategories: financial assets held for trading and those designated as FVPL
at inception.
Investments typically bought with the intention to sell in the near future are classified as held
for trading. For investments designated as FVPL, the following criteria must be met:
•
The designation eliminates or significantly reduces the inconsistent treatment that would otherwise
arise from measuring the assets or liabilities or recognising gains or losses on a different basis; or
•
The assets and liabilities are part of a group of financial assets which are managed and their
performance evaluated on a fair value basis, in accordance with a documented risk management
or investment strategy.
These investments are initially recorded at fair value. Subsequent to initial recognition, these investments
are re-measured at fair value at each reporting date. Fair value adjustments and realised gains and losses
are recognised in the income statement.
Derecognition of Financial Assets
A financial asset or, when applicable, a part of a financial asset is derecognised when:
•
The rights to the cash flows from the asset have expired; or
•
The Syndicate retains the right to receive cash flows from the asset or has assumed an obligation to
pay the received cash flows in full without material delay to a third party under a ‘pass through’
arrangement and either (a) the Syndicate has transferred substantially all the risks and rewards of
the asset; or (b) the Syndicate has neither transferred nor retained substantially all the risks and
rewards of the asset, but has transferred control of the asset.
SYNDICATE 1947
24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
3.
Significant accounting policies (continued)
Derecognition of Financial Assets (continued)
When the Syndicate has transferred its right to receive cash flows from an asset or has entered into a pass-
through arrangement and has neither transferred nor retained substantially all the risks and rewards nor
transferred control of the asset, the asset is recognised to the extent of the Syndicate’s continuing
involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred
asset is measured at the lower of the original carrying amount of the asset and the maximum amount of
consideration that the Syndicate could be required to repay. In that case, the Syndicate also recognises an
associated liability.
Cash and Cash Equivalents
Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and
short-term deposits with an original maturity date of three months or less.
For the purpose of the cash flow
statement, cash and cash equivalents consist of cash and cash equivalents as defined above, where
applicable net of outstanding bank overdrafts.
Investment Return
Investment return comprises all investment income, realised investment gains and losses and movements
in unrealised gains and losses, net of investment expenses, charges and interest. Investment return is
initially recorded in the non-technical account. A transfer is made from the non-technical account to the
general business technical account. Investment return has been wholly allocated to the technical account
as all investments are held to support underwriting liabilities.
Realised gains and losses on investments carried at market value are calculated as the difference between
sale proceeds and carrying value. Unrealised gains and losses on investments represent the difference
between the valuation at the balance sheet date and their valuation at the previous balance sheet date, or
purchase price, if acquired during the year, together with the reversal of unrealised gains and losses
recognised in earlier accounting periods in respect of investment disposals in the current period.
Unrealised and realised gains and losses in financial investments are recognised based on the appropriate
classification of financial investments and are covered under the accounting policy for financial
investments.
Taxation
Under Schedule 19 of the Finance Act 1993 managing agents are not required to deduct basic rate income
tax from trading income. In addition, all UK basic rate income tax deducted from syndicate investment
income is recoverable by managing agents and consequently the distribution made to members is gross
of tax.
No provision has been made for any United States Federal Income Tax payable on underwriting results or
investment earnings. Any payments on account made by the Syndicate are included in the Statement of
Financial Position under the heading members’ balances. No provision has been made for any overseas
tax payable by members on underwriting results.
SYNDICATE 1947
25
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
3.
Significant accounting policies (continued)
Pension Costs
Staff are seconded from GIC Re UK branch or from GIC Head Office. The GIC Re UK branch operates a
defined contribution scheme. Pension contributions relating to seconded staff are charged to the
Syndicate and included within net operating expenses.
Profit Commission
Profit commission due from the Syndicate to the managing agent is not payable until after the appropriate
year of account closes – typically at 36 months. An accrual is calculated and recognised in the financial
statements based on the cumulative earned underwriting results of each year of account, taking into
account any deficits brought forward from prior years.
Profit commission payable to Lloyd’s coverholders or producing brokers has been provided for on all years
of account and recognised within acquisition costs in the income statement. Profit commission accruals
are calculated based on the expected profit or loss of qualifying premium and are included within creditors
on the balance sheet. Profit commissions are calculated at the minimum value of underwriting profits
whilst there is uncertainty over the amounts due. As such this is an estimation based on the level of
information available at a point in time.
Direct Insurance and Reinsurance Receivables
Direct insurance and reinsurance receivables are recognised when due and measured on initial
recognition at the fair value of the consideration received or receivable. The carrying value of these
receivables is reviewed for impairment whenever events or circumstances indicate that the carrying
amount may not be recoverable, with the impairment loss recorded in the income statement. Debtors
arising out of direct insurance and reinsurance operations are therefore stated net of specific provisions
against doubtful debts which are made on the basis of reviews conducted by management on pipeline
premium balances, which form part of the direct insurance receivables. Insurance receivables are
derecognised when the derecognition criteria for financial assets have been met.
Direct insurance and reinsurance payables are recognised when due and measured on initial recognition
at the fair value of the consideration received less directly attributable transaction costs. These liabilities
are derecognised when the obligation under the liability is settled, cancelled or expired.
Deposits with ceding undertakings
Deposits with ceding undertakings are funds held by Lloyd’s Europe on behalf of the Syndicate to settle
Part VII claims.
4.
Risk and capital management
Risk Framework
The primary objective of the Syndicate’s Risk Management Framework is to protect the Syndicate’s capital
provider, GIC Re, India, Corporate Member Limited, from events that might impede the achievement of
sustainable financial performance, lead to erosion of capital, or cause missed opportunities. The Board
recognises the critical importance of having efficient and effective risk management systems in place to
identify, measure, mitigate, monitor, and report on key risks.
SYNDICATE 1947
26
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
4.
Risk and capital management (continued)
Insurance Risk - Underwriting
HMA has an established risk management function for the Syndicate with a clear remit from the Board.
This is supplemented with a clear organisational structure with documented delegated authorities and
responsibilities from the Board.
Hamilton leverages the ‘three lines of defence’ model, in which the risk
management function is part of the second line of defence. The ongoing communication and collaboration
across the three lines of defence ensures that HMA identifies and manages risks effectively.
The Risk Committee and the Board approve the risk management policies and meet regularly to approve
any commercial, regulatory and organisational requirements of such policies. Significant emphasis is
placed on the continuous monitoring, assessment and documentation of existing and emerging risks and
controls.
Insurance Risk is a core aspect of the Syndicate’s business model and it is recognised that uncertainty
associated with the frequency and severity of claims is inherent to general insurance. The Syndicate
therefore seeks a measured amount of this risk in exchange for underwriting profit, provided that the nature
of these risks are adequately assessed, evaluated and priced, based on both internal strategy, approach
and business planning processes, as well as considering the standards and expectations set by regulators
and rating agencies. The Syndicate is risk averse to subcategories of insurance risk, which, upon
materialisation, may impede or disrupt the aforementioned assessment and evaluation process, such as
inadequate reserving, pricing, catastrophe risk, reinsurance, over-concentration, inadequate claims
handling or poor oversight and governance of underwriting processes (including delegated underwriting).
HMA’s Board approves the risk appetite statement and risk tolerance limit, considering the relativity
between willingness to lose and potential forecast profitability for each year of account. The risk appetite
will therefore reflect the view of the business plan, utilising the Syndicate’s latest approved business plan
assumptions
.
The principal risk the Syndicate faces under insurance contracts is that the actual claims and payments or
the timing thereof, differ from expectations. This is influenced by the frequency of claims, severity of
claims, and the development of long-term claims liabilities. The objective of the Syndicate is to ensure that
sufficient reserves are available to cover these liabilities. Management consider that this risk is heightened
in the current inflationary environment, as well as the impact of climate change on the frequency and
severity of natural catastrophes.
The risk exposure is mitigated by diversification across a large portfolio of insurance contracts and
geographical segments. The variability of risks is also improved by careful selection and implementation
of underwriting strategy guidelines, as well as the use of reinsurance arrangements. In light of the current
inflationary environment, specific premium rates have been increased based on inflation projections, with
input from across HMA’s functions that provide services to the Syndicate, as well as utilising market
benchmarks.
Reinsurance
Reinsurance allows the Syndicate to manage capital exposure to both frequency and severity of claims.
This includes the management of any systemic issues impacting a particular area of the account, as well
as catastrophic losses across all business areas.
SYNDICATE 1947
27
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
4.
Risk and capital management (continued)
Management Committee
The Syndicate organises underwriting through product areas. The Management Committee meets monthly
and provides direct oversight for each underwriting unit, and reports to the HMA Executive Committee
(Committee of the Board) via the Head of Strategic Business Partnership Reports.
Underwriting authorities, underwriting peer reviews of all risks, independent review procedures, and the
audit and review of delegated arrangements, all contribute to the strength of the underwriting control
environment. HMA and the Syndicate records and monitors individual risk exposures to ensure they remain
within the policies and guidelines set for the Syndicate.
Diversification
Risks usually cover twelve months’ duration. Risks deliberately emanate from a diverse range of sources.
The variability of risks is improved by careful selection and implementation of underwriting strategies,
which are designed to ensure that risks are diversified in terms of type of risk and level of insured benefits.
This is largely achieved through diversification across industry sectors and geographical segmentation.
Claims Management
HMA’s claims management process is designed to reduce the risk of inaccurate or incomplete case
reserves and settlements, poor service or excessive claims handling costs. This includes claim review
policies that assess all new and ongoing claims. HMA’s processes are cascaded down to the Syndicate,
and the Syndicate Head of Claims performs regular detailed reviews of claims handling procedures and
conducts investigations of possible fraudulent claims.
The Syndicate monitors exposures through a combination of deterministic modelling as part of the
Realistic Disaster Scenarios Framework and stochastic modelling as part of Lloyd’s catastrophe model
reporting requirements.
Insurance Risk – Reserving
HMA’s reserving policy seeks to ensure appropriate allowance for reserving risk and consistency in
reserving from year to year. The Syndicate utilises HMA’s Reserving team resources and applies its
reserving policy.
Booked reserves represent the level of reserves booked at syndicate level and provide
the basis for the syndicate results and forecasts. Actuarial best estimate reserves are intended to be true
best estimates, i.e. estimates of expected value claims reserves. These are the basis for internal reporting
and the derivation of expected loss ratios for business planning.
The following table presents the profit and loss impact of the sensitivity of the value of insurance liabilities
disclosed in the accounts to potential movements in the assumptions applied within the technical
provisions. Given the nature of the business underwritten by the Syndicate, the approach to calculating
the technical provisions for each class can vary and as a result the sensitivity performed is to apply a
beneficial and adverse risk margin to the total insurance liability. The amount disclosed in the table
represents the profit or loss impact of an increase or decrease in the insurance liability as a result of
applying the sensitivity.
The amount disclosed for the impact on claims outstanding – net of reinsurance
represents the impact on both the profit and loss for the year and member balance.
SYNDICATE 1947
28
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
4.
Risk and capital management (continued)
Insurance Risk – Reserving (continued)
General insurance business sensitivities as at 31 December 2024
Sensitivity
5.0%
-5.0%
£000
£000
Claims outstanding – gross of reinsurance
(8,146)
8,146
Claims outstanding – net of reinsurance
(7,559)
7,559
Mitigation
Reserving risk is controlled by the robust application of actuarial methodologies, stepped sign-off
procedures, quarterly tracking of projected ultimate loss ratios, reassessment of methodologies where
appropriate, regular dialogue between actuaries and practitioners, and access to historical loss data. The
use of independent external reserve assessments, by professional services firms, provides additional risk
mitigation.
Management has considered the effects of the continued heightened inflation environment on claims
reserves and has made appropriate allowance in the reserve results. Specific considerations were made
around current economic circumstances, social inflation trends and the potential impact to business
portfolio mix when setting reserving assumptions.
HMA and the Syndicate are also mindful that there is a risk that climate change may adversely affect
reserving requirements and monitors its climate-related exposure closely, assessing current and future
climate change risk in a variety of ways, including stress and scenario testing, over short and long term
time horizons.
Regulatory Risk
HMA is required to comply with the requirements of the Prudential Regulation Authority, the Financial
Conduct Authority and Lloyd’s. Lloyd’s requirements include those imposed on the Lloyd’s market by
overseas regulators. Regulatory risk is the risk of loss owing to a breach of regulatory requirements or
failure to respond to regulatory change. HMA has a Compliance Officer, who monitors regulatory
developments and assesses the impact on HMA policy. HMA also carries out a compliance-monitoring
programme as documented in the Compliance Framework. Additional consideration has been given to
compliance with climate and sustainability-related legislation, with monitoring of the regulatory landscape
ongoing.
Capital Framework at Lloyd’s
Lloyd’s is a regulated undertaking and subject to the supervision of the Prudential Regulatory Authority
(“PRA”) under the Financial Services and Markets Act 2000. Lloyd’s is subject to the capital regime
determined by the PRA which is based upon the Solvency II capital regime. Within the supervisory
framework, Lloyd’s applies capital requirements at member level and centrally to ensure that Lloyd’s
complies with Solvency II capital requirements, and beyond that to meet its own financial strength, licence
and ratings objectives.
General insurance business sensitivities as at 31 December 2023
Sensitivity
5.0%
-5.0%
£000
£000
Claims outstanding – gross of reinsurance
(8,461)
8,461
Claims outstanding – net of reinsurance
(7,886)
7,886
SYNDICATE 1947
29
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
4.
Risk and capital management (continued)
Capital Framework at Lloyd’s (continued)
Although Lloyd’s capital setting processes use a capital requirement set at syndicate level as a starting
point, the requirement to meet Solvency II capital requirements applies at Lloyd’s aggregate level, and not
syndicate level. Accordingly, the capital requirement in respect of the Syndicate is not disclosed in these
financial statements.
Credit Risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss to the other party by
failing to discharge an obligation. HMA and the Syndicate has a risk averse appetite to credit risk arising
from dealings and interactions with counterparties. The key aspect of credit risk is the risk of default by a
reinsurer, insurance intermediary or debt holder. HMA and the Syndicate also recognises that the potential
increased frequency and severity of natural catastrophes in light of climate change may adversely affect
the Syndicate in this area. The table below provides information regarding the credit risk exposure of the
Syndicate at 31 December 2024 by classifying assets according to Standard & Poor’s credit ratings of the
counterparties for assets not yet due. AAA is the highest possible rating. Assets that fall outside the range
of AAA to BBB and below are classified as speculative grade and have not been rated.
2024
AAA
AA
A
BBB
Other
Not
rated
Total
£000
£000
£000
£000
£000
£000
£000
Shares and other variable yield securities and
units in unit trusts
21,329
-
-
-
-
-
21,329
Debt securities and other fixed income
securities
1,051
31,528
56,726
6,498
-
-
95,803
Deposits with ceded undertakings
-
-
17
-
-
-
17
Syndicate loans to central fund
-
-
1,031
-
-
-
1,031
Other investments
1,348
253
308
250
-
34
2,193
Reinsurers’ share of claims outstanding
-
10,921
813
-
-
5
11,739
Debtors arising out of direct insurance
operations
-
-
-
-
-
9,245
9,245
Debtors arising out of reinsurance operations
-
1,083
82
-
-
45,499
46,664
Cash at bank and in hand
-
-
34,147
-
-
-
34,147
Other debtors and accrued interest
-
-
-
-
-
2,958
2,958
Total
23,728
43,785
93,124
6,748
-
57,741
225,126
2023 (restated)*
AAA
AA
A
BBB
Other
Not
rated
Total
£000
£000
£000
£000
£000
£000
£000
Shares and other variable yield securities and
units in unit trusts
9,476
-
-
-
-
-
9,476
Debt securities and other fixed income
securities
77
27,568
50,674
2,754
-
-
81,073
Deposits with ceded undertakings
-
-
19
-
-
-
19
Syndicate loans to central fund
-
-
1,291
-
-
-
1,291
Other investments
1,142
215
180
152
-
7
1,696
Reinsurers’ share of claims outstanding
334
8,171
1,729
1,116
-
139
11,489
Debtors arising out of direct insurance
operations
-
-
-
-
-
14,659
14,659
Debtors arising out of reinsurance operations
-
3,300
239
5,303
-
56,914
65,756
Cash at bank and in hand
-
-
17,180
-
-
-
17,180
Other debtors and accrued interest
-
-
-
-
-
504
504
Total
11,029
39,254
71,312
9,325
-
72,223
203,143
*
The 2023 comparative has been restated. Refer to Note 1 – Basis of preparation for further details.
SYNDICATE 1947
30
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
4.
Risk and capital management (continued)
Credit Risk (continued)
The HMA Ceded Reinsurance Working Group monitors all reinsurer counterparties with whom the
Syndicate conducts business and sets credit limits for the recoveries due from individual reinsurers. The
review includes an analysis of the financial strength of the reinsurer, its payment performance record and
standing in the market. Thereafter, with the assistance of outside expertise, management of reinsurer
credit risk follows active and regular review of credit ratings and financial exposure to all approved
reinsurers. Investment credit risk is managed through investment management guidelines and monitored
by the HMA Finance and Investments Committee.
The tables below show the maximum exposure to credit risk (including an analysis of financial assets
exposed to credit risk) for the components of the statement of financial position. The maximum exposure
is shown gross, before the effect of any mitigation arrangements. As at the balance sheet date, all financial
assets of the Syndicate are unimpaired.
2024
Neither past
due nor
impaired
assets
Past due but
not impaired
assets
Gross value
of impaired
assets
Impairment
allowance
Total
£000
£000
£000
£000
£000
Shares and other variable yield securities and
units in unit trusts
21,329
-
-
-
21,329
Debt securities and other fixed income
securities
95,803
-
-
-
95,803
Deposits with ceded undertakings
17
-
-
-
17
Syndicate loans to central fund
1,031
-
-
-
1,031
Other investments
2,193
-
-
-
2,193
Reinsurers’ share of claims outstanding
11,739
-
-
-
11,739
Debtors arising out of direct insurance
operations
8,753
492
-
-
9,245
Debtors arising out of reinsurance operations
46,553
111
-
-
46,664
Cash at bank and in hand
34,147
-
-
-
34,147
Other debtors and accrued interest
2,958
-
-
-
2,958
Total
224,523
603
-
-
225,126
2023 (restated)*
Neither past
due nor
impaired
assets
Past due
but not
impaired
assets
Gross value of
impaired
assets
Impairment
allowance
Total
£000
£000
£000
£000
£000
Shares and other variable yield securities and
units in unit trusts
9,476
-
-
-
9,476
Debt securities and other fixed income
securities
81,073
-
-
-
81,073
Deposits with ceded undertakings
19
-
-
-
19
Syndicate loans to central fund
1,291
-
-
-
1,291
Other investments
1,696
-
-
-
1,696
Reinsurers’ share of claims outstanding
11,489
-
-
-
11,489
Debtors arising out of direct insurance
operations
12,779
1,880
-
-
14,659
Debtors arising out of reinsurance operations
65,756
-
-
-
65,756
Cash at bank and in hand
17,180
-
-
-
17,180
Other debtors and accrued interest
504
-
-
-
504
Total
201,263
1,880
-
-
203,143
*
The 2023 comparative has been restated. Refer to Note 1 – Basis of preparation for further details.
SYNDICATE 1947
31
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
4.
Risk and capital management (continued)
Credit Risk (continued)
The Syndicate has debtors arising from direct insurance and reinsurance operations that are past due but
not impaired at the reporting date. An analysis of the carrying amounts of past due or impaired debtors is
presented in the able below:
Past due but not impaired
2024
0-3
months
past due
3-6 months
past due
6-12
months
past due
Greater
than 1 year
past due
Total
£000
£000
£000
£000
£000
Debtors arising out of direct insurance operations
396
70
26
-
492
Debtors arising out of reinsurance operations
111
-
-
-
111
Total
507
70
26
-
603
Past due but not impaired
2023
0-3
months
past due
3-6 months
past due
6-12
months
past due
Greater
than 1 year
past due
Total
£000
£000
£000
£000
£000
Debtors arising out of direct insurance operations
1,856
18
6
-
1,880
Debtors arising out of reinsurance operations
-
-
-
-
-
Total
1,856
18
6
-
1,880
Liquidity Risk
Liquidity Risk is the risk that the Syndicate, although solvent, either does not have available sufficient
financial resources to enable it to meet its obligations as they fall due or can secure such resources only
at excessive cost. In respect of catastrophic events there is also a liquidity risk associated with the timing
differences between gross cash outflows and expected reinsurance recoveries, which may be heightened
due to climate change. The Syndicate is risk averse to materialisation of liquidity risk. The risk is managed
by HMA for the Syndicate.
The Syndicate is subject to calls on cash resources, mainly in respect of claims on insurance business, on
a daily basis. HMA’s Finance team operates and maintains procedures designed to ensure that cash is
available to settle liabilities and other obligations when due without excessive cost to the business. The
procedures set limits for cash required to meet expected cash flows. Contingency arrangements exist to
meet liquidity requirements in extreme circumstances.
The table below summarises the maturity profile of the Syndicate’s financial liabilities based on remaining
undiscounted contractual obligations, including interest payable, and outstanding claim liabilities based
on the estimated timing of claim payments resulting from recognised insurance liabilities. Repayments
which are subject to notice are treated as if notice were to be given immediately.
SYNDICATE 1947
32
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
4.
Risk and capital management (continued)
Liquidity Risk (continued)
Undiscounted net cash flows
2024
No maturity
stated
0-1 Years
1-3 Years
3-5 Years
> 5 Years
Total
£000
£000
£000
£000
£000
£000
Claims outstanding
-
30,496
100,296
25,577
6,551
162,920
Creditors
5,229
-
-
-
-
5,229
Total
5,229
30,496
100,296
25,577
6,551
168,149
Undiscounted net cash flows
2023 (restated)*
No maturity
stated
0-1 Years
1-3 Years
3-5 Years
> 5 Years
Total
£000
£000
£000
£000
£000
£000
Claims outstanding
-
31,675
104,172
26,566
6,805
169,218
Creditors
11,495
-
-
-
-
11,495
Total
11,495
31,675
104,172
26,566
6,805
180,713
*The 2023 comparative has been restated. Refer to note 23 for further details.
Market Risk
Currency Risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates.
The Syndicate writes a significant proportion of insurance business in currencies other than pounds
sterling, which creates an exposure to currency risk. The Syndicate seeks to manage this exposure by
matching foreign currency assets and liabilities. The Syndicate is expected to have sufficient liquid funds
available, which may include trades from other currencies, at the point expenses become payable. The
table below summarises the exposure of financial assets and liabilities to foreign currency exchange risk
at the balance sheet date.
2024
GBP
USD
EUR
CAD
AUD
JPY
Total
£000
£000
£000
£000
£000
£000
£000
Investments
1,064
110,964
2
8,036
307
-
120,373
Reinsurers' share of technical provisions
603
11,462
155
46
58
26
12,350
Debtors
7,025
40,713
2,942
4,306
601
322
55,909
Other assets
24,917
195
8,829
-
1,490
851
36,282
Prepayments and accrued income
2,234
8,137
435
776
179
44
11,805
Total assets
35,843
171,471
12,363
13,164
2,635
1,243
236,719
Technical provisions
(26,501)
(162,799)
(13,003)
(8,530)
(1,213)
(803)
(212,849)
Creditors
(2,016)
(2,434)
(15)
3
(16)
-
(4,478)
Accruals and deferred income
(4,266)
(4,283)
-
-
-
-
(8,549)
Total liabilities
(32,783)
(169,516)
(13,018)
(8,527)
(1,229)
(803)
(225,876)
Total capital and reserves
3,060
1,955
(655)
4,637
1,406
440
10,843
SYNDICATE 1947
33
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
4.
Risk and capital management (continued)
Market Risk (continued)
Currency Risk (continued)
2023 (restated)*
GBP
USD
EUR
CAD
AUD
JPY
Total
£000
£000
£000
£000
£000
£000
£000
Investments
1,303
87,297
-
4,418
537
-
93,555
Reinsurers' share of technical provisions
(171)
12,204
69
48
77
6
12,233
Debtors
5,453
68,787
2,758
2,611
671
158
80,438
Other assets
9,361
106
5,332
-
813
1,568
17,180
Prepayments and accrued income
2,079
6,068
290
358
212
47
9,054
Total assets
18,025
174,462
8,449
7,435
2,310
1,779
212,460
Technical provisions
(27,443)
(157,032)
(19,152)
(4,738)
(1,657)
(1,014)
(211,036)
Creditors
(171)
(11,235)
(79)
(4)
(6)
-
(11,495)
Accruals and deferred income
(2,291)
(1,370)
(128)
(61)
-
(3)
(3,853)
Total liabilities
(29,905)
(169,637)
(19,359)
(4,803)
(1,663)
(1,017)
(226,384)
Total capital and reserves
(11,880)
4,825
(10,910)
2,632
647
762
(13,924)
*The 2023 comparative has been restated. Refer to note 23 and Note 1 – Basis of preparation for further
details.
The table below gives an indication of the impact on the result of a percentage change in the relative
strength of pounds sterling against the value of the US dollar.
Investment Risk
The Syndicate’s investments are exposed to two key risks: interest rate risk and credit risk. Interest rate
risk is driven by changes in the value or future cash flows of a financial instrument due to changes in market
interest rates. Credit risk is driven by the change in the value of an instrument due to either a change in the
market’s view of its credit worthiness or alternatively due to a default - the risk of a default on instrument
is described in the credit risk section above. Since the syndicate holds investments in government and
corporate bonds, it is exposed to these risks.
The below sets out the impact of a 50 basis point movement in interest rates. Note insurance liabilities are
not discounted in these accounts and therefore are not exposed to interest rate risk, although they are
under the Solvency II regime used under the Lloyd’s capital framework.
Interest Rate Risk
2024
Impact on
results
before tax
2024
Impact on
member’s
balances
2023 Impact
on results
before tax
2023
Impact on
member’s
balances
£000
£000
£000
£000
Impact of 50 basis point increase
(837)
(837)
(702)
(702)
Impact of 50 basis point decrease
835
835
704
704
SYNDICATE 1947
34
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
4.
Risk and capital management (continued)
Market Risk (continued)
Investment Risk (continued)
The current inflationary environment has resulted in short term volatility in the investment return. The
Syndicate’s investment strategy of a high credit quality and relatively short duration portfolio mitigates
against this in the medium term, HMA management has continued to monitor its investment approach and
has not made any adjustments as a result.
HMA is also mindful that there is a risk that climate change may adversely affect a number of industries
and thus negatively impact the Syndicate’s investments. As a result of this, specific guidelines have been
agreed with the investment manager and these are monitored by the Finance & Investments Committee
on a quarterly basis as part of a suite of ESG metrics, notably carbon intensity. Specific consideration is
given to investments on the Lloyd’s watch list. Reporting at 31 December 2024 suggests that there is only
marginal exposure to climate change risk.
Operational Risk
The Syndicate is potentially exposed to direct or indirect losses resulting from inadequate or failed internal
processes, systems, or people, or from external events. HMA and the Syndicate has a risk averse appetite
to operational risk.
HMA seeks to manage this risk with detailed procedure manuals and policies set out standards and
expectations for operational activities. The structured programme of testing of processes and systems by
internal audit also aims to determine adequate levels of operational continuity and resilience.
Climate Change Risk
The Syndicate and HMA has a risk averse appetite towards negative financial impacts of climate change
on our strategic objectives. Negative financial impacts may arise from all three of the key subcategories of
climate risk, namely physical, transition and liability. Furthermore, operational disruptions may also arise
from the consequences of physical climate risk.
HMA undertakes and embeds assessments of the Syndicate’s exposure to climate change risk to the broad
suite of risk categories. HMA does not believe that these financial statements are subject to material
uncertainty arising from climate change risk.
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 (“Solvency II”).
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.
SYNDICATE 1947
35
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
4.
Risk and capital management (continued)
Capital management (continued)
Capital framework at Lloyd’s (continued)
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 the Syndicate 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.
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’.
Provision of capital by members
Each member may provide capital to meet its ECA either by assets held in trust by Lloyd’s specifically for
that member (FAL), assets held and managed within a syndicate (FIS), or as the member’s share of the
members’ balances on each syndicate on which it participates.
Accordingly, all of the assets less liabilities of the Syndicate, as represented in the members’ balances
reported on the balance sheet on page 16, represent resources available to meet members’ and Lloyd’s
capital requirements.
SYNDICATE 1947
36
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
5.
Analysis of underwriting result
An analysis of the underwriting result before investment return is set out 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
Marine, aviation, and transport
8,015
5,657
(8,899)
(1,894)
(555)
(5,691)
Fire and other damage to property
28,151
25,359
(6,057)
(6,191)
(8,244)
4,867
Third party liability
19,817
18,739
(11,418)
(9,705)
(307)
(2,691)
Miscellaneous
-
-
-
-
-
-
Total Direct Business
55,983
49,755
(26,374)
(17,790)
(9,106)
(3,515)
Reinsurance acceptances
74,545
72,218
(32,247)
(19,772)
(11,445)
8,754
Total
130,528
121,973
(58,621)
(37,562)
(20,551)
5,239
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
Marine, aviation, and transport
6,147
4,988
(5,029)
(1,472)
(56)
(1,569)
Fire and other damage to property
28,411
28,984
(9,033)
(6,267)
(5,454)
8,230
Third party liability
15,912
14,337
(7,502)
(6,967)
(177)
(309)
Miscellaneous
381
334
58
(72)
(63)
257
Total Direct Business
50,851
48,643
(21,506)
(14,778)
(5,750)
6,609
Reinsurance acceptances
66,195
79,697
(46,834)
(15,524)
(16,207)
1,132
Total
117,046
128,340
(68,340)
(30,302)
(21,957)
7,741
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 and damage to property of
which is:
Energy
-
-
-
-
-
-
Specialties
194
169
(24)
(42)
5
108
Third party liability of which is:
Energy
-
-
-
-
-
-
SYNDICATE 1947
37
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
5.
Analysis of underwriting result (continued)
2023
Gross
premiums
written
Gross
premiums
earned
Gross
claims
incurred
Gross
operating
expenses
Reinsurance
balance
Underwritin
g result
£000
£000
£000
£000
£000
£000
Additional analysis
Fire and damage to property of
which is:
Energy
-
-
-
-
-
-
Specialties
96
105
(1)
(22)
(32)
50
Third party liability of which is:
Energy
-
-
-
-
-
-
The geographical analysis of gross premiums written by destination is as follows:
Destination
2024
2023
£000
£000
United Kingdom
44,925
40,786
European Union Member States
3,955
4,397
US
59,712
47,777
India
105
6,407
Canada
8,842
4,988
Rest of the world
12,989
12,691
Total gross premiums written
130,528
117,046
All premiums were concluded in the UK.
6.
Net operating expenses
Net operating expenses
2024
2023
£000
£000
Acquisition costs
27,746
22,974
Change in deferred acquisition costs
(2,441)
89
Administrative expenses
8,210
5,442
Members’ standard personal expenses
4,047
1,797
Reinsurance commissions and profit participation
-
39
Total net operating expenses
37,562
30,341
Total commissions for direct insurance business for the year amounted to:
Commissions on direct business
2024
2023
£000
£000
Total commission for direct insurance business
11,433
9,225
SYNDICATE 1947
38
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
6.
Net operating expenses (continued)
Administrative expenses include:
Auditors Remuneration
2024
2023
£000
£000
Auditor’s remuneration:
fees payable to the Syndicate's auditor for the audit of these financial
statements
160
161
fees payable to the Syndicate's auditor and its associates in respect of other
services pursuant to legislation
200
178
Total auditor’s remuneration
360
339
7.
Key management personnel compensation
The Directors of HMA received remuneration from Hamilton UK Services Limited, none of which is directly
charged to the Syndicate.
No other director related compensation or amounts considered to represent key management personnel
compensation was charged to the Syndicate.
The active underwriter received the following remuneration charged as a syndicate exposure:
Active Underwriter
2024
2023
£000
£000
Emoluments
532
422
8.
Staff numbers and costs
All staff were employed by Hamilton UK Services Limited, except for the following who were seconded by
GIC Re UK Branch and GIC Head Office:
Staff Numbers
2024
2023
Number
Number
Administration and finance
1
1
Underwriting
9
8
Claims
3
2
Other
4
4
Total
17
15
The following amounts were recharged to the Syndicate in respect of seconded staff (there are no direct
recharges of staff costs from HMA):
Staff Costs
2024
2023
£000
£000
Wages and salaries
3,057
1,896
Social security costs
400
270
Pension costs
259
143
Total
3,716
2,309
SYNDICATE 1947
39
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
9.
Investment return
Investment return on Syndicate investment assets
2024
2023
£000
£000
£0
Interest and similar income
From financial instruments designated at fair value through profit or loss
Interest and similar income
2,505
2,756
Interest on cash at bank
1,188
240
Other income from investments
From financial instruments designated at fair value through profit or loss
Gains on the realisation of investments
1,209
30
Losses on the realisation of investments
(174)
(431)
Unrealised gains on investments
221
2,207
Unrealised losses on investments
(4)
(462)
Investment management expenses
(65)
(61)
Total investment return
4,880
4,279
Transferred to the technical account from the non-technical account
4,880
4,279
An investment return of £4.9m was allocated to the technical account. The investment return was wholly
allocated to the technical account.
10. Financial investments
Carrying value
Cost
Distribution
2024
2023
(restated)*
2024
2023
(restated)*
£000
£000
£000
£000
Shares and other variable yield securities and units in unit
trusts
21,329
9,476
21,329
9,476
Debt securities and other fixed income securities
95,803
81,073
96,111
81,642
Deposits with ceded undertakings
17
19
17
19
Syndicate loans to central fund
1,031
1,291
1,031
1,291
Other investments
2,193
1,696
2,193
1,696
Total financial investments
120,373
93,555
120,681
94,124
*
The 2023 comparative has been restated. Refer to Note 1 – Basis of preparation for further details.
The Syndicate classifies its financial instruments held at fair value in the balance sheet using a fair value
hierarchy, as follows:
SYNDICATE 1947
40
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
10. Financial Investments (continued)
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
Assets held
at amortised
cost
Total
£000
£000
£000
£000
£000
Shares and other variable yield securities
and units in unit trusts
21,329
-
-
-
21,329
Debt securities and other fixed income
securities
-
95,803
-
-
95,803
Deposits with ceded undertakings
17
-
-
-
17
Syndicate loans to central fund
-
-
1,031
-
1,031
Other investments
20
2,173
-
-
2,193
Total financial Investments
21,366
97,976
1,031
-
120,373
Total
21,366
97,976
1,031
-
120,373
*
The 2023 comparative has been restated. Refer to Note 1 – Basis of preparation for further details.
Level 1
Included in the level 1 category are financial assets that are measured by reference to published quotes
in an active market. A financial instrument is regarded as quoted in an active market if quoted prices
are readily and regularly available from an exchange, dealer, broker, industry syndicate, pricing service
or regulatory agency and those prices represent actual and regularly occurring market transactions on
an arm’s length basis.
Level 2
Included in the level 2 category are financial assets measured using a valuation technique based on
assumptions that are supported by prices from observable current market transactions. For example,
assets for which pricing is obtained via pricing services but where prices have not been determined in
an active market, financial assets with fair values based on broker quotes, investments in private equity
funds with fair values obtained via fund managers and assets that are valued using the Syndicate’s own
models whereby the significant inputs into the assumptions are market observable.
Level 3
Included in the level 3 category are financial assets measured using a valuation technique (model)
based on assumptions that are neither supported by prices from observable current market
transactions in the same instrument nor are they based on available market data. Therefore,
observable inputs reflect the Syndicate’s own assumptions about the assumptions that market
participants would use in pricing the asset.
These inputs are developed based on the best information
available, which might include the Syndicate’s own data.
2023 (restated)*
Level 1
Level 2
Level 3
Assets held
at amortised
cost
Total
£000
£000
£000
£000
£000
Shares and other variable yield securities
and units in unit trusts
9,476
-
-
-
9,476
Debt securities and other fixed income
securities
-
81,073
-
-
81,073
Deposits with ceding undertakings
19
-
-
-
19
Syndicate loans to central fund
-
-
1,291
-
1,291
Other investments
7
1,689
-
-
1,696
Total financial Investments
9,502
82,762
1,291
-
93,555
Total
9,502
82,762
1,291
-
93,555
SYNDICATE 1947
41
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
10. Financial investments (continued)
Other investments comprise overseas deposits which are lodged as a condition of conducting
underwriting business in certain countries.
The level 3 assets are loans provided by the Syndicate to the Lloyd’s Central Fund and are carried at fair
value using information provided by Lloyd’s. These instruments are not tradeable and their valuation
includes significant unobservable inputs.
11. Debtors arising out of direct insurance operations
Debtors arising out of direct insurance operations
2024
2023
£000
£000
Due within one year
8,315
13,878
Due after one year
930
781
Total
9,245
14,659
12. Debtors arising out of reinsurance operations
Debtors arising out of reinsurance operations
2024
2023
(restated)*
£000
£000
Due within one year
46,076
65,418
Due after one year
588
338
Total
46,664
65,756
*
The 2023 comparative has been restated. Refer to Note 1 – Basis of preparation for further details.
13. Other debtors
Other debtors
2024
2023
£000
£000
Other debtors
-
23
14. Other assets
Other assets
2024
2023
£000
£000
Prepaid ceded premiums
2,052
-
Ceded quota share debtor
83
-
Total
2,135
-
The prepaid ceded premiums are to be allocated to the 2025 underwriting year of account when opened.
The ceded quota share debtor is due for settlement under the natural course of business.
SYNDICATE 1947
42
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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:
Deferred acquisition costs
2024
2023
Gross
Reinsurance
Net
Gross
Reinsurance
Net
£000
£000
£000
£000
£000
£000
Balance at 1 January
8,573
-
8,573
9,038
-
9,038
Incurred deferred acquisition costs
25,304
-
25,304
23,102
-
23,102
Amortised deferred acquisition costs
(22,863)
-
(22,863)
(23,191)
-
(23,191)
Foreign exchange movements
(32)
-
(32)
(376)
-
(376)
Balance at 31 December
10,982
-
10,982
8,573
-
8,573
16. Claims development
In setting claims provisions, the Syndicate gives consideration to the probability and magnitude of future
experience being more adverse than assumed and exercises a degree of caution in setting reserves where
there is considerable uncertainty. In general, the uncertainty associated with the ultimate claims
experience in an underwriting year is greatest when the underwriting year is at an early stage of
development and the margin necessary to provide the necessary confidence in the provisions adequacy is
relatively at its highest. As claims develop, and the ultimate cost of claims becomes more certain, the
relative level of margin maintained should decrease. However, due to the uncertainty inherent in the
estimation process, the actual overall claim provision may not always be in surplus.
Gross:
Pure underwriting
year
2018
2019
2020
2021
2022
2023
2024
Total
£000
£000
£000
£000
£000
£000
£000
£000
Estimate of gross
claims at the end of the
underwriting year
25,137
26,715
42,133
59,121
74,673
30,209
36,100
one year later
35,329
58,844
67,142
99,784
107,042
44,527
two years later
31,565
56,079
59,382
104,072
118,111
three years later
29,336
56,586
60,397
102,579
four years later
22,445
55,904
60,193
five years later
22,437
55,967
six years later
22,414
Estimate of gross
claims reserve
22,414
55,967
60,193
102,579
118,111
44,527
36,100
439,891
Less gross claims paid
(22,321)
(52,877)
(52,817)
(69,981)
(66,468)
(10,711)
(1,796)
(276,971)
Gross claims reserve
93
3,090
7,376
32,598
51,643
33,816
34,304
162,920
SYNDICATE 1947
43
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
16. Claims development (continued)
Net:
Pure underwriting
year
2018
2019
2020
2021
2022
2023
2024
Total
£000
£000
£000
£000
£000
£000
£000
£000
Estimate of net claims
at the end of the
underwriting year
17,416
25,933
37,736
54,472
71,776
29,490
33,714
one year later
22,527
48,432
58,728
94,230
104,413
43,582
two years later
19,240
43,584
51,571
95,945
115,753
three years later
18,514
42,517
52,558
94,160
four years later
14,552
43,117
52,249
five years later
14,547
43,179
six years later
14,516
Estimate of net claims
reserve
14,516
43,179
52,249
94,160
115,753
43,582
33,714
397,153
Less net claims paid
(14,423)
(40,415)
(45,498)
(66,661)
(66,468)
(10,711)
(1,796)
(245,972)
Net claims reserve
93
2,764
6,751
27,499
49,285
32,871
31,918
151,181
17. 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.
Claims outstanding
2024
2023
Gross
Reinsurance
Net
Gross
Reinsurance
Net
£000
£000
£000
£000
£000
£000
Balance at 1 January
169,218
(11,489)
157,729
181,515
(12,924)
168,591
Claims paid during the year
(65,772)
2,585
(63,187)
(72,439)
2,556
(69,883)
Expected cost of current year claims
52,970
(2,469)
50,501
56,953
92
57,045
Change in estimates of prior year
provisions
5,651
(248)
5,403
11,387
(1,925)
9,462
Foreign exchange movements
853
(118)
734
(8,198)
712
(7,486)
Balance at 31 December
162,920
(11,739)
151,181
169,218
(11,489)
157,729
Unearned premiums
2024
2023
Gross
Reinsurance
Net
Gross
Reinsurance
Net
£000
£000
£000
£000
£000
£000
Balance at 1 January
41,818
(744)
41,074
55,493
(2,126)
53,367
Premiums written during the year
130,527
(23,342)
107,185
117,046
(22,451)
94,595
Premiums earned during the year
(121,972)
23,268
(98,704)
(128,340)
23,751
(104,589)
Foreign exchange movements
(444)
207
(237)
(2,381)
82
(2,299)
Balance at 31 December
49,929
(611)
49,318
41,818
(744)
41,074
Refer to Note 4 for the sensitivity analysis performed over the value of insurance liabilities, disclosed in the
accounts, to the potential movements in the assumptions applied within the technical provisions.
SYNDICATE 1947
44
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
18. Creditors arising out of reinsurance operations
Creditors arising out of reinsurance operations
2024
2023
(restated) *
£000
£000
Due within one year
4,478
11,259
*The 2023 comparative has been restated. Refer to note 23 for further details.
19. Other creditors
Other creditors
2024
2023
£000
£000
Other related party balances (non-syndicates)
751
236
20. Cash and cash equivalents
Cash and cash equivalents
2024
2023
£000
£000
Cash at bank and in hand
34,147
17,180
21. Analysis of net debt
Analysis of net debt
At 1
January
2024
Cash
flows
Acquired
Fair value
and
exchange
movements
Non-cash
changes
At 31
December
2024
Cash and cash equivalents
17,180
17,400
-
(433)
-
34,147
Analysis of net debt
At 1
January
2024
Cash
flows
Acquired
Fair value
and
exchange
movements
Non-cash
changes
At 31
December
2024
Cash and cash equivalents
16,189
1,304
-
(313)
-
17,180
22. Related parties
Capital
Underwriting capacity is provided 100% by GIC Re, India, Corporate Member Limited (“GIC”).
Managing Agent
The Syndicate is managed by Hamilton Managing Agency Limited (“HMA”).
The immediate parent
company of HMA is Hamilton UK Holdings Limited.
SYNDICATE 1947
45
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
22. Related parties (continued)
Managing Agent (continued)
During the financial year the Syndicate incurred managing agent fees of £3.0m (2023: £0.8m) and a yearly
fixed fee of £3.7m (2023: £2.7m) for the services provided to the Syndicate. In addition, Hamilton UK
Services Limited recharged costs incurred on behalf of the Syndicate of £0.8m (2023: £0.6m). At the year
end, £0.8m (2023: £0.2m) is payable to the Hamilton Group.
Syndicate 4000
The
Syndicate participates on a Space consortium managed by Syndicate 4000, which is also managed by
HMA. The management fees charged to Syndicate 1947 during the year were £0.2m (2023: £0.3m), with no
balances outstanding at year end (2023: nil).
Ultimate Parent Company
The ultimate parent company of GIC Re, India, Corporate Member Limited is General Insurance
Corporation of India, a company registered in India.
The ultimate parent company of Hamilton Managing Agency Limited is Hamilton Insurance Group, Ltd, a
company registered in Bermuda.
Transactions with the GIC Group
The Syndicate’s gross premium written includes cessions from the GIC Group (details are provided on
page 4). The Syndicate also purchases certain reinsurance programmes from the GIC Group, premiums
ceded (net of commissions) were £2.1m (2023: £2.0m).
Details of staff seconded to the Syndicate from GIC UK branch are provided in note 8.
23.
Prior year restatement
During the year ended 31 December 2024, a prior year error was identified which had resulted in Creditors
arising out of reinsurance operations being understated by £2.4m and Member’s balances being
overstated by £2.4m. This was a one-off error arising from the write-off of unsubstantiated technical
balances, following a system migration. The comparative figures in the primary statements and notes have
been restated to reflect the prior period error.
The correction of the affected financial statement line items for this prior period error is shown below:
SYNDICATE 1947
46
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
23.
Prior year restatement (continued)
Balance Sheet - Liabilities
2023
Restatements
2023 Restated
Prior year restatement
£000
£000
£000
Member’s balances
(11,503)
(2,421)
(13,924)
Total Capital and reserves
(11,503)
(2,421)
(13,924)
Provision for unearned premiums
41,818
-
41,818
Claims outstanding
169,218
-
169,218
Technical provisions
211,036
-
211,036
Creditors arising out of reinsurance operations
8,838
2,421
11,259
Reinsurers share of deferred acquisition costs
236
-
236
Creditors
9,074
2,421
11,495
Accruals & Deferred income
3,853
-
3,853
Total liabilities
223,963
2,421
226,384
Total liabilities, capital and reserves
212,460
-
212,460
24.
Post balance sheet events
A loss collection of £13.6m will be settled into Syndicate 1947 by the corporate member in June 2025.
25.
Foreign exchange rates
The following currency exchange rates have been used for principal foreign currency transactions:
Currency
2024
2023
Start of
period
rate
End of
period
rate
Average
rate
Start of
period
rate
End of
period
rate
Average
rate
GBP
EUR
USD
CAD
AUD
JPY
SYNDICATE 1947
47
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
26.
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”) and 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 PRA
requirements and resource criteria. 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 accounts by way of such capital resources. However, the managing agent is able
to make a call on the members’ FAL to meet liquidity requirements or to settle losses.