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1a Nature of operations
Beazley plc (registered number 09763575) is a public company incorporated in England and Wales. The C ompany\u2019s registered
address is 22 Bishopsgate, London, EC2N 4BQ, United Kingdom. The principal activity of the Company and its subsidiaries
(\"the Group\") is to participate as a specialist insurer which transacts primarily in commercial lines of business through its
subsidiaries and Lloyd\u2019s syndicates. The Group's consolidated financial statements for the year ended 31 December 2023
comprise the parent company, its subsidiaries and the Group\u2019s interest in associates. For the separate parent company
financial statements, refer to page 246.
1b Basis of preparation
The Group\u2019s consolidated financial statements have been prepared in accordance with UK adopted International Financial
Reporting Standards (\"IFRS\") and the requirements of the Companies Act 2006. These are prepared on the historical cost
basis, with the exception of financial assets and derivative financial instruments which are stated at their fair value, and the
defined benefit pension asset which is measured at the fair value of plan assets less the present value of the defined benefit
pension obligation. All amounts are presented in US dollars and millions, unless stated otherwise.
1c New accounting standards
International Financial Reporting Standard 17, Insurance Contracts (\u201cIFRS 17\u201d)\u202f
IFRS 17 replaces IFRS 4 for annual periods beginning on or after 01 January 2023. The Group has applied the transitional
provisions per Appendix C of IFRS 17 and taken a fully retrospective approach, restating comparative information for the year
ended 31 December 2022.
International Financial Reporting Standard 9, Financial Instruments (\u201cIFRS 9\u201d)\u202f
IFRS 9 was issued by the International Accounting Standards Board (\"IASB\") in July 2014 and became effective for accounting
periods beginning on or after 01 January 2018. The Group previously applied the amendment issued by the IASB which
exempted eligible entities from applying IFRS 9 until accounting periods beginning on or after 01 January 2023.
1d Amendments to existing standards
In the current year, the Group has applied several amendments to IFRS issued by the IASB and endorsed by the UK
Endorsement Board (\"UKEB\") that are mandatorily effective for accounting periods beginning on or after 01 January 2023. Of
these, the following amendments have not had a material impact on the Group on adoption:
\u2022 Amendment to IAS 8 - Definition of Accounting Estimates;
\u2022 Amendment to IAS 1 - Disclosure of Accounting Policies; and
\u2022 Amendment to IAS 12 - Deferred Tax related to Assets and Liabilities arising from a Single Transaction.
The Group has also applied the amendment to IAS 12 - International Tax Reform - Pillar Two Model Rules from 01 January
2023, as issued by the IASB and endorsed by the UKEB. This amendment was issued in response to the Pillar Two framework
issued by the Organisation for Economic Co-operation and Development, which aims to ensure that large multinational
enterprises pay a minimum effective corporate tax rate of 15% on the income arising in each jurisdiction in which they operate.
The amendment introduces a mandatory temporary exemption from recognising and disclosing deferred taxes arising from the
Pillar Two rules. For jurisdictions in which legislation has been substantively enacted, the Group has applied this exemption.
Refer to Note 13 for further details.
The IASB has issued a number of other minor amendments to standards which are not yet effective at the reporting date and
have not been applied in preparing these financial statements. These have been endorsed by the UKEB with an effective date of
01 January 2024 unless noted otherwise below. None of these are expected to have a material impact on the Group.
\u2022 Amendments to IAS 1 - Classification of Liabilities as Current or Non-Current and Non-Current Liabilities with Covenants;
\u2022 Amendment to IFRS 16 - Lease Liability in a Sale and Leaseback;
\u2022 Amendments to IAS 7 and IFRS 7 - Supplier Finance Arrangement Disclosures;
\u2022 Amendment to IAS 21 - Lack of exchangeability (not yet endorsed, effective date 01 January 2025); and
\u2022 Amendments to IFRS 10 and IAS 28 - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
(not yet endorsed, effective date postponed indefinitely).
1 General information continued
1e Going concern
The consolidated financial statements of Beazley plc have been prepared on a going concern basis. In adopting the going
concern basis, the Board has reviewed the Group\u2019s current and forecast solvency and liquidity positions for the 12 months from
the date that the financial statements are authorised for issue. The Group\u2019s business activities, together with the factors likely
to affect its future development, performance, and position, are set out in the strategic report contained in this Annual Report &
Accounts. In addition, the risk report and financial review includes the Group\u2019s risk management objectives and the Group\u2019s
objectives, policies and processes for managing its capital.
In assessing the Group\u2019s going concern position as at 31 December 2023, the Directors have considered a number of factors,
including:
\u2022 the current statement of financial position and in particular the adequacy of technical provisions;
\u2022 the Group\u2019s strategic and financial plan, taking account of possible changes in trading performance and funding retention;
\u2022 the Group's capital forecast, which takes into account the capital requirements of major subsidiaries and their current
external credit rating and outlook;
\u2022 the Group's liquidity at both a Group and material Subsidiary level;
\u2022 stress testing and scenario analysis assessing the impact of natural and cyber catastrophe events on the Group's capital and
liquidity positions and reverse stress test scenarios designed to render the business model unviable; and
\u2022 other qualitative factors, such as the market environment, the Group's ability to raise additional capital and/or liquidity, and
climate change.
For further details, refer to the Viability Statement on Page 73 of this Annual Report & Accounts.
As a result of the assessment, no material uncertainty in relation to going concern has been identified. As at its most recent
regulatory submission, the Group\u2019s capital ratios and its total capital resources are comfortably in excess of regulatory solvency
requirements, and internal stress testing indicates that the Group can withstand severe economic and competitive stresses.
Based on the going concern assessment performed, the Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence over a period of 12 months from the date of this report being authorised for
issue, and therefore believe that the Group is well placed to manage its business risks successfully. Accordingly, they continue
to adopt the going concern basis in preparing the consolidated financial statements.", "dimensions": { "concept": "ifrs-full:DisclosureOfGoingConcernExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-328": { "value": "
1a Nature of operations
Beazley plc (registered number 09763575) is a public company incorporated in England and Wales. The C ompany\u2019s registered
address is 22 Bishopsgate, London, EC2N 4BQ, United Kingdom. The principal activity of the Company and its subsidiaries
(\"the Group\") is to participate as a specialist insurer which transacts primarily in commercial lines of business through its
subsidiaries and Lloyd\u2019s syndicates. The Group's consolidated financial statements for the year ended 31 December 2023
comprise the parent company, its subsidiaries and the Group\u2019s interest in associates. For the separate parent company
financial statements, refer to page 246.
1b Basis of preparation
The Group\u2019s consolidated financial statements have been prepared in accordance with UK adopted International Financial
Reporting Standards (\"IFRS\") and the requirements of the Companies Act 2006. These are prepared on the historical cost
basis, with the exception of financial assets and derivative financial instruments which are stated at their fair value, and the
defined benefit pension asset which is measured at the fair value of plan assets less the present value of the defined benefit
pension obligation. All amounts are presented in US dollars and millions, unless stated otherwise.
1c New accounting standards
International Financial Reporting Standard 17, Insurance Contracts (\u201cIFRS 17\u201d)\u202f
IFRS 17 replaces IFRS 4 for annual periods beginning on or after 01 January 2023. The Group has applied the transitional
provisions per Appendix C of IFRS 17 and taken a fully retrospective approach, restating comparative information for the year
ended 31 December 2022.
International Financial Reporting Standard 9, Financial Instruments (\u201cIFRS 9\u201d)\u202f
IFRS 9 was issued by the International Accounting Standards Board (\"IASB\") in July 2014 and became effective for accounting
periods beginning on or after 01 January 2018. The Group previously applied the amendment issued by the IASB which
exempted eligible entities from applying IFRS 9 until accounting periods beginning on or after 01 January 2023.
1d Amendments to existing standards
In the current year, the Group has applied several amendments to IFRS issued by the IASB and endorsed by the UK
Endorsement Board (\"UKEB\") that are mandatorily effective for accounting periods beginning on or after 01 January 2023. Of
these, the following amendments have not had a material impact on the Group on adoption:
\u2022 Amendment to IAS 8 - Definition of Accounting Estimates;
\u2022 Amendment to IAS 1 - Disclosure of Accounting Policies; and
\u2022 Amendment to IAS 12 - Deferred Tax related to Assets and Liabilities arising from a Single Transaction.
The Group has also applied the amendment to IAS 12 - International Tax Reform - Pillar Two Model Rules from 01 January
2023, as issued by the IASB and endorsed by the UKEB. This amendment was issued in response to the Pillar Two framework
issued by the Organisation for Economic Co-operation and Development, which aims to ensure that large multinational
enterprises pay a minimum effective corporate tax rate of 15% on the income arising in each jurisdiction in which they operate.
The amendment introduces a mandatory temporary exemption from recognising and disclosing deferred taxes arising from the
Pillar Two rules. For jurisdictions in which legislation has been substantively enacted, the Group has applied this exemption.
Refer to Note 13 for further details.
The IASB has issued a number of other minor amendments to standards which are not yet effective at the reporting date and
have not been applied in preparing these financial statements. These have been endorsed by the UKEB with an effective date of
01 January 2024 unless noted otherwise below. None of these are expected to have a material impact on the Group.
\u2022 Amendments to IAS 1 - Classification of Liabilities as Current or Non-Current and Non-Current Liabilities with Covenants;
\u2022 Amendment to IFRS 16 - Lease Liability in a Sale and Leaseback;
\u2022 Amendments to IAS 7 and IFRS 7 - Supplier Finance Arrangement Disclosures;
\u2022 Amendment to IAS 21 - Lack of exchangeability (not yet endorsed, effective date 01 January 2025); and
\u2022 Amendments to IFRS 10 and IAS 28 - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
(not yet endorsed, effective date postponed indefinitely).
1 General information continued
1e Going concern
The consolidated financial statements of Beazley plc have been prepared on a going concern basis. In adopting the going
concern basis, the Board has reviewed the Group\u2019s current and forecast solvency and liquidity positions for the 12 months from
the date that the financial statements are authorised for issue. The Group\u2019s business activities, together with the factors likely
to affect its future development, performance, and position, are set out in the strategic report contained in this Annual Report &
Accounts. In addition, the risk report and financial review includes the Group\u2019s risk management objectives and the Group\u2019s
objectives, policies and processes for managing its capital.
In assessing the Group\u2019s going concern position as at 31 December 2023, the Directors have considered a number of factors,
including:
\u2022 the current statement of financial position and in particular the adequacy of technical provisions;
\u2022 the Group\u2019s strategic and financial plan, taking account of possible changes in trading performance and funding retention;
\u2022 the Group's capital forecast, which takes into account the capital requirements of major subsidiaries and their current
external credit rating and outlook;
\u2022 the Group's liquidity at both a Group and material Subsidiary level;
\u2022 stress testing and scenario analysis assessing the impact of natural and cyber catastrophe events on the Group's capital and
liquidity positions and reverse stress test scenarios designed to render the business model unviable; and
\u2022 other qualitative factors, such as the market environment, the Group's ability to raise additional capital and/or liquidity, and
climate change.
For further details, refer to the Viability Statement on Page 73 of this Annual Report & Accounts.
As a result of the assessment, no material uncertainty in relation to going concern has been identified. As at its most recent
regulatory submission, the Group\u2019s capital ratios and its total capital resources are comfortably in excess of regulatory solvency
requirements, and internal stress testing indicates that the Group can withstand severe economic and competitive stresses.
Based on the going concern assessment performed, the Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence over a period of 12 months from the date of this report being authorised for
issue, and therefore believe that the Group is well placed to manage its business risks successfully. Accordingly, they continue
to adopt the going concern basis in preparing the consolidated financial statements.", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-330": { "value": "Beazley", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-331": { "value": "plc", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-332": { "value": "England and Wales", "dimensions": { "concept": "ifrs-full:CountryOfIncorporation", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-333": { "value": "22 Bishopsgate, London, EC2N 4BQ, United Kingdom", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-334": { "value": "United Kingdom", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-335": { "value": "United Kingdom", "dimensions": { "concept": "ifrs-full:PrincipalPlaceOfBusiness", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-336": { "value": "to participate as a specialist insurer which transacts primarily in commercial lines of business through its subsidiaries and Lloyd\u2019s syndicates", "dimensions": { "concept": "ifrs-full:DescriptionOfNatureOfEntitysOperationsAndPrincipalActivities", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-338": { "value": "
The Group\u2019s consolidated financial statements have been prepared in accordance with UK adopted International Financial
Reporting Standards (\"IFRS\") and the requirements of the Companies Act 2006. These are prepared on the historical cost
basis, with the exception of financial assets and derivative financial instruments which are stated at their fair value, and the
defined benefit pension asset which is measured at the fair value of plan assets less the present value of the defined benefit
pension obligation. All amounts are presented in US dollars and millions, unless stated otherwise.", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-337": { "value": "
The Group\u2019s consolidated financial statements have been prepared in accordance with UK adopted International Financial
Reporting Standards (\"IFRS\") and the requirements of the Companies Act 2006. These are prepared on the historical cost
basis, with the exception of financial assets and derivative financial instruments which are stated at their fair value, and the
defined benefit pension asset which is measured at the fair value of plan assets less the present value of the defined benefit
pension obligation. All amounts are presented in US dollars and millions, unless stated otherwise.", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-340": { "value": "
1c New accounting standards
International Financial Reporting Standard 17, Insurance Contracts (\u201cIFRS 17\u201d)\u202f
IFRS 17 replaces IFRS 4 for annual periods beginning on or after 01 January 2023. The Group has applied the transitional
provisions per Appendix C of IFRS 17 and taken a fully retrospective approach, restating comparative information for the year
ended 31 December 2022.
International Financial Reporting Standard 9, Financial Instruments (\u201cIFRS 9\u201d)\u202f
IFRS 9 was issued by the International Accounting Standards Board (\"IASB\") in July 2014 and became effective for accounting
periods beginning on or after 01 January 2018. The Group previously applied the amendment issued by the IASB which
exempted eligible entities from applying IFRS 9 until accounting periods beginning on or after 01 January 2023.
1d Amendments to existing standards
In the current year, the Group has applied several amendments to IFRS issued by the IASB and endorsed by the UK
Endorsement Board (\"UKEB\") that are mandatorily effective for accounting periods beginning on or after 01 January 2023. Of
these, the following amendments have not had a material impact on the Group on adoption:
\u2022 Amendment to IAS 8 - Definition of Accounting Estimates;
\u2022 Amendment to IAS 1 - Disclosure of Accounting Policies; and
\u2022 Amendment to IAS 12 - Deferred Tax related to Assets and Liabilities arising from a Single Transaction.
The Group has also applied the amendment to IAS 12 - International Tax Reform - Pillar Two Model Rules from 01 January
2023, as issued by the IASB and endorsed by the UKEB. This amendment was issued in response to the Pillar Two framework
issued by the Organisation for Economic Co-operation and Development, which aims to ensure that large multinational
enterprises pay a minimum effective corporate tax rate of 15% on the income arising in each jurisdiction in which they operate.
The amendment introduces a mandatory temporary exemption from recognising and disclosing deferred taxes arising from the
Pillar Two rules. For jurisdictions in which legislation has been substantively enacted, the Group has applied this exemption.
Refer to Note 13 for further details.
The IASB has issued a number of other minor amendments to standards which are not yet effective at the reporting date and
have not been applied in preparing these financial statements. These have been endorsed by the UKEB with an effective date of
01 January 2024 unless noted otherwise below. None of these are expected to have a material impact on the Group.
\u2022 Amendments to IAS 1 - Classification of Liabilities as Current or Non-Current and Non-Current Liabilities with Covenants;
\u2022 Amendment to IFRS 16 - Lease Liability in a Sale and Leaseback;
\u2022 Amendments to IAS 7 and IFRS 7 - Supplier Finance Arrangement Disclosures;
\u2022 Amendment to IAS 21 - Lack of exchangeability (not yet endorsed, effective date 01 January 2025); and
\u2022 Amendments to IFRS 10 and IAS 28 - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
(not yet endorsed, effective date postponed indefinitely).
2a IFRS 17
i. Transition
IFRS 17 Insurance Contracts is a new accounting standard applicable for reporting periods beginning on or after 01 January
2023. The accounting policies applied by the Group on adoption of IFRS 17 have been disclosed in Note 3b.
The Group has applied the transitional provisions under IFRS 17, meaning changes in accounting policies resulting from the
adoption of IFRS 17 have been applied on a fully retrospective basis. This required assumptions to be made (for example, in
relation to discount rates and the risk adjustment for non-financial risk) based on what management\u2019s intentions would have
been in previous periods.
Under the fully retrospective approach, the Group has made the following changes to classification and measurement as at 01
January 2022.
\u2022 The Group has elected to apply the General Measurement Model (\u201cGMM\u201d) to the insurance and reinsurance contracts that it
issues, and applies the GMM with certain prescribed modifications to the reinsurance contracts that it holds. This is the
default measurement model under IFRS 17.
\u2022 Insurance contracts issued are identified and recognised by management as those contracts under which significant
insurance risk is accepted from another party (either the policyholder or the cedant) by agreeing to compensate the third party
if a specified uncertain future event (\"the insured event\") adversely affects the policyholder or cedant. This category also
includes some reinsurance contracts which are issued by the Group.
\u2022 Reinsurance contracts held are those under which the Group acts as cedant as opposed to reinsurer. These are measured
separately from the underlying contracts to which the arrangement relates.
\u2022 The Group allocates insurance contracts to portfolios based on whether they share similar risk characteristics and are
managed together. Generally, all insurance contracts within a product line (being similar types of underlying coverage and
geography) represent a portfolio of contracts.
\u2022 For each portfolio, contracts issued within a calendar year (i.e. annual cohorts) are further disaggregated into groups based
on those which are/are not onerous at initial recognition. The non-onerous contracts are further broken down into those which
do and do not have a significant possibility of becoming onerous subsequently. Note that onerous here means that the
expected costs of meeting contractual obligations will exceed the expected economic benefits.
\u2022 These groups represent the level of aggregation at which insurance contracts are initially recognised and measured, and such
groupings are not subsequently reconsidered.
\u2022 The Group measures its insurance contracts issued and reinsurance contracts held as the sum of the following:
\u2013 the estimated present value of future cash flows (\"PVFCF\"), discounted in order to account for the time value of money;
\u2013 a risk adjustment for non-financial risks that are expected to arise as the Group fulfils its contractual obligations; and
\u2013 a contractual service margin (\u201cCSM\u201d), which represents unearned profit.
\u2022 The Group recognises profit through release of the CSM for a group of insurance contracts over each period as insurance
contract services are provided. The amount of CSM released is based on assumptions around coverage units, which typically
correspond to the length of cover on a policy. Assumptions include the number of coverage units included in a group of
insurance contracts, the allocation of CSM to each coverage unit, and the number of coverage units provided in the period. If
a group of contracts is expected to be onerous on day one or subsequently becomes so, a loss is recognised immediately in
the profit or loss account.
\u2022 Insurance contracts issued can also be represented as the sum of the liability for remaining coverage and the liability for
incurred claims. For portfolios of issued insurance contracts that are onerous, a loss component is included within the liability
for remaining coverage and recognised in profit or loss upon initial recognition. Reinsurance contracts held are comprised of
the asset for remaining coverage (which contains a loss recovery component) in addition to the asset for incurred claims.
The following changes have been made to the presentation of the Group's financial statement on adoption of IFRS 17:
\u2022 Balances that existed under IFRS 4 and continue to exist under the new standard, such as reinsurance premiums payable,
have been reclassified.
\u2022 Balances that would not have existed if IFRS 17 had always been applied, primarily being deferred acquisition costs (\"DAC\")
and the unearned premium reserve (\u201cUPR\u201d), have been derecognised.
\u2022 Groups of insurance and reinsurance contracts have been identified, recognised and measured as if IFRS 17 had always
been applied. This has resulted in insurance and reinsurance contract assets and liabilities being recognised on the balance
sheet.
2 Impact of new accounting standards continued
\u2022 Insurance revenue, insurance finance income/expenses, and net income/expenses from reinsurance contracts held
(comprised of the allocation of reinsurance premium and amounts recoverable from reinsurers for incurred claims) have been
recognised in the statement of profit or loss.
\u2022 The net effect of adopting IFRS 17 as at 01 January 2022 has been recognised through the statement of changes in equity.
Refer to Section ii below for further details.
ii. Opening equity adjustment
The following table sets out the impact of the adoption of IFRS 17 on the Group\u2019s consolidated statement of financial position
as at 01 January 2022, with the net position posted as an adjustment to retained earnings.
The overall increase in equity is largely due to the following reclassification and measurement differences between IFRS 4 and
IFRS 17.
\u2022 There is a requirement under IFRS 17 to discount technical provisions to reflect the time value of money, whereas under IFRS
4 no such discounting was applied. This change therefore causes a timing difference in the way that profit is recognised as
the discount unwinds throughout the claims settlement period. There will initially be a favourable impact on profit as the
discount is established, followed by an unfavourable impact as the initial credit from discounting unwinds (assuming a
positive interest rate environment).
\u2022 In order to cover claims expected to be paid, the Group has historically held reserves within a range of 5-10% over an
actuarial estimate. This actuarial estimate itself had an embedded level of prudence. Under IFRS 17, reserves are held
at a best estimate with an additional risk adjustment calculated to a specified confidence level. This percentile indicates
where reserves sit compared to the best estimate and the capital requirement. Under IFRS 4 at the date of transition,
the level of prudence within reserves equated to a confidence level at the upper end of an 80th to 90th percentile range.
Under IFRS 17, the confidence level on transition is in the middle of this range. Accordingly, the provision for claims
recognised on adoption of IFRS 17 is lower than under IFRS 4.
\u2022 Under IFRS 4, the unearned premium reserve and deferred acquisition costs were treated as non-monetary items and were
translated to the Group\u2019s functional currency using historic exchange rates. Under IFRS 17, all insurance contract balances
are considered to be monetary items and are revalued using spot rates at each reporting date.
\u2022 Balances which existed under IFRS 4 have been reclassified. This includes reinsurance premiums payable and insurance
receivables and payables (all of which are now measured under IFRS 17).
\u2022 Other amounts that would not have existed if IFRS 17 had always been applied (namely DAC and UPR) have been
derecognised.
\u2022 In addition, the adoption of IFRS 17 has caused a number of temporary differences for tax purposes, resulting in the
recognition of an additional deferred tax asset of $1.7m and deferred tax liability of $15.0m as at 01 January 2022. Refer to
Note 25 for further details.
2 Impact of new accounting standards continued
Consolidated statement of financial position
31 December 2021 \u00a0
(previously reported)
IFRS 17 reclassification
IFRS 17 measurement
01 January 2022
(restated under\u00a0IFRS 17)
$m
$m
$m
$m
Assets
Intangible assets
123.5
\u2014
\u2014
123.5
Plant and equipment
19.2
\u2014
\u2014
19.2
Right-of-use assets
75.5
\u2014
\u2014
75.5
Deferred tax asset
16.3
\u2014
1.7
18.0
Deferred acquisition costs
477.8
(477.8)
\u2014
\u2014
Retirement benefit asset
18.1
\u2014
\u2014
18.1
Reinsurance assets
2,386.4
(2,386.4)
\u2014
\u2014
Insurance receivables
1,696.1
(1,696.1)
\u2014
\u2014
Reinsurance contract assets
\u2014
2,386.4
(712.1)
1,674.3
Financial assets at fair value
7,283.5
\u2014
\u2014
7,283.5
Other assets
107.3
130.8
\u2014
238.1
Current tax asset
11.9
\u2014
\u2014
11.9
Cash and cash equivalents
591.8
\u2014
\u2014
591.8
Total assets
12,807.4
(2,043.1)
(710.4)
10,053.9
Liabilities
Insurance liabilities
8,871.8
(8,871.8)
\u2014
\u2014
Insurance contract liabilities
\u2014
6,828.7
(269.2)
6,559.5
Reinsurance contract liabilities
\u2014
655.3
(515.6)
139.7
Financial liabilities
554.7
\u2014
\u2014
554.7
Lease liabilities
84.3
\u2014
\u2014
84.3
Deferred tax liabilities
\u2014
\u2014
15.0
15.0
Current tax liability
24.5
\u2014
\u2014
24.5
Other liabilities
1,141.3
(655.3)
\u2014
486.0
Total liabilities
10,676.6
(2,043.1)
(769.8)
7,863.7
Equity
Share capital
42.9
\u2014
\u2014
42.9
Share premium
5.3
\u2014
\u2014
5.3
Foreign currency translation
(97.2)
\u2014
\u2014
(97.2)
Other reserves
(4.0)
\u2014
\u2014
(4.0)
Retained earnings
2,183.8
\u2014
59.4
2,243.2
Total equity
2,130.8
\u2014
59.4
2,190.2
Total liabilities and equity
12,807.4
(2,043.1)
(710.4)
10,053.9
2 Impact of new accounting standards continued
2b IFRS 9
i. Transition
IFRS 9 Financial Instruments is a new accounting standard applied prospectively by the Group from 01 January 2023. The
classification and measurement of financial instruments under IFRS 9 has been determined based on facts and circumstances
that existed at this date. For example, if a financial asset had low credit risk as at 01 January 2023, then the credit risk of that
asset is considered not to have increased significantly since initial recognition.
ii. Changes to the classification and measurement of financial assets
IFRS 9 requires all financial assets to be classified either at fair value through profit or loss (\"FVTPL\"), fair value through other
comprehensive income (\"FVOCI\"), or amortised cost. This has resulted in some reclassifications when compared to the
measurement categories under IAS 39. Namely, cash and cash equivalents has been reclassified from FVTPL (designated) to
amortised cost, other receivables has been reclassified from loans and receivables to amortised cost, and all other financial
assets have been reclassified from FVTPL (designated) to FVTPL (mandatory). Included below is a reconciliation between the
carrying amounts under IAS 39 as at 31 December 2022 and the balances reported under IFRS 9 as at 01 January 2023. The
equity adjustment on adoption of IFRS 9 has been included at Section iv.
Under
IAS 39
Reclassification
ECL
Under
IFRS 9
$m
$m
$m
$m
Total financial assets at fair value through profit or loss
Fixed and floating rate debt securities:
\u2013 Government issued
5,006.3
\u2014
\u2014
5,006.3
\u2013 Corporate bonds
\u2013 Investment grade
2,050.5
\u2014
\u2014
2,050.5
\u2013 High yield
308.7
\u2014
\u2014
308.7
Syndicate loans
32.5
\u2014
\u2014
32.5
Equity funds
159.4
\u2014
\u2014
159.4
Hedge funds
530.6
\u2014
\u2014
530.6
Illiquid assets
222.9
\u2014
\u2014
222.9
Derivative financial assets
34.7
\u2014
\u2014
34.7
Cash and cash equivalents
652.5
(652.5)
\u2014
\u2014
Total financial assets at fair value through profit or loss
8,998.1
(652.5)
\u2014
8,345.6
Financial assets at amortised cost
Cash and cash equivalents
\u2014
652.5
\u2014
652.5
Amounts due from managed syndicates and other receivables
181.8
\u2014
(1.3)
180.5
Total financial assets at amortised cost
181.8
652.5
(1.3)
833.0
Financial liabilities at fair value through profit or loss
Derivative financial liabilities
14.5
\u2014
\u2014
14.5
Total financial liabilities at fair value through profit or loss
14.5
\u2014
\u2014
14.5
Financial liabilities at amortised cost
Tier 2 subordinated debt (2026)
249.4
\u2014
\u2014
249.4
Tier 2 subordinated debt (2029)
298.6
\u2014
\u2014
298.6
Other liabilities
524.0
\u2014
\u2014
524.0
Total financial liabilities at amortised cost
1,072.0
\u2014
\u2014
1,072.0
2 Impact of new accounting standards continued
iii. Expected credit losses (\"ECLs\")
The table below shows the receivables for which loss allowances have been measured using a lifetime ECL (as permitted by the
simplified approach) on the adoption of IFRS 9 as at 01 January 2023. These loss allowances have been estimated by applying
inputs and assumptions in relation to the following:
\u2022 the period of assessment for the receivables;
\u2022 the creditworthiness of counterparties;
\u2022 the probability of default by these counterparties over the lifetime of the assets; and
\u2022 the loss given default based on historical rates.
We have determined that a reasonable change in any of these assumptions would not have a material impact on the ECLs
recognised in the financial statements.
Before ECL
ECL
Net
as at 01 January 2023
$m
$m
$m
Investment receivables
53.9
(0.3)
53.6
Accrued investment income
35.7
(0.3)
35.4
Other receivables
92.2
(0.7)
91.5
Total amounts due from managed syndicates and other receivables
181.8
(1.3)
180.5
iv. Opening equity adjustment
The difference between the carrying amounts of the Group's financial assets before and after the adoption of IFRS 9 has been
posted as an opening adjustment to retained earnings. The adjustment is comprised of $1.3m in ECLs offset by $0.3m in
deferred tax assets \u2013 refer to Section b(iii) above for further details.
31 December 2022
IFRS 9 adjustment
01 January 2023
$m
$m
$m
Assets
Deferred tax asset
30.8
0.3
31.1
Other assets
204.2
(1.3)
202.9
Total impact on assets
235.0
(1.0)
234.0
Equity
Retained earnings
3,016.1
(1.0)
3,015.1
Total impact on equity
3,016.1
(1.0)
3,015.1
", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-339": { "value": "
1c New accounting standards
International Financial Reporting Standard 17, Insurance Contracts (\u201cIFRS 17\u201d)\u202f
IFRS 17 replaces IFRS 4 for annual periods beginning on or after 01 January 2023. The Group has applied the transitional
provisions per Appendix C of IFRS 17 and taken a fully retrospective approach, restating comparative information for the year
ended 31 December 2022.
International Financial Reporting Standard 9, Financial Instruments (\u201cIFRS 9\u201d)\u202f
IFRS 9 was issued by the International Accounting Standards Board (\"IASB\") in July 2014 and became effective for accounting
periods beginning on or after 01 January 2018. The Group previously applied the amendment issued by the IASB which
exempted eligible entities from applying IFRS 9 until accounting periods beginning on or after 01 January 2023.
1d Amendments to existing standards
In the current year, the Group has applied several amendments to IFRS issued by the IASB and endorsed by the UK
Endorsement Board (\"UKEB\") that are mandatorily effective for accounting periods beginning on or after 01 January 2023. Of
these, the following amendments have not had a material impact on the Group on adoption:
\u2022 Amendment to IAS 8 - Definition of Accounting Estimates;
\u2022 Amendment to IAS 1 - Disclosure of Accounting Policies; and
\u2022 Amendment to IAS 12 - Deferred Tax related to Assets and Liabilities arising from a Single Transaction.
The Group has also applied the amendment to IAS 12 - International Tax Reform - Pillar Two Model Rules from 01 January
2023, as issued by the IASB and endorsed by the UKEB. This amendment was issued in response to the Pillar Two framework
issued by the Organisation for Economic Co-operation and Development, which aims to ensure that large multinational
enterprises pay a minimum effective corporate tax rate of 15% on the income arising in each jurisdiction in which they operate.
The amendment introduces a mandatory temporary exemption from recognising and disclosing deferred taxes arising from the
Pillar Two rules. For jurisdictions in which legislation has been substantively enacted, the Group has applied this exemption.
Refer to Note 13 for further details.
The IASB has issued a number of other minor amendments to standards which are not yet effective at the reporting date and
have not been applied in preparing these financial statements. These have been endorsed by the UKEB with an effective date of
01 January 2024 unless noted otherwise below. None of these are expected to have a material impact on the Group.
\u2022 Amendments to IAS 1 - Classification of Liabilities as Current or Non-Current and Non-Current Liabilities with Covenants;
\u2022 Amendment to IFRS 16 - Lease Liability in a Sale and Leaseback;
\u2022 Amendments to IAS 7 and IFRS 7 - Supplier Finance Arrangement Disclosures;
\u2022 Amendment to IAS 21 - Lack of exchangeability (not yet endorsed, effective date 01 January 2025); and
\u2022 Amendments to IFRS 10 and IAS 28 - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
(not yet endorsed, effective date postponed indefinitely).
2a IFRS 17
i. Transition
IFRS 17 Insurance Contracts is a new accounting standard applicable for reporting periods beginning on or after 01 January
2023. The accounting policies applied by the Group on adoption of IFRS 17 have been disclosed in Note 3b.
The Group has applied the transitional provisions under IFRS 17, meaning changes in accounting policies resulting from the
adoption of IFRS 17 have been applied on a fully retrospective basis. This required assumptions to be made (for example, in
relation to discount rates and the risk adjustment for non-financial risk) based on what management\u2019s intentions would have
been in previous periods.
Under the fully retrospective approach, the Group has made the following changes to classification and measurement as at 01
January 2022.
\u2022 The Group has elected to apply the General Measurement Model (\u201cGMM\u201d) to the insurance and reinsurance contracts that it
issues, and applies the GMM with certain prescribed modifications to the reinsurance contracts that it holds. This is the
default measurement model under IFRS 17.
\u2022 Insurance contracts issued are identified and recognised by management as those contracts under which significant
insurance risk is accepted from another party (either the policyholder or the cedant) by agreeing to compensate the third party
if a specified uncertain future event (\"the insured event\") adversely affects the policyholder or cedant. This category also
includes some reinsurance contracts which are issued by the Group.
\u2022 Reinsurance contracts held are those under which the Group acts as cedant as opposed to reinsurer. These are measured
separately from the underlying contracts to which the arrangement relates.
\u2022 The Group allocates insurance contracts to portfolios based on whether they share similar risk characteristics and are
managed together. Generally, all insurance contracts within a product line (being similar types of underlying coverage and
geography) represent a portfolio of contracts.
\u2022 For each portfolio, contracts issued within a calendar year (i.e. annual cohorts) are further disaggregated into groups based
on those which are/are not onerous at initial recognition. The non-onerous contracts are further broken down into those which
do and do not have a significant possibility of becoming onerous subsequently. Note that onerous here means that the
expected costs of meeting contractual obligations will exceed the expected economic benefits.
\u2022 These groups represent the level of aggregation at which insurance contracts are initially recognised and measured, and such
groupings are not subsequently reconsidered.
\u2022 The Group measures its insurance contracts issued and reinsurance contracts held as the sum of the following:
\u2013 the estimated present value of future cash flows (\"PVFCF\"), discounted in order to account for the time value of money;
\u2013 a risk adjustment for non-financial risks that are expected to arise as the Group fulfils its contractual obligations; and
\u2013 a contractual service margin (\u201cCSM\u201d), which represents unearned profit.
\u2022 The Group recognises profit through release of the CSM for a group of insurance contracts over each period as insurance
contract services are provided. The amount of CSM released is based on assumptions around coverage units, which typically
correspond to the length of cover on a policy. Assumptions include the number of coverage units included in a group of
insurance contracts, the allocation of CSM to each coverage unit, and the number of coverage units provided in the period. If
a group of contracts is expected to be onerous on day one or subsequently becomes so, a loss is recognised immediately in
the profit or loss account.
\u2022 Insurance contracts issued can also be represented as the sum of the liability for remaining coverage and the liability for
incurred claims. For portfolios of issued insurance contracts that are onerous, a loss component is included within the liability
for remaining coverage and recognised in profit or loss upon initial recognition. Reinsurance contracts held are comprised of
the asset for remaining coverage (which contains a loss recovery component) in addition to the asset for incurred claims.
The following changes have been made to the presentation of the Group's financial statement on adoption of IFRS 17:
\u2022 Balances that existed under IFRS 4 and continue to exist under the new standard, such as reinsurance premiums payable,
have been reclassified.
\u2022 Balances that would not have existed if IFRS 17 had always been applied, primarily being deferred acquisition costs (\"DAC\")
and the unearned premium reserve (\u201cUPR\u201d), have been derecognised.
\u2022 Groups of insurance and reinsurance contracts have been identified, recognised and measured as if IFRS 17 had always
been applied. This has resulted in insurance and reinsurance contract assets and liabilities being recognised on the balance
sheet.
2 Impact of new accounting standards continued
\u2022 Insurance revenue, insurance finance income/expenses, and net income/expenses from reinsurance contracts held
(comprised of the allocation of reinsurance premium and amounts recoverable from reinsurers for incurred claims) have been
recognised in the statement of profit or loss.
\u2022 The net effect of adopting IFRS 17 as at 01 January 2022 has been recognised through the statement of changes in equity.
Refer to Section ii below for further details.
ii. Opening equity adjustment
The following table sets out the impact of the adoption of IFRS 17 on the Group\u2019s consolidated statement of financial position
as at 01 January 2022, with the net position posted as an adjustment to retained earnings.
The overall increase in equity is largely due to the following reclassification and measurement differences between IFRS 4 and
IFRS 17.
\u2022 There is a requirement under IFRS 17 to discount technical provisions to reflect the time value of money, whereas under IFRS
4 no such discounting was applied. This change therefore causes a timing difference in the way that profit is recognised as
the discount unwinds throughout the claims settlement period. There will initially be a favourable impact on profit as the
discount is established, followed by an unfavourable impact as the initial credit from discounting unwinds (assuming a
positive interest rate environment).
\u2022 In order to cover claims expected to be paid, the Group has historically held reserves within a range of 5-10% over an
actuarial estimate. This actuarial estimate itself had an embedded level of prudence. Under IFRS 17, reserves are held
at a best estimate with an additional risk adjustment calculated to a specified confidence level. This percentile indicates
where reserves sit compared to the best estimate and the capital requirement. Under IFRS 4 at the date of transition,
the level of prudence within reserves equated to a confidence level at the upper end of an 80th to 90th percentile range.
Under IFRS 17, the confidence level on transition is in the middle of this range. Accordingly, the provision for claims
recognised on adoption of IFRS 17 is lower than under IFRS 4.
\u2022 Under IFRS 4, the unearned premium reserve and deferred acquisition costs were treated as non-monetary items and were
translated to the Group\u2019s functional currency using historic exchange rates. Under IFRS 17, all insurance contract balances
are considered to be monetary items and are revalued using spot rates at each reporting date.
\u2022 Balances which existed under IFRS 4 have been reclassified. This includes reinsurance premiums payable and insurance
receivables and payables (all of which are now measured under IFRS 17).
\u2022 Other amounts that would not have existed if IFRS 17 had always been applied (namely DAC and UPR) have been
derecognised.
\u2022 In addition, the adoption of IFRS 17 has caused a number of temporary differences for tax purposes, resulting in the
recognition of an additional deferred tax asset of $1.7m and deferred tax liability of $15.0m as at 01 January 2022. Refer to
Note 25 for further details.
2 Impact of new accounting standards continued
Consolidated statement of financial position
31 December 2021 \u00a0
(previously reported)
IFRS 17 reclassification
IFRS 17 measurement
01 January 2022
(restated under\u00a0IFRS 17)
$m
$m
$m
$m
Assets
Intangible assets
123.5
\u2014
\u2014
123.5
Plant and equipment
19.2
\u2014
\u2014
19.2
Right-of-use assets
75.5
\u2014
\u2014
75.5
Deferred tax asset
16.3
\u2014
1.7
18.0
Deferred acquisition costs
477.8
(477.8)
\u2014
\u2014
Retirement benefit asset
18.1
\u2014
\u2014
18.1
Reinsurance assets
2,386.4
(2,386.4)
\u2014
\u2014
Insurance receivables
1,696.1
(1,696.1)
\u2014
\u2014
Reinsurance contract assets
\u2014
2,386.4
(712.1)
1,674.3
Financial assets at fair value
7,283.5
\u2014
\u2014
7,283.5
Other assets
107.3
130.8
\u2014
238.1
Current tax asset
11.9
\u2014
\u2014
11.9
Cash and cash equivalents
591.8
\u2014
\u2014
591.8
Total assets
12,807.4
(2,043.1)
(710.4)
10,053.9
Liabilities
Insurance liabilities
8,871.8
(8,871.8)
\u2014
\u2014
Insurance contract liabilities
\u2014
6,828.7
(269.2)
6,559.5
Reinsurance contract liabilities
\u2014
655.3
(515.6)
139.7
Financial liabilities
554.7
\u2014
\u2014
554.7
Lease liabilities
84.3
\u2014
\u2014
84.3
Deferred tax liabilities
\u2014
\u2014
15.0
15.0
Current tax liability
24.5
\u2014
\u2014
24.5
Other liabilities
1,141.3
(655.3)
\u2014
486.0
Total liabilities
10,676.6
(2,043.1)
(769.8)
7,863.7
Equity
Share capital
42.9
\u2014
\u2014
42.9
Share premium
5.3
\u2014
\u2014
5.3
Foreign currency translation
(97.2)
\u2014
\u2014
(97.2)
Other reserves
(4.0)
\u2014
\u2014
(4.0)
Retained earnings
2,183.8
\u2014
59.4
2,243.2
Total equity
2,130.8
\u2014
59.4
2,190.2
Total liabilities and equity
12,807.4
(2,043.1)
(710.4)
10,053.9
2 Impact of new accounting standards continued
2b IFRS 9
i. Transition
IFRS 9 Financial Instruments is a new accounting standard applied prospectively by the Group from 01 January 2023. The
classification and measurement of financial instruments under IFRS 9 has been determined based on facts and circumstances
that existed at this date. For example, if a financial asset had low credit risk as at 01 January 2023, then the credit risk of that
asset is considered not to have increased significantly since initial recognition.
ii. Changes to the classification and measurement of financial assets
IFRS 9 requires all financial assets to be classified either at fair value through profit or loss (\"FVTPL\"), fair value through other
comprehensive income (\"FVOCI\"), or amortised cost. This has resulted in some reclassifications when compared to the
measurement categories under IAS 39. Namely, cash and cash equivalents has been reclassified from FVTPL (designated) to
amortised cost, other receivables has been reclassified from loans and receivables to amortised cost, and all other financial
assets have been reclassified from FVTPL (designated) to FVTPL (mandatory). Included below is a reconciliation between the
carrying amounts under IAS 39 as at 31 December 2022 and the balances reported under IFRS 9 as at 01 January 2023. The
equity adjustment on adoption of IFRS 9 has been included at Section iv.
Under
IAS 39
Reclassification
ECL
Under
IFRS 9
$m
$m
$m
$m
Total financial assets at fair value through profit or loss
Fixed and floating rate debt securities:
\u2013 Government issued
5,006.3
\u2014
\u2014
5,006.3
\u2013 Corporate bonds
\u2013 Investment grade
2,050.5
\u2014
\u2014
2,050.5
\u2013 High yield
308.7
\u2014
\u2014
308.7
Syndicate loans
32.5
\u2014
\u2014
32.5
Equity funds
159.4
\u2014
\u2014
159.4
Hedge funds
530.6
\u2014
\u2014
530.6
Illiquid assets
222.9
\u2014
\u2014
222.9
Derivative financial assets
34.7
\u2014
\u2014
34.7
Cash and cash equivalents
652.5
(652.5)
\u2014
\u2014
Total financial assets at fair value through profit or loss
8,998.1
(652.5)
\u2014
8,345.6
Financial assets at amortised cost
Cash and cash equivalents
\u2014
652.5
\u2014
652.5
Amounts due from managed syndicates and other receivables
181.8
\u2014
(1.3)
180.5
Total financial assets at amortised cost
181.8
652.5
(1.3)
833.0
Financial liabilities at fair value through profit or loss
Derivative financial liabilities
14.5
\u2014
\u2014
14.5
Total financial liabilities at fair value through profit or loss
14.5
\u2014
\u2014
14.5
Financial liabilities at amortised cost
Tier 2 subordinated debt (2026)
249.4
\u2014
\u2014
249.4
Tier 2 subordinated debt (2029)
298.6
\u2014
\u2014
298.6
Other liabilities
524.0
\u2014
\u2014
524.0
Total financial liabilities at amortised cost
1,072.0
\u2014
\u2014
1,072.0
2 Impact of new accounting standards continued
iii. Expected credit losses (\"ECLs\")
The table below shows the receivables for which loss allowances have been measured using a lifetime ECL (as permitted by the
simplified approach) on the adoption of IFRS 9 as at 01 January 2023. These loss allowances have been estimated by applying
inputs and assumptions in relation to the following:
\u2022 the period of assessment for the receivables;
\u2022 the creditworthiness of counterparties;
\u2022 the probability of default by these counterparties over the lifetime of the assets; and
\u2022 the loss given default based on historical rates.
We have determined that a reasonable change in any of these assumptions would not have a material impact on the ECLs
recognised in the financial statements.
Before ECL
ECL
Net
as at 01 January 2023
$m
$m
$m
Investment receivables
53.9
(0.3)
53.6
Accrued investment income
35.7
(0.3)
35.4
Other receivables
92.2
(0.7)
91.5
Total amounts due from managed syndicates and other receivables
181.8
(1.3)
180.5
iv. Opening equity adjustment
The difference between the carrying amounts of the Group's financial assets before and after the adoption of IFRS 9 has been
posted as an opening adjustment to retained earnings. The adjustment is comprised of $1.3m in ECLs offset by $0.3m in
deferred tax assets \u2013 refer to Section b(iii) above for further details.
31 December 2022
IFRS 9 adjustment
01 January 2023
$m
$m
$m
Assets
Deferred tax asset
30.8
0.3
31.1
Other assets
204.2
(1.3)
202.9
Total impact on assets
235.0
(1.0)
234.0
Equity
Retained earnings
3,016.1
(1.0)
3,015.1
Total impact on equity
3,016.1
(1.0)
3,015.1
3 Statement of accounting policies continued
3b Material accounting policies
i. Subsidiary undertakings
Subsidiary undertakings are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights
to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the
entity. Subsidiary companies where the Group has control are consolidated within these financial statements.
Certain Group subsidiaries underwrite as corporate members of Lloyd\u2019s on syndicates managed by Beazley Furlonge Limited. In
view of the several and direct liability of underwriting members at Lloyd\u2019s for the transactions of syndicates in which they
participate, only attributable shares of transactions, assets and liabilities of those syndicates are included in the Group
financial statements. The Group continues to conclude that it remains appropriate to consolidate its share of the result of these
syndicates and accordingly, as the Group is the sole provider of capacity on syndicates 2623, 3622 and 3623, these financial
statements include 100% of the economic interest in these syndicates.
The Group provides 10% of the capacity on Syndicate 4321 for the 2022 and 2023 years of account and approximately 18% of
the capacity on Syndicate 5623 for the 2023 year of account. These syndicates are both managed by Beazley Furlonge Limited.
These financial statements include the corresponding economic interest in these syndicates for the relevant years of account
and show the Group's share of the transactions, assets and liabilities of these syndicates. For the remaining capacity of these
syndicates (including for 5623 the 2021 and 2022 years of account where capital was solely provided by third parties), the
Group's economic interest in the form of agency fees and profit commission attributable to non group capital providers is
included within these financial statements.
Beazley Furlonge Limited is also the managing agent of syndicates 623 and 6107. Capacity for these syndicates is provided
entirely by third parties to the Group, and these financial statements reflect Beazley\u2019s economic interest in the form of agency
fees and profit commission to which it is entitled.
ii. Foreign currency translation
The Group financial statements are presented in US dollars, being the functional and presentational currency of the parent and
its main trading subsidiaries, as the majority of trading assets and insurance premiums are denominated in US dollars.
The Group has subsidiaries with different functional currencies, the results and financial position of which are translated into
the USD presentational currency as follows:
\u2022 assets and liabilities are translated at the closing rate as at the statement of financial position date;
\u2022 income and expenses are translated at average exchange rates for the reporting period where this is determined to be a
reasonable approximation of the actual transaction rates; and
\u2022 all resulting exchange differences are recognised in other comprehensive income and as a separate component of equity (the
foreign currency translation reserve).
iii. Insurance and reinsurance contracts
Recognition and measurement
The Group applies IFRS 17 to all insurance contracts issued and reinsurance contracts held. These are defined respectively as
contracts under which the Group accepts significant insurance risk by agreeing to compensate a policyholder/cedant if they are
adversely affected by an insured event, and contracts which are issued by a reinsurer to compensate the Group as cedant for
claims arising from underlying contracts. Insurance risk is considered in further detail in Note 30. The Group has elected to
apply the General Measurement Model (\u201cGMM\u201d) to all insurance and reinsurance contracts that it issues, and applies the GMM
with certain modifications to all reinsurance contracts that it holds. This is the default approach under IFRS 17 - the optional
simplified Premium Allocation Approach has not been applied. Under the GMM, insurance contracts issued are aggregated into
groups. Contracts are then recognised at the earliest of (i) the beginning of the coverage period of the group; (ii) the date when
first payment from a policyholder/cedant in the group is due; or (iii) where applicable, when the group becomes onerous. The
Group measures its reinsurance contracts held separately from the underlying contracts to which the arrangement relates. For
proportional reinsurance contracts, these are recognised at the later of the date on which the first underlying contract is initially
recognised, or the date into which the reinsurance is entered. Non-proportional reinsurance contracts are typically recognised at
the beginning of the coverage period of the group of reinsurance contracts. However if the underlying group is determined to be
onerous, then the reinsurance contract is recognised on the date at which this assessment took place.
3 Statement of accounting policies continued
Level of aggregation
The Group is required under IFRS 17 to allocate its insurance contracts into groups. These are first aggregated into portfolios at
a granular level based on whether they share similar risk characteristics and are managed together. Generally, all insurance
contracts within a product line are considered by management to represent a portfolio of contracts. These are then aggregated
further into groups based on profitability characteristics. The three categories are as follows:
\u2022 Contracts that are onerous on initial recognition, meaning the expected costs of meeting contractual obligations will exceed
the expected economic benefits;
\u2022 Contracts that are not onerous on initial recognition but have a significant possibility of becoming onerous subsequently; and
\u2022 Contracts that are not onerous on initial recognition and have no significant possibility of becoming onerous subsequently.
The majority of the Group's insurance contracts are deemed not to be onerous on initial recognition with a possibility of
becoming onerous subsequently.
Finally, these are aggregated into annual cohorts with contracts issued more than one year apart separated out. These groups
represent the level of aggregation at which insurance contracts are initially recognised and measured. Such groupings are not
subsequently reconsidered.
Components of insurance and reinsurance contracts
Insurance and reinsurance contracts included within the Group's statement of financial position are comprised of the following
components.
\u2022 The present value of future cash flows. Cash flows are comprised of future expected premium which is based on data entered
into underwriting systems, gross and reinsured claims payments derived from the latest quarterly reserving exercise,
expenses deemed to be within the contract boundary, and lapses/cancellations which are projected by applying assumptions
determined through statistical measures based on the Group\u2019s experience. Cash flows also include amounts due to and from
insureds, brokers and reinsurers. An allowance is made for default by these parties. The future cash flows are discounted
using a rate derived by applying the 'bottom-up' estimation technique. As referenced in Section 3a, the future cash flows and
their discounting are both sensitive to changes in accounting estimates.
\u2022 A risk adjustment for non-financial risk. This represents the compensation that the Group requires for bearing uncertainty
around the amount and timing of the cash flows that arise from non-financial risk. IFRS 17 does not prescribe a specific
approach, therefore the Group has opted to apply the CoC approach. Under this method, the risk adjustment is calculated by
applying a cost of capital rate to the present value of the projected capital for non-financial risk. The risk adjustment changes
as cash flows crystallise on existing business, new business is recognised, and any changes to the cost of capital are
applied.
\u2022 The contractual service margin. This represents the unearned profit that the Group will recognise as it provides services in
the future. If the contract is not deemed to be onerous on initial recognition, the CSM is measured as the equal and opposite
of the sum of its related cash flows and risk adjustment. If deemed to be onerous, then the full CSM is immediately
recognised as a loss in the statement of profit or loss, and included within the loss component on subsequent measurement.
The Group has elected not to calculate its CSM on a year-to-date basis. Instead, the CSM is taken as the weighted average of
the year-to-date quarters, meaning this is updated periodically and then \"locked in\" at the year end position. Groups of
insurance contracts, including the CSM, that generate cash flows in a foreign currency are treated as monetary items. As the
Group measures fulfilment cash flows based on the four major transactional currencies (USD, GBP, EUR and Canadian
dollars), the Group maintains the CSM based on these respective currencies.
Coverage units
Management is required to identify coverage units in order to determine the amount of CSM that should be released into the
profit or loss in each period. Coverage units are determined at a policy level by considering the quantity of the benefits provided
and the expected coverage duration. For insurance contracts issued and proportional reinsurance contracts held, the number of
coverage units in a group reflects the expected pattern of underwriting of the contracts, as the level of service provided depends
on the number of contracts in force. Once management has determined the number of coverage units included in a group of
insurance contracts, CSM is allocated to each coverage unit. An assessment is then made at each reporting period as to how
much of the CSM should be released and recognised as profit. For non-proportional reinsurance contracts held, the CSM is
amortised on a straight-line basis over the life of the policy, as benefits are received evenly over the coverage period.
Liability for remaining coverage (\"LRC\") and liability for incurred claims (\"LIC\")
The LRC represents the Group's obligation for insurance contracts written where insured events have not yet occurred. The LIC
represents the Group's obligation to pay claims for insured events that have already occurred, including events that have
occurred but for which claims have not been reported. Insurance contracts issued are comprised of the LRC, which includes a
loss component, and the LIC. Reinsurance contracts held are comprised of the asset for remaining coverage (\"ARC\"),
3 Statement of accounting policies continued
containing a loss recovery component, and an asset for incurred claims (\"AIC\"). Note that the LRC and ARC include an element
of the PVFCF, a risk adjustment for non-financial risk, and the CSM. The LIC and AIC include the remainder of the PVFCF and a
risk adjustment for non-financial risk.
Amounts recognised in profit or loss
\u2022 Insurance revenue in each reporting period represents the changes in the LRC that relate to services for which the Group
expects to receive consideration, in addition to an allocation of premiums that relate to the recovery of insurance acquisition
cash flows. Changes in the LRC include claims and expenses incurred in the period measured at the amounts expected at
the beginning of the period, changes in the risk adjustment for non-financial risk, amounts recognised as profit through
release of the CSM for insurance contract services provided, and other amounts including experience adjustments (which
represent the difference between the expected present value of future cash flows versus the actual cash flows generated,
and any resultant second order impacts).
\u2022 Insurance service expenses are comprised of incurred claims and other directly attributable expenses, changes that relate to
past service, changes that relate to future service, and the amortisation of insurance acquisition cash flows.
\u2022 Income/expenses from reinsurance contracts are presented separately from income/expenses from underlying insurance
contracts. The Group has elected to present its net expenses from reinsurance contracts in the statement of profit or loss as
the allocation of reinsurance premium and amounts recoverable from reinsurers for incurred claims.
\u2022 Finance income/expense from insurance contracts issued and reinsurance contracts held shows the interest accreted and
the effect of changes in discount rates and other financial assumptions.
\u2022 Changes in the risk adjustment for non-financial risk are disaggregated between insurance service expenses and insurance
finance income/expenses.
\u2022 Insurance and reinsurance contract amounts denominated in foreign currencies are translated to the Group's reporting
currency at the balance sheet date, with any translation differences recognised in the statement of profit or loss.
iv. Financial instruments
Financial instruments are recognised in the statement of financial position at such time as the Group becomes a party to the
contractual provisions of the financial instrument. Purchases and sales of financial assets are recognised on the trade date,
which is the date the Group commits to purchase or sell the asset. A financial asset is derecognised when the contractual
rights to receive cash flows from the financial assets expire, or where the financial assets have been transferred, together with
substantially all the risks and rewards of ownership. Financial liabilities are derecognised if the Group\u2019s obligations specified in
the contract expire, are discharged or are cancelled.
Classification
The Group is required to classify its financial instruments into one of the following categories on subsequent measurement: fair
value through profit or loss, fair value through other comprehensive income, or amortised cost. Classification is based on the
business model in which these are managed and the characteristics of the associated contractual cash flows. Almost all of the
Group\u2019s financial assets are measured at FVTPL under IFRS 9. This is with the exception of cash and cash equivalents,
amounts due from managed syndicates, and other receivables, all of which are measured at amortised cost.
The Group\u2019s financial liabilities are held at amortised cost, with the exception of its derivative financial liabilities and a potential
profit uplift commission payment, both of which are held at FVTPL (mandatory) under IFRS 9.
Other receivables
Other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market, and are carried at amortised cost less any impairment losses. These are included within \u2018Other assets\u2019 on the face of
the consolidated statement of financial position.
Hedge funds, equity funds and illiquid assets
The Group invests in a number of hedge funds, equity funds and illiquid assets for which there are no available quoted market
prices. The valuation of these assets is based on fair value techniques as described in Note 18. The fair value of our hedge
fund and illiquid asset portfolio is calculated by reference to the underlying net asset values (\"NAV\") of each of the individual
funds. Consideration is also given to adjusting such NAV valuations for any restriction applied to distributions, the existence of
side pocket provisions and the timing of the latest available valuations. At certain times, the Group will have uncalled unfunded
commitments in relation to its illiquid assets and these are are actively monitored by the Group. These amounts are not shown
on the consolidated statement of financial position, and any additional investment into the illiquid asset portfolio is recognised
on the date that this funding is provided by the Group. Further information is included in Note 18 to the financial statements.
3 Statement of accounting policies continued
Other payables
Other payables are stated at amortised cost determined according to the effective interest rate method. Other payables are
included within \u2018Other liabilities\u2019 on the face of the consolidated statement of financial position.
Derivative financial instruments
Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently
remeasured at their fair value. The best evidence of fair value of a derivative at initial recognition is the transaction price. The
method of recognising the resulting fair value gains or losses depends on whether the derivative is designated as a hedging
instrument and, if so, the nature of the item being hedged. The Group does not hold any derivatives designated as fair value
hedges, cash flow hedges or net investment hedges and therefore all fair value movements are recorded through profit or loss.
Fair values are obtained from quoted market prices in active markets, recent market transactions, and valuation techniques
which include discounted cash flow models. All derivatives are carried as assets when fair value is positive and as liabilities
when fair value is negative.
Derivative assets and liabilities are offset and the net amount reported in the statement of financial position when there is a
legally enforceable right to set off the recognised amounts and the parties intend to settle on a net basis, or realise the assets
and settle the liability simultaneously.
Impairment of financial assets
The \u2018expected credit losses\u2019 (\u201cECLs\u201d) model is applied to the Group\u2019s financial assets measured at amortised cost. This
requires an entity to calculate an allowance for credit losses by taking the sum of various probability weighted outcomes. The
general approach is the default method which management applies in determining the ECLs against its cash and cash
equivalents. A simplified approach is permitted for trade receivables, contract assets and lease receivables where there is no
significant financing component. This results in an entity recognising an ECL that is always equal to a lifetime ECL, rather than
assessing periodically whether there has been an increase in credit risk. The main impact of this new IFRS 9 impairment model
is that credit losses are based on the risk of default, as opposed to whether a loss has been incurred, and consequently credit
losses are recognised earlier than under the previous accounting standard. Note that the Group has been able to determine the
credit risk of financial assets on transition using reasonable and supportable information, rather than placing reliance on
transitional provisions.
Cash and cash equivalents
Cash and cash equivalents consist of cash held at bank, cash in hand, deposits held at call with banks, cash held in Lloyd\u2019s
trust accounts and other short term highly liquid investments that are readily convertible to known amounts of cash and which
are subject to an insignificant risk of changes in value. These investments have less than three months maturity from the date
of acquisition. Cash and cash equivalents are measured at amortised cost under IFRS 9.
v. Share based compensation
The grant date fair value of share based payment awards granted to employees is recognised as an employee expense, with a
corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The
amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market
performance conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the
number of awards that meet the related service and non-market performance conditions at the vesting date. For share based
payment awards with non-vesting conditions, the grant date fair value of the share based payment is measured to reflect such
conditions and there is no true-up for differences between expected and actual outcomes.
When options are exercised and new shares are issued, the proceeds received, net of any transaction costs, are credited to
share capital (nominal value) with the excess amount going to share premium. For other plans, when no proceeds are received,
the nominal value of shares issued is to share capital and debited to retained earnings. When the options are exercised and
the shares are granted from the employee share trust, the proceeds received, net of any transaction costs, and the value of
shares held within the trust, are credited to retained earnings.", "dimensions": { "concept": "ifrs-full:DisclosureOfMaterialAccountingPolicyInformationExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-341": { "value": "
3a Use of key judgements and estimates
The preparation of financial statements requires the use of judgements and estimates that affect the reported amounts of
assets, liabilities, income and expenses. Actual results may differ from those on which management\u2019s estimates are based.
Inputs and assumptions are evaluated on an ongoing basis by considering historical experience, expectations of reasonably
possible future events, and other factors. For example, estimates which are sensitive to economic, regulatory and geopolitical
conditions could be impacted by significant changes in the external environment such as rising inflation, rising interest rates,
climate change, international conflicts, and significant changes in legislation. Any revisions to accounting estimates are
recognised in the period in which the estimate is revised and in any future periods affected.
Specific to climate change, the estimate for which there is the highest potential exposure to climate risk is the estimation of
future cash flows within insurance contract assets and liabilities. Management currently include allowances in the determination
of best estimate cash flows for the potential impact of changes arising from climate risks (which could include but is not limited
to an increased frequency of natural catastrophes, liability claims for green-washing and changes in legislation related to
climate). Management are of the view that for all other estimates, climate risk would not have a material impact on the
valuation of the assets and liabilities held by the Group at the year end date.
Information about the Group's key judgements and estimates has been disclosed below. Note that key judgements made by
management in applying its accounting policies are those that have the most significant effect on the amounts recognised in
the financial statements. Key estimates are those that have a significant risk of resulting in a material adjustment to the
carrying amounts of assets and liabilities within the next 12 months. The Group's key judgements and estimates are
reassessed at each reporting period and updated within the financial statements. These have changed in the current year due
to the adoption of IFRS 17.
i. Key judgements
Impairment assessment of goodwill
As part of the goodwill impairment assessment, management determines whether the recoverable amount of the cash
generating unit exceeds the carrying amount. The recoverable amount is deemed to be the value-in-use, which is estimated as
the present value of projected future cash flows. A number of judgemental inputs and assumptions are used in making this
assessment, including premium growth rates, claims experience, discount rates, retention rates and expected future market
conditions. Further detail is provided in Note 16, including a sensitivity analysis showing that a reasonably possible change in
the key inputs and assumptions would not have a material impact on the outcome of impairment testing. As a result, this is
considered to be an area of key judgement rather than a significant source of estimation uncertainty.
Measurement of insurance contract liabilities
Judgement has been applied in determining the Group's results on an IFRS 17 basis.
\u2022 Management has exercised judgement in determining an appropriate level of aggregation in the measurement of insurance
contracts. Contracts are aggregated into portfolios based on shared risk and management characteristics (i.e. by type of
cover, classes covered, and the reinsurer). These are then split into two groups representing contracts which are onerous and
those which are non-onerous on initial recognition. The latter category is broken down further based on whether there is a
significant possibility of contracts becoming onerous in the future.
\u2022 Under IFRS 17, discount rates are applied to expected future cash flows in measuring insurance contract liabilities.
Management has applied judgement in determining that the 'bottom-up' estimation technique should be used in calculating
these rates.
\u2022 Management has also applied judgement in determining an appropriate calculation basis for the risk adjustment. The Cost of
Capital (\"CoC\") approach has been applied as this is consistent with the basis on which the risk margin is calculated under
Solvency II, meaning work in this area could be leveraged. The main difference between the two methods is that the CoC is
prescribed by EIOPA under Solvency II, whereas under IFRS 17 this is calculated in line with the Group\u2019s view of the required
return.
\u2022 Judgement has been applied by management in determining the amount of contractual service margin (\"CSM\") that should be
released into the profit or loss in each period. This process is carried out by identifying the coverage units in the group of
contracts based on straight-line earnings patterns, allocating the CSM to coverage units, and then assessing at each
reporting date the amount of CSM to be amortised and recognised as profit.
3 Statement of accounting policies continued
\u2022 Finally, the Group has applied the IFRS 17 expense principles by allocating costs to the 'insurance service expense' line
based on those which are deemed to be 'directly attributable'. The amount recognised as insurance service expenses is
determined by excluding certain costs as prescribed by IFRS 17, breaking down the balance by classes of expense
(administrative, other acquisition, claims handling and brokerage), and then applying percentages representing amounts that
are directly attributable. These proportions are calculated with references to both forecast and historical figures.
For further details on the accounting for insurance and reinsurance contracts under IFRS 17, refer to the policies set out at
section (b)(iii) below. For details of the estimates applied in the calculation of discount rates and the risk adjustment, refer to
section (ii) below.
ii. Key estimates
Measurement of insurance contract liabilities - Future cash flows
The Group has estimated the amount, timing and probability of future cash flows. Estimates are formed by applying
assumptions about past events, current conditions and forecasts of future conditions. These have been outlined below:
\u2022 Future expected premium cash flows are based on data entered into underwriting systems. These have a level of estimate
embedded for certain contracts, with payment/settlement patterns used to determine timing.
\u2022 Gross and reinsured claims payments are determined using an approach whereby cash flows are set at a Year of Account and
reserving class level based on the latest quarterly reserving exercise.
\u2022 Expenses are deemed to be within the contract boundary, and therefore included in the cash flows, when these are directly
attributable to fulfilling insurance contracts.
\u2022 Lapses/cancellations are projected by applying assumptions determined through statistical measures based on the Group\u2019s
experience. These vary by product type, policy duration and sales trends.
For carrying values of insurance contracts by measurement component (including future cash flows), refer to Note 28(a).
Measurement of insurance contract liabilities - Discount rates
The discount rates applied to expected future cash flows in measuring insurance contract liabilities have been determined using
the bottom-up approach. This method takes the risk-free rates and adjusts for an illiquidity premium.
\u2022 Risk-free rates are derived using government yield curves denominated in the same currency as the product being measured,
which are sourced from Moody's. These are based on quarter-start and quarter-end rates.
\u2022 The Group's illiquidity premium is also sourced from Moody\u2019s and adjusted to reflect the Group\u2019s own asset portfolio. This
represents the differences in the liquidity characteristics between the financial assets used to derive the risk-free yield and
the insurance contract liability characteristics. The illiquidity premium applied by management is a flat percentage which
varies by currency. For the USD discount rate, which is the dominant currency of the Group, as at 31 December 2023 this
was 0.4% (2022: 0.5%).
The discount rates applied in determining the Group\u2019s IFRS 17 results are as follows.
31 December 2023
1 Year
3 Year
5 Year
USD
5.1%
4.5%
4.3%
CAD
5.3%
4.4%
4.1%
GBP
4.9%
4.0%
3.8%
EUR
3.5%
2.7%
2.6%
31 December 2022
1 Year
3 Year
5 Year
USD
5.2%
4.8%
4.5%
CAD
5.3%
4.6%
4.3%
GBP
4.4%
4.4%
4.5%
EUR
2.9%
3.1%
3.1%
For carrying values of insurance contract liabilities, refer to Note 28. Sensitivities to a change in interest rate against the
carrying value of insurance contract liabilities are included in Note 30(b)(iii).
3 Statement of accounting policies continued
Measurement of insurance contract liabilities - Risk adjustment
Estimation of the risk adjustment for non-financial risk is based on various inputs and assumptions, particularly relating to non-
financial risk components of the SCR from the Solvency II internal model which captures all material exposure elements for the
Group. IFRS 17 does not prescribe a specific methodology for the calculation of the risk adjustment for non-financial risk and
the Group has elected to use a CoC approach. This is determined at a segment level comparing the required return by segment.
Our overall cross cycle return on capital target is 15%. Projected capital amounts are derived from the annual business plan,
with adjustments made to factor in emerging risks and uncertainties. The risk adjustment therefore differs between portfolios
depending on the inherent risk associated with each. Diversification is considered between segments (to allow for negative/
positive correlation between risks) and between years (to allow for the different kind of risk written across years).
The risk adjustment calculations as defined above are performed on a net basis, and the resulting risk adjustment percentage
is then applied separately to insurance contracts issued and reinsurance contracts held.
The reserve confidence level determined by the actuarial department is considered as part of a quarterly reserve review
exercise. These meetings are attended by senior management, senior underwriters, and representatives from actuarial, claims
and finance. The reserve confidence level was deemed to be at the 85th percentile for the 2023 year end as per output from
the latest governed reserve review (2022: 85th percentile) at the balance sheet date. This is in line with the preference that the
Group maintains a reserve confidence level in the 80th to 90th percentile range. The carrying values of insurance contracts by
measurement component (including risk adjustment) are disclosed in Note 28(a). For sensitivities to a change in risk
adjustment, refer to Note 30(a)(iv).
Valuation of level 3 financial assets
The Group holds its syndicate loans and illiquid assets at level 3 within the fair value hierarchy. This means that fair values are
estimated using model valuations which incorporate both observable and unobservable market inputs and assumptions. For
further details on the methodologies, inputs and assumptions used by the Group, in addition to carrying values of level 3
financial assets, refer to Note 18. For the sensitivity of level 3 financial assets to price risk, refer to Note 30(b)(iv).", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-342": { "value": "
Measurement of insurance contract liabilities - Future cash flows
The Group has estimated the amount, timing and probability of future cash flows. Estimates are formed by applying
assumptions about past events, current conditions and forecasts of future conditions. These have been outlined below:
\u2022 Future expected premium cash flows are based on data entered into underwriting systems. These have a level of estimate
embedded for certain contracts, with payment/settlement patterns used to determine timing.
\u2022 Gross and reinsured claims payments are determined using an approach whereby cash flows are set at a Year of Account and
reserving class level based on the latest quarterly reserving exercise.
\u2022 Expenses are deemed to be within the contract boundary, and therefore included in the cash flows, when these are directly
attributable to fulfilling insurance contracts.
\u2022 Lapses/cancellations are projected by applying assumptions determined through statistical measures based on the Group\u2019s
experience. These vary by product type, policy duration and sales trends.
For carrying values of insurance contracts by measurement component (including future cash flows), refer to Note 28(a).
Insurance and reinsurance contracts
Recognition and measurement
The Group applies IFRS 17 to all insurance contracts issued and reinsurance contracts held. These are defined respectively as
contracts under which the Group accepts significant insurance risk by agreeing to compensate a policyholder/cedant if they are
adversely affected by an insured event, and contracts which are issued by a reinsurer to compensate the Group as cedant for
claims arising from underlying contracts. Insurance risk is considered in further detail in Note 30. The Group has elected to
apply the General Measurement Model (\u201cGMM\u201d) to all insurance and reinsurance contracts that it issues, and applies the GMM
with certain modifications to all reinsurance contracts that it holds. This is the default approach under IFRS 17 - the optional
simplified Premium Allocation Approach has not been applied. Under the GMM, insurance contracts issued are aggregated into
groups. Contracts are then recognised at the earliest of (i) the beginning of the coverage period of the group; (ii) the date when
first payment from a policyholder/cedant in the group is due; or (iii) where applicable, when the group becomes onerous. The
Group measures its reinsurance contracts held separately from the underlying contracts to which the arrangement relates. For
proportional reinsurance contracts, these are recognised at the later of the date on which the first underlying contract is initially
recognised, or the date into which the reinsurance is entered. Non-proportional reinsurance contracts are typically recognised at
the beginning of the coverage period of the group of reinsurance contracts. However if the underlying group is determined to be
onerous, then the reinsurance contract is recognised on the date at which this assessment took place.
3 Statement of accounting policies continued
Level of aggregation
The Group is required under IFRS 17 to allocate its insurance contracts into groups. These are first aggregated into portfolios at
a granular level based on whether they share similar risk characteristics and are managed together. Generally, all insurance
contracts within a product line are considered by management to represent a portfolio of contracts. These are then aggregated
further into groups based on profitability characteristics. The three categories are as follows:
\u2022 Contracts that are onerous on initial recognition, meaning the expected costs of meeting contractual obligations will exceed
the expected economic benefits;
\u2022 Contracts that are not onerous on initial recognition but have a significant possibility of becoming onerous subsequently; and
\u2022 Contracts that are not onerous on initial recognition and have no significant possibility of becoming onerous subsequently.
The majority of the Group's insurance contracts are deemed not to be onerous on initial recognition with a possibility of
becoming onerous subsequently.
Finally, these are aggregated into annual cohorts with contracts issued more than one year apart separated out. These groups
represent the level of aggregation at which insurance contracts are initially recognised and measured. Such groupings are not
subsequently reconsidered.
Components of insurance and reinsurance contracts
Insurance and reinsurance contracts included within the Group's statement of financial position are comprised of the following
components.
\u2022 The present value of future cash flows. Cash flows are comprised of future expected premium which is based on data entered
into underwriting systems, gross and reinsured claims payments derived from the latest quarterly reserving exercise,
expenses deemed to be within the contract boundary, and lapses/cancellations which are projected by applying assumptions
determined through statistical measures based on the Group\u2019s experience. Cash flows also include amounts due to and from
insureds, brokers and reinsurers. An allowance is made for default by these parties. The future cash flows are discounted
using a rate derived by applying the 'bottom-up' estimation technique. As referenced in Section 3a, the future cash flows and
their discounting are both sensitive to changes in accounting estimates.
\u2022 A risk adjustment for non-financial risk. This represents the compensation that the Group requires for bearing uncertainty
around the amount and timing of the cash flows that arise from non-financial risk. IFRS 17 does not prescribe a specific
approach, therefore the Group has opted to apply the CoC approach. Under this method, the risk adjustment is calculated by
applying a cost of capital rate to the present value of the projected capital for non-financial risk. The risk adjustment changes
as cash flows crystallise on existing business, new business is recognised, and any changes to the cost of capital are
applied.
\u2022 The contractual service margin. This represents the unearned profit that the Group will recognise as it provides services in
the future. If the contract is not deemed to be onerous on initial recognition, the CSM is measured as the equal and opposite
of the sum of its related cash flows and risk adjustment. If deemed to be onerous, then the full CSM is immediately
recognised as a loss in the statement of profit or loss, and included within the loss component on subsequent measurement.
The Group has elected not to calculate its CSM on a year-to-date basis. Instead, the CSM is taken as the weighted average of
the year-to-date quarters, meaning this is updated periodically and then \"locked in\" at the year end position. Groups of
insurance contracts, including the CSM, that generate cash flows in a foreign currency are treated as monetary items. As the
Group measures fulfilment cash flows based on the four major transactional currencies (USD, GBP, EUR and Canadian
dollars), the Group maintains the CSM based on these respective currencies.
Coverage units
Management is required to identify coverage units in order to determine the amount of CSM that should be released into the
profit or loss in each period. Coverage units are determined at a policy level by considering the quantity of the benefits provided
and the expected coverage duration. For insurance contracts issued and proportional reinsurance contracts held, the number of
coverage units in a group reflects the expected pattern of underwriting of the contracts, as the level of service provided depends
on the number of contracts in force. Once management has determined the number of coverage units included in a group of
insurance contracts, CSM is allocated to each coverage unit. An assessment is then made at each reporting period as to how
much of the CSM should be released and recognised as profit. For non-proportional reinsurance contracts held, the CSM is
amortised on a straight-line basis over the life of the policy, as benefits are received evenly over the coverage period.
Liability for remaining coverage (\"LRC\") and liability for incurred claims (\"LIC\")
The LRC represents the Group's obligation for insurance contracts written where insured events have not yet occurred. The LIC
represents the Group's obligation to pay claims for insured events that have already occurred, including events that have
occurred but for which claims have not been reported. Insurance contracts issued are comprised of the LRC, which includes a
loss component, and the LIC. Reinsurance contracts held are comprised of the asset for remaining coverage (\"ARC\"),
3 Statement of accounting policies continued
containing a loss recovery component, and an asset for incurred claims (\"AIC\"). Note that the LRC and ARC include an element
of the PVFCF, a risk adjustment for non-financial risk, and the CSM. The LIC and AIC include the remainder of the PVFCF and a
risk adjustment for non-financial risk.
Amounts recognised in profit or loss
\u2022 Insurance revenue in each reporting period represents the changes in the LRC that relate to services for which the Group
expects to receive consideration, in addition to an allocation of premiums that relate to the recovery of insurance acquisition
cash flows. Changes in the LRC include claims and expenses incurred in the period measured at the amounts expected at
the beginning of the period, changes in the risk adjustment for non-financial risk, amounts recognised as profit through
release of the CSM for insurance contract services provided, and other amounts including experience adjustments (which
represent the difference between the expected present value of future cash flows versus the actual cash flows generated,
and any resultant second order impacts).
\u2022 Insurance service expenses are comprised of incurred claims and other directly attributable expenses, changes that relate to
past service, changes that relate to future service, and the amortisation of insurance acquisition cash flows.
\u2022 Income/expenses from reinsurance contracts are presented separately from income/expenses from underlying insurance
contracts. The Group has elected to present its net expenses from reinsurance contracts in the statement of profit or loss as
the allocation of reinsurance premium and amounts recoverable from reinsurers for incurred claims.
\u2022 Finance income/expense from insurance contracts issued and reinsurance contracts held shows the interest accreted and
the effect of changes in discount rates and other financial assumptions.
\u2022 Changes in the risk adjustment for non-financial risk are disaggregated between insurance service expenses and insurance
finance income/expenses.
\u2022 Insurance and reinsurance contract amounts denominated in foreign currencies are translated to the Group's reporting
currency at the balance sheet date, with any translation differences recognised in the statement of profit or loss.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInsuranceContracts", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-344": { "value": "
Subsidiary undertakings are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights
to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the
entity. Subsidiary companies where the Group has control are consolidated within these financial statements.
Certain Group subsidiaries underwrite as corporate members of Lloyd\u2019s on syndicates managed by Beazley Furlonge Limited. In
view of the several and direct liability of underwriting members at Lloyd\u2019s for the transactions of syndicates in which they
participate, only attributable shares of transactions, assets and liabilities of those syndicates are included in the Group
financial statements. The Group continues to conclude that it remains appropriate to consolidate its share of the result of these
syndicates and accordingly, as the Group is the sole provider of capacity on syndicates 2623, 3622 and 3623, these financial
statements include 100% of the economic interest in these syndicates.
The Group provides 10% of the capacity on Syndicate 4321 for the 2022 and 2023 years of account and approximately 18% of
the capacity on Syndicate 5623 for the 2023 year of account. These syndicates are both managed by Beazley Furlonge Limited.
These financial statements include the corresponding economic interest in these syndicates for the relevant years of account
and show the Group's share of the transactions, assets and liabilities of these syndicates. For the remaining capacity of these
syndicates (including for 5623 the 2021 and 2022 years of account where capital was solely provided by third parties), the
Group's economic interest in the form of agency fees and profit commission attributable to non group capital providers is
included within these financial statements.
Beazley Furlonge Limited is also the managing agent of syndicates 623 and 6107. Capacity for these syndicates is provided
entirely by third parties to the Group, and these financial statements reflect Beazley\u2019s economic interest in the form of agency
fees and profit commission to which it is entitled.", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-343": { "value": "
Subsidiary undertakings are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights
to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the
entity. Subsidiary companies where the Group has control are consolidated within these financial statements.
Certain Group subsidiaries underwrite as corporate members of Lloyd\u2019s on syndicates managed by Beazley Furlonge Limited. In
view of the several and direct liability of underwriting members at Lloyd\u2019s for the transactions of syndicates in which they
participate, only attributable shares of transactions, assets and liabilities of those syndicates are included in the Group
financial statements. The Group continues to conclude that it remains appropriate to consolidate its share of the result of these
syndicates and accordingly, as the Group is the sole provider of capacity on syndicates 2623, 3622 and 3623, these financial
statements include 100% of the economic interest in these syndicates.
The Group provides 10% of the capacity on Syndicate 4321 for the 2022 and 2023 years of account and approximately 18% of
the capacity on Syndicate 5623 for the 2023 year of account. These syndicates are both managed by Beazley Furlonge Limited.
These financial statements include the corresponding economic interest in these syndicates for the relevant years of account
and show the Group's share of the transactions, assets and liabilities of these syndicates. For the remaining capacity of these
syndicates (including for 5623 the 2021 and 2022 years of account where capital was solely provided by third parties), the
Group's economic interest in the form of agency fees and profit commission attributable to non group capital providers is
included within these financial statements.
Beazley Furlonge Limited is also the managing agent of syndicates 623 and 6107. Capacity for these syndicates is provided
entirely by third parties to the Group, and these financial statements reflect Beazley\u2019s economic interest in the form of agency
fees and profit commission to which it is entitled.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-345": { "value": "Foreign currency translation
The Group financial statements are presented in US dollars, being the functional and presentational currency of the parent and
its main trading subsidiaries, as the majority of trading assets and insurance premiums are denominated in US dollars.
The Group has subsidiaries with different functional currencies, the results and financial position of which are translated into
the USD presentational currency as follows:
\u2022 assets and liabilities are translated at the closing rate as at the statement of financial position date;
\u2022 income and expenses are translated at average exchange rates for the reporting period where this is determined to be a
reasonable approximation of the actual transaction rates; and
\u2022 all resulting exchange differences are recognised in other comprehensive income and as a separate component of equity (the
foreign currency translation reserve).
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-346": { "value": "
The Group financial statements are presented in US dollars, being the functional and presentational currency of the parent and
its main trading subsidiaries, as the majority of trading assets and insurance premiums are denominated in US dollars.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-348": { "value": "Insurance and reinsurance contracts
Recognition and measurement
The Group applies IFRS 17 to all insurance contracts issued and reinsurance contracts held. These are defined respectively as
contracts under which the Group accepts significant insurance risk by agreeing to compensate a policyholder/cedant if they are
adversely affected by an insured event, and contracts which are issued by a reinsurer to compensate the Group as cedant for
claims arising from underlying contracts. Insurance risk is considered in further detail in Note 30. The Group has elected to
apply the General Measurement Model (\u201cGMM\u201d) to all insurance and reinsurance contracts that it issues, and applies the GMM
with certain modifications to all reinsurance contracts that it holds. This is the default approach under IFRS 17 - the optional
simplified Premium Allocation Approach has not been applied. Under the GMM, insurance contracts issued are aggregated into
groups. Contracts are then recognised at the earliest of (i) the beginning of the coverage period of the group; (ii) the date when
first payment from a policyholder/cedant in the group is due; or (iii) where applicable, when the group becomes onerous. The
Group measures its reinsurance contracts held separately from the underlying contracts to which the arrangement relates. For
proportional reinsurance contracts, these are recognised at the later of the date on which the first underlying contract is initially
recognised, or the date into which the reinsurance is entered. Non-proportional reinsurance contracts are typically recognised at
the beginning of the coverage period of the group of reinsurance contracts. However if the underlying group is determined to be
onerous, then the reinsurance contract is recognised on the date at which this assessment took place.
3 Statement of accounting policies continued
Level of aggregation
The Group is required under IFRS 17 to allocate its insurance contracts into groups. These are first aggregated into portfolios at
a granular level based on whether they share similar risk characteristics and are managed together. Generally, all insurance
contracts within a product line are considered by management to represent a portfolio of contracts. These are then aggregated
further into groups based on profitability characteristics. The three categories are as follows:
\u2022 Contracts that are onerous on initial recognition, meaning the expected costs of meeting contractual obligations will exceed
the expected economic benefits;
\u2022 Contracts that are not onerous on initial recognition but have a significant possibility of becoming onerous subsequently; and
\u2022 Contracts that are not onerous on initial recognition and have no significant possibility of becoming onerous subsequently.
The majority of the Group's insurance contracts are deemed not to be onerous on initial recognition with a possibility of
becoming onerous subsequently.
Finally, these are aggregated into annual cohorts with contracts issued more than one year apart separated out. These groups
represent the level of aggregation at which insurance contracts are initially recognised and measured. Such groupings are not
subsequently reconsidered.
Components of insurance and reinsurance contracts
Insurance and reinsurance contracts included within the Group's statement of financial position are comprised of the following
components.
\u2022 The present value of future cash flows. Cash flows are comprised of future expected premium which is based on data entered
into underwriting systems, gross and reinsured claims payments derived from the latest quarterly reserving exercise,
expenses deemed to be within the contract boundary, and lapses/cancellations which are projected by applying assumptions
determined through statistical measures based on the Group\u2019s experience. Cash flows also include amounts due to and from
insureds, brokers and reinsurers. An allowance is made for default by these parties. The future cash flows are discounted
using a rate derived by applying the 'bottom-up' estimation technique. As referenced in Section 3a, the future cash flows and
their discounting are both sensitive to changes in accounting estimates.
\u2022 A risk adjustment for non-financial risk. This represents the compensation that the Group requires for bearing uncertainty
around the amount and timing of the cash flows that arise from non-financial risk. IFRS 17 does not prescribe a specific
approach, therefore the Group has opted to apply the CoC approach. Under this method, the risk adjustment is calculated by
applying a cost of capital rate to the present value of the projected capital for non-financial risk. The risk adjustment changes
as cash flows crystallise on existing business, new business is recognised, and any changes to the cost of capital are
applied.
\u2022 The contractual service margin. This represents the unearned profit that the Group will recognise as it provides services in
the future. If the contract is not deemed to be onerous on initial recognition, the CSM is measured as the equal and opposite
of the sum of its related cash flows and risk adjustment. If deemed to be onerous, then the full CSM is immediately
recognised as a loss in the statement of profit or loss, and included within the loss component on subsequent measurement.
The Group has elected not to calculate its CSM on a year-to-date basis. Instead, the CSM is taken as the weighted average of
the year-to-date quarters, meaning this is updated periodically and then \"locked in\" at the year end position. Groups of
insurance contracts, including the CSM, that generate cash flows in a foreign currency are treated as monetary items. As the
Group measures fulfilment cash flows based on the four major transactional currencies (USD, GBP, EUR and Canadian
dollars), the Group maintains the CSM based on these respective currencies.
Coverage units
Management is required to identify coverage units in order to determine the amount of CSM that should be released into the
profit or loss in each period. Coverage units are determined at a policy level by considering the quantity of the benefits provided
and the expected coverage duration. For insurance contracts issued and proportional reinsurance contracts held, the number of
coverage units in a group reflects the expected pattern of underwriting of the contracts, as the level of service provided depends
on the number of contracts in force. Once management has determined the number of coverage units included in a group of
insurance contracts, CSM is allocated to each coverage unit. An assessment is then made at each reporting period as to how
much of the CSM should be released and recognised as profit. For non-proportional reinsurance contracts held, the CSM is
amortised on a straight-line basis over the life of the policy, as benefits are received evenly over the coverage period.
Liability for remaining coverage (\"LRC\") and liability for incurred claims (\"LIC\")
The LRC represents the Group's obligation for insurance contracts written where insured events have not yet occurred. The LIC
represents the Group's obligation to pay claims for insured events that have already occurred, including events that have
occurred but for which claims have not been reported. Insurance contracts issued are comprised of the LRC, which includes a
loss component, and the LIC. Reinsurance contracts held are comprised of the asset for remaining coverage (\"ARC\"),
3 Statement of accounting policies continued
containing a loss recovery component, and an asset for incurred claims (\"AIC\"). Note that the LRC and ARC include an element
of the PVFCF, a risk adjustment for non-financial risk, and the CSM. The LIC and AIC include the remainder of the PVFCF and a
risk adjustment for non-financial risk.
Amounts recognised in profit or loss
\u2022 Insurance revenue in each reporting period represents the changes in the LRC that relate to services for which the Group
expects to receive consideration, in addition to an allocation of premiums that relate to the recovery of insurance acquisition
cash flows. Changes in the LRC include claims and expenses incurred in the period measured at the amounts expected at
the beginning of the period, changes in the risk adjustment for non-financial risk, amounts recognised as profit through
release of the CSM for insurance contract services provided, and other amounts including experience adjustments (which
represent the difference between the expected present value of future cash flows versus the actual cash flows generated,
and any resultant second order impacts).
\u2022 Insurance service expenses are comprised of incurred claims and other directly attributable expenses, changes that relate to
past service, changes that relate to future service, and the amortisation of insurance acquisition cash flows.
\u2022 Income/expenses from reinsurance contracts are presented separately from income/expenses from underlying insurance
contracts. The Group has elected to present its net expenses from reinsurance contracts in the statement of profit or loss as
the allocation of reinsurance premium and amounts recoverable from reinsurers for incurred claims.
\u2022 Finance income/expense from insurance contracts issued and reinsurance contracts held shows the interest accreted and
the effect of changes in discount rates and other financial assumptions.
\u2022 Changes in the risk adjustment for non-financial risk are disaggregated between insurance service expenses and insurance
finance income/expenses.
\u2022 Insurance and reinsurance contract amounts denominated in foreign currencies are translated to the Group's reporting
currency at the balance sheet date, with any translation differences recognised in the statement of profit or loss.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForReinsuranceExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-347": { "value": "Insurance and reinsurance contracts
Recognition and measurement
The Group applies IFRS 17 to all insurance contracts issued and reinsurance contracts held. These are defined respectively as
contracts under which the Group accepts significant insurance risk by agreeing to compensate a policyholder/cedant if they are
adversely affected by an insured event, and contracts which are issued by a reinsurer to compensate the Group as cedant for
claims arising from underlying contracts. Insurance risk is considered in further detail in Note 30. The Group has elected to
apply the General Measurement Model (\u201cGMM\u201d) to all insurance and reinsurance contracts that it issues, and applies the GMM
with certain modifications to all reinsurance contracts that it holds. This is the default approach under IFRS 17 - the optional
simplified Premium Allocation Approach has not been applied. Under the GMM, insurance contracts issued are aggregated into
groups. Contracts are then recognised at the earliest of (i) the beginning of the coverage period of the group; (ii) the date when
first payment from a policyholder/cedant in the group is due; or (iii) where applicable, when the group becomes onerous. The
Group measures its reinsurance contracts held separately from the underlying contracts to which the arrangement relates. For
proportional reinsurance contracts, these are recognised at the later of the date on which the first underlying contract is initially
recognised, or the date into which the reinsurance is entered. Non-proportional reinsurance contracts are typically recognised at
the beginning of the coverage period of the group of reinsurance contracts. However if the underlying group is determined to be
onerous, then the reinsurance contract is recognised on the date at which this assessment took place.
3 Statement of accounting policies continued
Level of aggregation
The Group is required under IFRS 17 to allocate its insurance contracts into groups. These are first aggregated into portfolios at
a granular level based on whether they share similar risk characteristics and are managed together. Generally, all insurance
contracts within a product line are considered by management to represent a portfolio of contracts. These are then aggregated
further into groups based on profitability characteristics. The three categories are as follows:
\u2022 Contracts that are onerous on initial recognition, meaning the expected costs of meeting contractual obligations will exceed
the expected economic benefits;
\u2022 Contracts that are not onerous on initial recognition but have a significant possibility of becoming onerous subsequently; and
\u2022 Contracts that are not onerous on initial recognition and have no significant possibility of becoming onerous subsequently.
The majority of the Group's insurance contracts are deemed not to be onerous on initial recognition with a possibility of
becoming onerous subsequently.
Finally, these are aggregated into annual cohorts with contracts issued more than one year apart separated out. These groups
represent the level of aggregation at which insurance contracts are initially recognised and measured. Such groupings are not
subsequently reconsidered.
Components of insurance and reinsurance contracts
Insurance and reinsurance contracts included within the Group's statement of financial position are comprised of the following
components.
\u2022 The present value of future cash flows. Cash flows are comprised of future expected premium which is based on data entered
into underwriting systems, gross and reinsured claims payments derived from the latest quarterly reserving exercise,
expenses deemed to be within the contract boundary, and lapses/cancellations which are projected by applying assumptions
determined through statistical measures based on the Group\u2019s experience. Cash flows also include amounts due to and from
insureds, brokers and reinsurers. An allowance is made for default by these parties. The future cash flows are discounted
using a rate derived by applying the 'bottom-up' estimation technique. As referenced in Section 3a, the future cash flows and
their discounting are both sensitive to changes in accounting estimates.
\u2022 A risk adjustment for non-financial risk. This represents the compensation that the Group requires for bearing uncertainty
around the amount and timing of the cash flows that arise from non-financial risk. IFRS 17 does not prescribe a specific
approach, therefore the Group has opted to apply the CoC approach. Under this method, the risk adjustment is calculated by
applying a cost of capital rate to the present value of the projected capital for non-financial risk. The risk adjustment changes
as cash flows crystallise on existing business, new business is recognised, and any changes to the cost of capital are
applied.
\u2022 The contractual service margin. This represents the unearned profit that the Group will recognise as it provides services in
the future. If the contract is not deemed to be onerous on initial recognition, the CSM is measured as the equal and opposite
of the sum of its related cash flows and risk adjustment. If deemed to be onerous, then the full CSM is immediately
recognised as a loss in the statement of profit or loss, and included within the loss component on subsequent measurement.
The Group has elected not to calculate its CSM on a year-to-date basis. Instead, the CSM is taken as the weighted average of
the year-to-date quarters, meaning this is updated periodically and then \"locked in\" at the year end position. Groups of
insurance contracts, including the CSM, that generate cash flows in a foreign currency are treated as monetary items. As the
Group measures fulfilment cash flows based on the four major transactional currencies (USD, GBP, EUR and Canadian
dollars), the Group maintains the CSM based on these respective currencies.
Coverage units
Management is required to identify coverage units in order to determine the amount of CSM that should be released into the
profit or loss in each period. Coverage units are determined at a policy level by considering the quantity of the benefits provided
and the expected coverage duration. For insurance contracts issued and proportional reinsurance contracts held, the number of
coverage units in a group reflects the expected pattern of underwriting of the contracts, as the level of service provided depends
on the number of contracts in force. Once management has determined the number of coverage units included in a group of
insurance contracts, CSM is allocated to each coverage unit. An assessment is then made at each reporting period as to how
much of the CSM should be released and recognised as profit. For non-proportional reinsurance contracts held, the CSM is
amortised on a straight-line basis over the life of the policy, as benefits are received evenly over the coverage period.
Liability for remaining coverage (\"LRC\") and liability for incurred claims (\"LIC\")
The LRC represents the Group's obligation for insurance contracts written where insured events have not yet occurred. The LIC
represents the Group's obligation to pay claims for insured events that have already occurred, including events that have
occurred but for which claims have not been reported. Insurance contracts issued are comprised of the LRC, which includes a
loss component, and the LIC. Reinsurance contracts held are comprised of the asset for remaining coverage (\"ARC\"),
3 Statement of accounting policies continued
containing a loss recovery component, and an asset for incurred claims (\"AIC\"). Note that the LRC and ARC include an element
of the PVFCF, a risk adjustment for non-financial risk, and the CSM. The LIC and AIC include the remainder of the PVFCF and a
risk adjustment for non-financial risk.
Amounts recognised in profit or loss
\u2022 Insurance revenue in each reporting period represents the changes in the LRC that relate to services for which the Group
expects to receive consideration, in addition to an allocation of premiums that relate to the recovery of insurance acquisition
cash flows. Changes in the LRC include claims and expenses incurred in the period measured at the amounts expected at
the beginning of the period, changes in the risk adjustment for non-financial risk, amounts recognised as profit through
release of the CSM for insurance contract services provided, and other amounts including experience adjustments (which
represent the difference between the expected present value of future cash flows versus the actual cash flows generated,
and any resultant second order impacts).
\u2022 Insurance service expenses are comprised of incurred claims and other directly attributable expenses, changes that relate to
past service, changes that relate to future service, and the amortisation of insurance acquisition cash flows.
\u2022 Income/expenses from reinsurance contracts are presented separately from income/expenses from underlying insurance
contracts. The Group has elected to present its net expenses from reinsurance contracts in the statement of profit or loss as
the allocation of reinsurance premium and amounts recoverable from reinsurers for incurred claims.
\u2022 Finance income/expense from insurance contracts issued and reinsurance contracts held shows the interest accreted and
the effect of changes in discount rates and other financial assumptions.
\u2022 Changes in the risk adjustment for non-financial risk are disaggregated between insurance service expenses and insurance
finance income/expenses.
\u2022 Insurance and reinsurance contract amounts denominated in foreign currencies are translated to the Group's reporting
currency at the balance sheet date, with any translation differences recognised in the statement of profit or loss.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-349": { "value": "Financial instruments
Financial instruments are recognised in the statement of financial position at such time as the Group becomes a party to the
contractual provisions of the financial instrument. Purchases and sales of financial assets are recognised on the trade date,
which is the date the Group commits to purchase or sell the asset. A financial asset is derecognised when the contractual
rights to receive cash flows from the financial assets expire, or where the financial assets have been transferred, together with
substantially all the risks and rewards of ownership. Financial liabilities are derecognised if the Group\u2019s obligations specified in
the contract expire, are discharged or are cancelled.
Classification
The Group is required to classify its financial instruments into one of the following categories on subsequent measurement: fair
value through profit or loss, fair value through other comprehensive income, or amortised cost. Classification is based on the
business model in which these are managed and the characteristics of the associated contractual cash flows. Almost all of the
Group\u2019s financial assets are measured at FVTPL under IFRS 9. This is with the exception of cash and cash equivalents,
amounts due from managed syndicates, and other receivables, all of which are measured at amortised cost.
The Group\u2019s financial liabilities are held at amortised cost, with the exception of its derivative financial liabilities and a potential
profit uplift commission payment, both of which are held at FVTPL (mandatory) under IFRS 9.
Other receivables
Other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market, and are carried at amortised cost less any impairment losses. These are included within \u2018Other assets\u2019 on the face of
the consolidated statement of financial position.
Hedge funds, equity funds and illiquid assets
The Group invests in a number of hedge funds, equity funds and illiquid assets for which there are no available quoted market
prices. The valuation of these assets is based on fair value techniques as described in Note 18. The fair value of our hedge
fund and illiquid asset portfolio is calculated by reference to the underlying net asset values (\"NAV\") of each of the individual
funds. Consideration is also given to adjusting such NAV valuations for any restriction applied to distributions, the existence of
side pocket provisions and the timing of the latest available valuations. At certain times, the Group will have uncalled unfunded
commitments in relation to its illiquid assets and these are are actively monitored by the Group. These amounts are not shown
on the consolidated statement of financial position, and any additional investment into the illiquid asset portfolio is recognised
on the date that this funding is provided by the Group. Further information is included in Note 18 to the financial statements.
3 Statement of accounting policies continued
Other payables
Other payables are stated at amortised cost determined according to the effective interest rate method. Other payables are
included within \u2018Other liabilities\u2019 on the face of the consolidated statement of financial position.
Derivative financial instruments
Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently
remeasured at their fair value. The best evidence of fair value of a derivative at initial recognition is the transaction price. The
method of recognising the resulting fair value gains or losses depends on whether the derivative is designated as a hedging
instrument and, if so, the nature of the item being hedged. The Group does not hold any derivatives designated as fair value
hedges, cash flow hedges or net investment hedges and therefore all fair value movements are recorded through profit or loss.
Fair values are obtained from quoted market prices in active markets, recent market transactions, and valuation techniques
which include discounted cash flow models. All derivatives are carried as assets when fair value is positive and as liabilities
when fair value is negative.
Derivative assets and liabilities are offset and the net amount reported in the statement of financial position when there is a
legally enforceable right to set off the recognised amounts and the parties intend to settle on a net basis, or realise the assets
and settle the liability simultaneously.
Impairment of financial assets
The \u2018expected credit losses\u2019 (\u201cECLs\u201d) model is applied to the Group\u2019s financial assets measured at amortised cost. This
requires an entity to calculate an allowance for credit losses by taking the sum of various probability weighted outcomes. The
general approach is the default method which management applies in determining the ECLs against its cash and cash
equivalents. A simplified approach is permitted for trade receivables, contract assets and lease receivables where there is no
significant financing component. This results in an entity recognising an ECL that is always equal to a lifetime ECL, rather than
assessing periodically whether there has been an increase in credit risk. The main impact of this new IFRS 9 impairment model
is that credit losses are based on the risk of default, as opposed to whether a loss has been incurred, and consequently credit
losses are recognised earlier than under the previous accounting standard. Note that the Group has been able to determine the
credit risk of financial assets on transition using reasonable and supportable information, rather than placing reliance on
transitional provisions.
Cash and cash equivalents
Cash and cash equivalents consist of cash held at bank, cash in hand, deposits held at call with banks, cash held in Lloyd\u2019s
trust accounts and other short term highly liquid investments that are readily convertible to known amounts of cash and which
are subject to an insignificant risk of changes in value. These investments have less than three months maturity from the date
of acquisition. Cash and cash equivalents are measured at amortised cost under IFRS 9.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-350": { "value": "
Classification
The Group is required to classify its financial instruments into one of the following categories on subsequent measurement: fair
value through profit or loss, fair value through other comprehensive income, or amortised cost. Classification is based on the
business model in which these are managed and the characteristics of the associated contractual cash flows. Almost all of the
Group\u2019s financial assets are measured at FVTPL under IFRS 9. This is with the exception of cash and cash equivalents,
amounts due from managed syndicates, and other receivables, all of which are measured at amortised cost.
The Group\u2019s financial liabilities are held at amortised cost, with the exception of its derivative financial liabilities and a potential
profit uplift commission payment, both of which are held at FVTPL (mandatory) under IFRS 9.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-351": { "value": "
Hedge funds, equity funds and illiquid assets
The Group invests in a number of hedge funds, equity funds and illiquid assets for which there are no available quoted market
prices. The valuation of these assets is based on fair value techniques as described in Note 18. The fair value of our hedge
fund and illiquid asset portfolio is calculated by reference to the underlying net asset values (\"NAV\") of each of the individual
funds. Consideration is also given to adjusting such NAV valuations for any restriction applied to distributions, the existence of
side pocket provisions and the timing of the latest available valuations. At certain times, the Group will have uncalled unfunded
commitments in relation to its illiquid assets and these are are actively monitored by the Group. These amounts are not shown
on the consolidated statement of financial position, and any additional investment into the illiquid asset portfolio is recognised
on the date that this funding is provided by the Group. Further information is included in Note 18 to the financial statements.
Derivative financial instruments
Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently
remeasured at their fair value. The best evidence of fair value of a derivative at initial recognition is the transaction price. The
method of recognising the resulting fair value gains or losses depends on whether the derivative is designated as a hedging
instrument and, if so, the nature of the item being hedged. The Group does not hold any derivatives designated as fair value
hedges, cash flow hedges or net investment hedges and therefore all fair value movements are recorded through profit or loss.
Fair values are obtained from quoted market prices in active markets, recent market transactions, and valuation techniques
which include discounted cash flow models. All derivatives are carried as assets when fair value is positive and as liabilities
when fair value is negative.
Derivative assets and liabilities are offset and the net amount reported in the statement of financial position when there is a
legally enforceable right to set off the recognised amounts and the parties intend to settle on a net basis, or realise the assets
and settle the liability simultaneously.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-353": { "value": "
Derivative financial instruments
Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently
remeasured at their fair value. The best evidence of fair value of a derivative at initial recognition is the transaction price. The
method of recognising the resulting fair value gains or losses depends on whether the derivative is designated as a hedging
instrument and, if so, the nature of the item being hedged. The Group does not hold any derivatives designated as fair value
hedges, cash flow hedges or net investment hedges and therefore all fair value movements are recorded through profit or loss.
Fair values are obtained from quoted market prices in active markets, recent market transactions, and valuation techniques
which include discounted cash flow models. All derivatives are carried as assets when fair value is positive and as liabilities
when fair value is negative.
Derivative assets and liabilities are offset and the net amount reported in the statement of financial position when there is a
legally enforceable right to set off the recognised amounts and the parties intend to settle on a net basis, or realise the assets
and settle the liability simultaneously.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-352": { "value": "
Derivative financial instruments
Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently
remeasured at their fair value. The best evidence of fair value of a derivative at initial recognition is the transaction price. The
method of recognising the resulting fair value gains or losses depends on whether the derivative is designated as a hedging
instrument and, if so, the nature of the item being hedged. The Group does not hold any derivatives designated as fair value
hedges, cash flow hedges or net investment hedges and therefore all fair value movements are recorded through profit or loss.
Fair values are obtained from quoted market prices in active markets, recent market transactions, and valuation techniques
which include discounted cash flow models. All derivatives are carried as assets when fair value is positive and as liabilities
when fair value is negative.
Derivative assets and liabilities are offset and the net amount reported in the statement of financial position when there is a
legally enforceable right to set off the recognised amounts and the parties intend to settle on a net basis, or realise the assets
and settle the liability simultaneously.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-354": { "value": "
Impairment of financial assets
The \u2018expected credit losses\u2019 (\u201cECLs\u201d) model is applied to the Group\u2019s financial assets measured at amortised cost. This
requires an entity to calculate an allowance for credit losses by taking the sum of various probability weighted outcomes. The
general approach is the default method which management applies in determining the ECLs against its cash and cash
equivalents. A simplified approach is permitted for trade receivables, contract assets and lease receivables where there is no
significant financing component. This results in an entity recognising an ECL that is always equal to a lifetime ECL, rather than
assessing periodically whether there has been an increase in credit risk. The main impact of this new IFRS 9 impairment model
is that credit losses are based on the risk of default, as opposed to whether a loss has been incurred, and consequently credit
losses are recognised earlier than under the previous accounting standard. Note that the Group has been able to determine the
credit risk of financial assets on transition using reasonable and supportable information, rather than placing reliance on
transitional provisions.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-355": { "value": "
Cash and cash equivalents
Cash and cash equivalents consist of cash held at bank, cash in hand, deposits held at call with banks, cash held in Lloyd\u2019s
trust accounts and other short term highly liquid investments that are readily convertible to known amounts of cash and which
are subject to an insignificant risk of changes in value. These investments have less than three months maturity from the date
of acquisition. Cash and cash equivalents are measured at amortised cost under IFRS 9.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-356": { "value": "Share based compensation
The grant date fair value of share based payment awards granted to employees is recognised as an employee expense, with a
corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The
amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market
performance conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the
number of awards that meet the related service and non-market performance conditions at the vesting date. For share based
payment awards with non-vesting conditions, the grant date fair value of the share based payment is measured to reflect such
conditions and there is no true-up for differences between expected and actual outcomes.
When options are exercised and new shares are issued, the proceeds received, net of any transaction costs, are credited to
share capital (nominal value) with the excess amount going to share premium. For other plans, when no proceeds are received,
the nominal value of shares issued is to share capital and debited to retained earnings. When the options are exercised and
the shares are granted from the employee share trust, the proceeds received, net of any transaction costs, and the value of
shares held within the trust, are credited to retained earnings.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-357": { "value": "
The grant date fair value of share based payment awards granted to employees is recognised as an employee expense, with a
corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The
amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market
performance conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the
number of awards that meet the related service and non-market performance conditions at the vesting date. For share based
payment awards with non-vesting conditions, the grant date fair value of the share based payment is measured to reflect such
conditions and there is no true-up for differences between expected and actual outcomes.
When options are exercised and new shares are issued, the proceeds received, net of any transaction costs, are credited to
share capital (nominal value) with the excess amount going to share premium. For other plans, when no proceeds are received,
the nominal value of shares issued is to share capital and debited to retained earnings. When the options are exercised and
the shares are granted from the employee share trust, the proceeds received, net of any transaction costs, and the value of
shares held within the trust, are credited to retained earnings.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-358": { "value": "
4a Reporting segments
Segmental information is presented based on the Group\u2019s management and internal reporting structures which represent the
level at which financial information is reported, performance is analysed and resources are allocated by the Group\u2019s Executive
Committee, being the chief operating decision maker as defined by IFRS 8.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated
on a reasonable basis. Those items that are allocated on a reasonable basis are split based on each segment\u2019s capital
requirement which is taken from the Group\u2019s most up-to-date business plan. The reporting segments do not cross-sell business
to each other.
Finance costs and taxation have not been allocated to operating segments as these items are determined at a consolidated
level and do not relate to operating performance.
As a result of the adoption of IFRS 17, comparative information has been restated for the year ended 31 December 2022.
An overview of the Group's segments is set out below.
Cyber Risks
This segment underwrites cyber and technology risks.
Digital
This segment underwrites a variety of marine, contingency and SME liability risks through digital channels such as e-trading
platforms and broker portals.
MAP Risks
This segment underwrites marine, portfolio underwriting and political and contingency business.
Property Risks
This segment underwrites first party property risks and reinsurance business.
Specialty Risks
This segment underwrites a wide range of liability classes, including employment practices risks and directors and officers, as
well as healthcare, lawyers and international financial institutions.
4 Segmental reporting continued
4b Segmental information
Year ended 31 December 2023
Cyber Risks
Digital
MAP Risks
Property
Risks
Specialty
Risks
Total
2023
$m
$m
$m
$m
$m
$m
Insurance revenue
1,174.9
224.7
1,015.4
1,145.2
1,882.2
5,442.4
Insurance service expenses
(802.1)
(144.0)
(635.5)
(643.9)
(1,367.1)
(3,592.6)
Current year claims
(565.2)
(90.5)
(430.8)
(470.1)
(940.1)
(2,496.7)
Adjustments to prior year claims
(8.9)
33.7
88.6
108.1
39.8
261.3
(Loss on)/reversal of onerous contracts
(2.6)
2.6
1.4
(0.1)
0.5
1.8
Insurance acquisition cash flows amortisation and other directly\u00a0
attributable expenses
(225.4)
(89.8)
(294.7)
(281.8)
(467.3)
(1,359.0)
Allocation of reinsurance premium
(308.5)
(24.3)
(236.1)
(198.5)
(359.9)
(1,127.3)
Amounts recoverable from reinsurers for incurred claims
210.1
7.1
23.9
26.4
261.0
528.5
Current year claims
211.8
13.0
107.6
57.0
294.2
683.6
Adjustments to prior year claims
(1.0)
(5.7)
(83.0)
(30.1)
(31.7)
(151.5)
Share of expenses and other amounts
(0.7)
(0.2)
(0.7)
(0.5)
(1.5)
(3.6)
Insurance service result
274.4
63.5
167.7
329.2
416.2
1,251.0
Net investment income
86.6
14.8
53.5
75.2
250.1
480.2
Net finance expense from insurance contracts issued
(17.5)
(2.9)
(12.6)
(10.9)
(125.4)
(169.3)
Net finance (expense)/income from reinsurance contracts
held
(1.3)
0.5
2.1
(13.7)
28.3
15.9
Net insurance and financial result
342.2
75.9
210.7
379.8
569.2
1,577.8
Other income
16.9
3.2
14.8
16.5
27.1
78.5
Other operating expenses
(52.7)
(19.9)
(68.1)
(42.5)
(182.6)
(365.8)
Foreign exchange gains
1.0
0.2
0.8
0.9
1.6
4.5
Segment result
307.4
59.4
158.2
354.7
415.3
1,295.0
Finance costs
(40.6)
Profit before tax
1,254.4
Tax expense
(227.6)
Profit after tax
1,026.8
Claims ratio
42%
23%
41%
35%
42%
39%
Expense ratio
26%
45%
38%
30%
31%
32%
Combined ratio
68%
68%
79%
65%
73%
71%
Insurance assets
50.5
14.1
0.5
13.7
22.7
101.5
Reinsurance assets
469.0
27.5
322.6
287.2
1,320.4
2,426.7
Other
2,411.3
368.1
1,511.2
1,961.7
4,884.9
11,137.2
Total assets
2,930.8
409.7
1,834.3
2,262.6
6,228.0
13,665.4
Insurance liabilities
1,634.8
208.8
1,006.6
1,173.3
3,968.7
7,992.2
Reinsurance liabilities
73.2
8.7
160.2
\u2014
91.4
333.5
Other
333.8
52.5
182.2
297.3
591.8
1,457.6
Total liabilities
2,041.8
270.0
1,349.0
1,470.6
4,651.9
9,783.3
The calculation bases for the claims, expense and combined ratios are disclosed within the APMs section on page 254.
4 Segmental reporting continued
Year ended 31 December 2022 (restated)
Cyber Risks
Digital
MAP Risks
Property
Risks
Specialty
Risks
Total
2022
$m
$m
$m
$m
$m
$m
Insurance revenue
1,013.5
211.3
970.3
807.2
1,846.1
4,848.4
Insurance service expenses
(750.9)
(161.3)
(859.5)
(699.5)
(1,542.8)
(4,014.0)
Current year claims
(506.3)
(104.3)
(436.2)
(524.0)
(974.5)
(2,545.3)
Adjustments to prior year claims
(81.4)
9.1
(139.4)
37.0
(102.2)
(276.9)
(Loss on)/reversal of onerous contracts
23.2
(0.2)
(0.5)
1.2
0.4
24.1
Insurance acquisition cash flows amortisation and other directly
attributable expenses
(186.4)
(65.9)
(283.4)
(213.7)
(466.5)
(1,215.9)
Allocation of reinsurance premium
(198.3)
(27.2)
(250.1)
(175.7)
(314.1)
(965.4)
Amounts recoverable from reinsurers for incurred claims
208.4
21.5
296.3
108.5
319.2
953.9
Current year claims
128.2
26.2
172.9
123.4
282.9
733.6
Adjustments to prior year claims
80.5
(4.6)
123.7
(14.6)
37.0
222.0
Share of expenses and other amounts
(0.3)
(0.1)
(0.3)
(0.3)
(0.7)
(1.7)
Insurance service result
272.7
44.3
157.0
40.5
308.4
822.9
Net investment loss
(34.5)
(8.7)
(20.5)
(27.1)
(88.9)
(179.7)
Net finance income from insurance contracts issued
30.2
4.8
45.3
24.5
174.7
279.5
Net finance expense from reinsurance contracts held
(9.0)
(0.9)
(19.6)
(5.2)
(61.8)
(96.5)
Net insurance and financial result
259.4
39.5
162.2
32.7
332.4
826.2
Other income
7.9
2.3
1.0
7.4
13.5
32.1
Other operating expenses
(33.7)
(9.9)
(34.8)
(35.5)
(103.7)
(217.6)
Foreign exchange (losses)
(3.6)
(0.8)
(3.5)
(2.9)
(6.5)
(17.3)
Segment result
230.0
31.1
124.9
1.7
235.7
623.4
Finance costs
(39.4)
Profit before tax
584.0
Tax expense
(100.7)
Profit after tax
483.3
Claims ratio
44%
40%
39%
60%
49%
47%
Expense ratio
23%
36%
39%
34%
31%
32%
Combined ratio
67%
76%
78%
94%
80%
79%
Insurance assets
0.4
\u2014
44.1
14.0
25.6
84.1
Reinsurance assets
308.6
26.5
327.0
430.8
1,082.4
2,175.3
Other
2,169.6
340.6
1,307.0
1,436.5
4,199.9
9,453.6
Total assets
2,478.6
367.1
1,678.1
1,881.3
5,307.9
11,713.0
Insurance liabilities
1,285.8
198.2
1,141.9
1,141.9
3,582.0
7,349.8
Reinsurance liabilities
17.9
2.1
82.6
3.9
54.7
161.2
Other
348.6
49.5
134.6
218.3
496.0
1,247.0
Total liabilities
1,652.3
249.8
1,359.1
1,364.1
4,132.7
8,758.0
4c Information about geographical areas
The Group generates revenue in multiple geographies, an overview of which is set out below. The basis for attributing insurance
revenues is as follows:
\u2022 UK insurance revenue represents all risks placed at Lloyd\u2019s;
\u2022 US insurance revenue represents all risks placed at the Group\u2019s US insurance companies (Beazley Insurance Company, Inc.
and Beazley America Insurance Company, Inc); and
\u2022 European insurance revenue represents all risks placed at the Group\u2019s European insurance company (Beazley Insurance dac).
2023
2022\u00b9
$m
$m
Insurance revenue
UK (Lloyd's)
4,539.0
3,990.6
US (Non-Lloyd's)
603.5
625.7
Europe (Non-Lloyd's)
299.9
232.1
5,442.4
4,848.4
1 Restated for the year ended 31 December 2022 following the adoption of IFRS 17.
Provided below is a geographical split of a portion of the Group's non-current assets, namely intangible assets, plant and
equipment, right of use assets, and investments in associates. This excludes financial instruments, deferred tax assets,
pension assets and insurance / reinsurance contract assets.
2023
2022
$m
$m
Non-current assets
UK
186.7
151.0
US
51.4
51.4
Europe
2.8
2.2
240.9
204.6
4d Total revenue
The table below sets out the Group's total revenue, being insurance revenue, interest on cash and cash equivalents and other
income within the scope of IFRS 15.
2023
2022
$m
$m
Insurance revenue
5,442.4
4,848.4
Interest on cash and cash equivalents
16.8
0.5
Other income
78.5
32.1
5,537.7
4,881.0
", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-359": { "value": "
5 Insurance revenue
Insurance revenue represents the total changes in the liability for remaining coverage that relate to services for which the Group
expects to receive consideration. This includes the difference between the claims and other expenses expected at the
beginning of the year versus those actually incurred (per Note 6), after the loss component allocation.
2023
2022
$m
$m
Amounts relating to changes in the liability for remaining coverage:
Expected incurred claims and other expenses after loss component allocation
3,015.7
2,723.8
Change in risk adjustment for non-financial risk for the risk expired after loss component allocation
316.8
274.7
CSM recognised in profit or loss for services provided
691.4
565.2
Other amounts including experience adjustments
503.7
434.6
Insurance acquisition cash flows recovery
914.8
850.1
Total insurance revenue
5,442.4
4,848.4
", "dimensions": { "concept": "ifrs-full:DisclosureOfAnalysisOfInsuranceRevenueExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-360": { "value": "
6 Insurance service expenses
The table below shows the insurance service expenses recognised on groups of insurance contracts issued by the Group.
These are recognised in the consolidated statement of profit or loss as they are incurred.
2023
2022
$m
$m
Incurred claims and other directly attributable expenses
2,911.6
2,908.6
Changes that relate to past service - adjustments to the LIC
(232.0)
279.4
Losses on onerous contracts and reversal of those losses
(1.8)
(24.1)
Insurance acquisition cash flows amortisation
914.8
850.1
Total insurance service expense
3,592.6
4,014.0
", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-361": { "value": "
7 Net income / expenses from reinsurance contracts held
The table below shows the net income/expenses from reinsurance contracts held, comprised of the allocation of reinsurance
premium and amounts recoverable from reinsurers for incurred claims.
2023
2022
$m
$m
Amounts relating to changes in the remaining coverage:
\u2013 Expected claims and other expenses recovery
(740.5)
(731.8)
\u2013 Changes in the risk adjustment recognised for the risk expired
(105.2)
(74.3)
\u2013 CSM recognised for the services received
(290.8)
(195.3)
\u2013 Other amounts including experience adjustments
9.2
36.0
Allocation of reinsurance premium
(1,127.3)
(965.4)
Effect of changes in the risk of reinsurers non-performance
4.2
(32.6)
Claims recovered
680.1
733.4
Other incurred directly attributable expenses
(3.6)
(1.7)
Changes that relate to past service - adjustments to incurred claims recovery
(152.2)
254.8
Amounts recoverable from reinsurers for incurred claims
528.5
953.9
Total net expenses from reinsurance contracts held
(598.8)
(11.5)
28 Insurance and reinsurance contracts
28a Reconciliations by measurement component
This section shows how the net carrying amounts of insurance contracts issued and reinsurance contracts held by the Group
have changed during the year, as a result of changes in cash flows and amounts recognised in profit or loss. An explanation of
how amounts have moved in the year is set out in Note 2.
i) Insurance contracts issued
The tables below set out the estimated present value of future cash flows, the risk adjustment for non-financial risk and the
CSM for insurance contracts issued.
Present value of
future cash
flows
Risk adjustment
for non-financial
risk
CSM
Total
31 December 2023
$m
$m
$m
$m
Opening insurance contract assets
123.5
(12.9)
(26.5)
84.1
Opening insurance contract liabilities
(6,324.0)
(711.3)
(314.5)
(7,349.8)
Net insurance contract liabilities at 01 January 2023
(6,200.5)
(724.2)
(341.0)
(7,265.7)
CSM recognised in profit or loss for services provided
\u2014
\u2014
691.4
691.4
Changes in the risk adjustment for non-financial risk for risk expired
\u2014
316.8
\u2014
316.8
Experience adjustments
893.3
(285.5)
\u2014
607.8
Total changes relating to current service
893.3
31.3
691.4
1,616.0
Changes in estimates that adjust the CSM
135.0
(19.1)
(115.9)
\u2014
Changes in estimates that result in onerous contract losses or
reversal of such losses
6.0
(1.1)
7.5
12.4
Contracts initially recognised in the period
870.2
(264.2)
(616.6)
(10.6)
Total changes relating to future service
1,011.2
(284.4)
(725.0)
1.8
Total changes relating to past service - adjustments to the LIC
16.2
215.8
\u2014
232.0
Recognised in insurance service result
1,920.7
(37.3)
(33.6)
1,849.8
Finance (expenses)/income from insurance contracts issued
(190.2)
(13.9)
34.8
(169.3)
Foreign exchange gains/(losses)
1.9
(0.6)
(4.2)
(2.9)
Other amounts recognised in total comprehensive income
(188.3)
(14.5)
30.6
(172.2)
Premiums received net of insurance acquisition cash flows
(4,526.4)
\u2014
\u2014
(4,526.4)
Claims and other directly attributable expenses paid
2,223.8
\u2014
\u2014
2,223.8
Total cash flows
(2,302.6)
\u2014
\u2014
(2,302.6)
Closing insurance contract assets
103.8
(1.2)
(1.1)
101.5
Closing insurance contract liabilities
(6,874.5)
(774.8)
(342.9)
(7,992.2)
Net insurance contract liabilities at 31 December 2023
(6,770.7)
(776.0)
(344.0)
(7,890.7)
28 Insurance and reinsurance contracts continued
Present value of
future cash
flows
Risk adjustment
for non-financial
risk
CSM
Total
31 December 2022
$m
$m
$m
$m
Opening insurance contract assets
\u2014
\u2014
\u2014
\u2014
Opening insurance contract liabilities
(5,628.3)
(740.3)
(190.9)
(6,559.5)
Net insurance contract liabilities at 01 January 2022
(5,628.3)
(740.3)
(190.9)
(6,559.5)
CSM recognised in profit or loss for services provided
\u2014
\u2014
565.2
565.2
Changes in the risk adjustment for non-financial risk for risk expired
\u2014
274.7
\u2014
274.7
Experience adjustments
518.4
(268.6)
\u2014
249.8
Total changes relating to current service
518.4
6.1
565.2
1,089.7
Changes in estimates that adjust the CSM
57.2
61.5
(118.7)
\u2014
Changes in estimates that result in onerous contract losses or
reversal of such losses
42.7
(3.0)
18.5
58.2
Contracts initially recognised in the period
898.3
(324.8)
(607.6)
(34.1)
Total changes relating to future service
998.2
(266.3)
(707.8)
24.1
Total changes relating to past service - adjustments to the LIC
(517.3)
237.9
\u2014
(279.4)
Recognised in insurance service result
999.3
(22.3)
(142.6)
834.4
Finance income/(expenses) from insurance contracts issued
261.8
29.5
(11.8)
279.5
Foreign exchange gains
45.9
8.9
4.3
59.1
Other amounts recognised in total comprehensive income
307.7
38.4
(7.5)
338.6
Premiums received net of insurance acquisition cash flows
(4,141.0)
\u2014
\u2014
(4,141.0)
Claims and other directly attributable expenses paid
2,261.8
\u2014
\u2014
2,261.8
Total cash flows
(1,879.2)
\u2014
\u2014
(1,879.2)
Closing insurance contract assets
123.5
(12.9)
(26.5)
84.1
Closing insurance contract liabilities
(6,324.0)
(711.3)
(314.5)
(7,349.8)
Net insurance contract liabilities at 31 December 2022
(6,200.5)
(724.2)
(341.0)
(7,265.7)
28 Insurance and reinsurance contracts continued
ii) Reinsurance contracts held
The tables below set out the estimates of the present value of future cash flows, risk adjustment for non-financial risk and CSM
for reinsurance contracts held.
Present value of
future cash
flows
Risk adjustment
for non-financial
risk
CSM
Total
31 December 2023
$m
$m
$m
$m
Opening reinsurance contract assets
1,853.3
184.6
137.4
2,175.3
Opening reinsurance contract liabilities
(193.8)
12.7
19.9
(161.2)
Net reinsurance contract assets at 01 January 2023
1,659.5
197.3
157.3
2,014.1
CSM recognised in profit or loss for the services provided
\u2014
\u2014
(290.8)
(290.8)
Changes in the risk adjustment for non-financial risk for the risk
expired
\u2014
(105.2)
\u2014
(105.2)
Experience adjustments
(139.0)
84.2
\u2014
(54.8)
Total changes relating to current service
(139.0)
(21.0)
(290.8)
(450.8)
Changes in estimates that adjust the CSM
91.6
(16.1)
(75.5)
\u2014
Contracts initially recognised in the period
(436.3)
84.2
352.1
\u2014
Total changes relating to future service
(344.7)
68.1
276.6
\u2014
Adjustments to incurred claims recovery
(110.9)
(41.3)
\u2014
(152.2)
Effect of changes in the risk of reinsurers non-performance
4.2
\u2014
\u2014
4.2
Total changes relating to past service
(106.7)
(41.3)
\u2014
(148.0)
Recognised in insurance service result
(590.4)
5.8
(14.2)
(598.8)
Finance income/(expenses) from reinsurance contracts held
24.0
5.7
(13.8)
15.9
Foreign exchange (losses)/gains
(20.6)
15.8
0.3
(4.5)
Other amounts recognised in total comprehensive income
3.4
21.5
(13.5)
11.4
Premiums paid net of ceding commissions and other directly
attributable expenses paid
1,080.4
\u2014
\u2014
1,080.4
Recoveries from reinsurance
(413.9)
\u2014
\u2014
(413.9)
Total cash flows
666.5
\u2014
\u2014
666.5
Closing reinsurance contract assets
2,143.4
166.2
117.1
2,426.7
Closing reinsurance contract liabilities
(404.4)
58.4
12.5
(333.5)
Net reinsurance contract assets at 31 December 2023
1,739.0
224.6
129.6
2,093.2
28 Insurance and reinsurance contracts continued
Present value of
future cash
flows
Risk adjustment
for non-financial
risk
CSM
Total
31 December 2022
$m
$m
$m
$m
Opening reinsurance contract assets
1,453.7
177.0
43.6
1,674.3
Opening reinsurance contract liabilities
(156.6)
13.8
3.1
(139.7)
Net reinsurance contract assets at 01 January 2022
1,297.1
190.8
46.7
1,534.6
CSM recognised in profit or loss for the services provided
\u2014
\u2014
(195.3)
(195.3)
Changes in the risk adjustment for non-financial risk for the risk
expired
\u2014
(74.3)
\u2014
(74.3)
Experience adjustments
(29.8)
65.7
\u2014
35.9
Total changes relating to current service
(29.8)
(8.6)
(195.3)
(233.7)
Changes in estimates that adjust the CSM
264.4
7.1
(271.5)
\u2014
Contracts initially recognised in the period
(646.2)
74.1
572.1
\u2014
Total changes relating to future service
(381.8)
81.2
300.6
\u2014
Adjustments to incurred claims recovery
307.8
(53.0)
\u2014
254.8
Effect of changes in the risk of reinsurers non-performance
(32.6)
\u2014
\u2014
(32.6)
Total changes relating to past service
275.2
(53.0)
\u2014
222.2
Recognised in insurance service result
(136.4)
19.6
105.3
(11.5)
Finance expenses from reinsurance contracts held
(82.6)
(10.7)
(3.2)
(96.5)
Foreign exchange (losses)/gains
(6.9)
(2.4)
8.5
(0.8)
Other amounts recognised in total comprehensive income
(89.5)
(13.1)
5.3
(97.3)
Premiums paid net of ceding commissions and other directly
attributable expenses paid
961.7
\u2014
\u2014
961.7
Recoveries from reinsurance
(373.4)
\u2014
\u2014
(373.4)
Total cash flows
588.3
\u2014
\u2014
588.3
Closing reinsurance contract assets
1,853.3
184.6
137.4
2,175.3
Closing reinsurance contract liabilities
(193.8)
12.7
19.9
(161.2)
Net reinsurance contract assets at 31 December 2022
1,659.5
197.3
157.3
2,014.1
28 Insurance and reinsurance contracts continued
28b Analysis of the liability for remaining coverage and the liability for incurred claims
i) Insurance contracts issued
The tables below analyse insurance contract assets and liabilities between the LRC and the LIC for insurance contracts issued.
LRC
LIC
Total
Excluding
Loss
Component
Loss
Component
31 December 2023
$m
$m
$m
$m
Opening insurance contract assets
87.2
\u2014
(3.1)
84.1
Opening insurance contract liabilities
(824.7)
(10.1)
(6,515.0)
(7,349.8)
Net insurance contract liabilities at 01 January 2023
(737.5)
(10.1)
(6,518.1)
(7,265.7)
Insurance revenue
5,442.4
\u2014
\u2014
5,442.4
Insurance service expenses:
- Incurred claims and other directly attributable expenses
(86.3)
\u2014
(2,825.3)
(2,911.6)
- Changes that relate to past service - adjustments to the LIC
\u2014
\u2014
232.0
232.0
- Losses on onerous contracts and reversal of those losses
\u2014
1.8
\u2014
1.8
- Insurance acquisition cash flows amortisation
(914.8)
\u2014
\u2014
(914.8)
Recognised in insurance service result
4,441.3
1.8
(2,593.3)
1,849.8
Finance income/(expenses) from insurance contracts issued
70.8
\u2014
(240.1)
(169.3)
Foreign exchange gains/(losses)
4.7
\u2014
(7.6)
(2.9)
Other amounts recognised in total comprehensive income
75.5
\u2014
(247.7)
(172.2)
Premiums received net of insurance acquisition cash flows
(4,526.4)
\u2014
\u2014
(4,526.4)
Claims and other directly attributable expenses paid
\u2014
\u2014
2,223.8
2,223.8
Total cash flows
(4,526.4)
\u2014
2,223.8
(2,302.6)
Closing insurance contract assets
101.7
\u2014
(0.2)
101.5
Closing insurance contract liabilities
(848.8)
(8.3)
(7,135.1)
(7,992.2)
Net insurance contract liabilities at 31 December 2023
(747.1)
(8.3)
(7,135.3)
(7,890.7)
28 Insurance and reinsurance contracts continued
LRC
LIC
Total
Excluding
Loss
Component
Loss
Component
31 December 2022
$m
$m
$m
$m
Opening insurance contract assets
\u2014
\u2014
\u2014
\u2014
Opening insurance contract liabilities
(688.1)
(34.3)
(5,837.1)
(6,559.5)
Net insurance contract liabilities at 01 January 2022
(688.1)
(34.3)
(5,837.1)
(6,559.5)
Insurance revenue
4,848.4
\u2014
\u2014
4,848.4
Insurance service expenses:
- Incurred claims and other directly attributable expenses
(41.0)
\u2014
(2,867.6)
(2,908.6)
- Changes that relate to past service - adjustments to the LIC
\u2014
\u2014
(279.4)
(279.4)
- Losses on onerous contracts and reversal of those losses
\u2014
24.1
\u2014
24.1
- Insurance acquisition cash flows amortisation
(850.1)
\u2014
\u2014
(850.1)
Recognised in insurance service result
3,957.3
24.1
(3,147.0)
834.4
Finance income from insurance contracts issued
129.5
\u2014
150.0
279.5
Foreign exchange gains
4.8
0.1
54.2
59.1
Other amounts recognised in total comprehensive income
134.3
0.1
204.2
338.6
Premiums received net of insurance acquisition cash flows
(4,141.0)
\u2014
\u2014
(4,141.0)
Claims and other directly attributable expenses paid
\u2014
\u2014
2,261.8
2,261.8
Total cash flows
(4,141.0)
\u2014
2,261.8
(1,879.2)
Closing insurance contract assets
87.2
\u2014
(3.1)
84.1
Closing insurance contract liabilities
(824.7)
(10.1)
(6,515.0)
(7,349.8)
Net insurance contract liabilities at 31 December 2022
(737.5)
(10.1)
(6,518.1)
(7,265.7)
28 Insurance and reinsurance contracts continued
ii) Reinsurance contracts held
The tables below analyse reinsurance contract assets and liabilities between the ARC and AIC for reinsurance contracts held.
ARC\u00b9
AIC
Total
31 December 2023
$m
$m
$m
Opening reinsurance contract assets
24.9
2,150.4
2,175.3
Opening reinsurance contract liabilities
(254.7)
93.5
(161.2)
Net reinsurance contract assets at 01 January 2023
(229.8)
2,243.9
2,014.1
Expected claims and other expenses recovery
(1,419.8)
679.3
(740.5)
Changes in the risk adjustment recognised for the risk expired
(189.4)
84.2
(105.2)
CSM recognised for the services received
(290.8)
\u2014
(290.8)
Other amounts including experience adjustments
9.2
\u2014
9.2
Allocation of reinsurance premium
(1,890.8)
763.5
(1,127.3)
Effect of changes in the risk of reinsurers\u2019 non-performance
(1.3)
5.5
4.2
Claims recovered
767.1
(87.0)
680.1
Other incurred directly attributable expenses
(0.5)
(3.1)
(3.6)
Changes that relate to past service \u2013 adjustments to incurred claims recovery
\u2014
(152.2)
(152.2)
Amounts recoverable from reinsurers for incurred claims
765.3
(236.8)
528.5
Net expenses from reinsurance contracts held
(1,125.5)
526.7
(598.8)
Finance (expenses)/income from reinsurance contracts held
(40.9)
56.8
15.9
Foreign exchange (losses)/gains
(6.1)
1.6
(4.5)
Other amounts recognised in total comprehensive income
(47.0)
58.4
11.4
Premiums paid net of ceding commissions and other directly attributable expenses paid
1,080.4
\u2014
1,080.4
Recoveries from reinsurance
\u2014
(413.9)
(413.9)
Total cash flows
1,080.4
(413.9)
666.5
Closing reinsurance contract assets
758.4
1,668.3
2,426.7
Closing reinsurance contract liabilities
(1,080.3)
746.8
(333.5)
Net reinsurance contract assets at 31 December 2023
(321.9)
2,415.1
2,093.2
1 Includes loss recovery component of $3.8m at 01 January 2023 and $0.9m at 31 December 2023.
28 Insurance and reinsurance contracts continued
ARC\u00b9
AIC
Total
31 December 2022
$m
$m
$m
Opening reinsurance contract assets
(29.0)
1,703.3
1,674.3
Opening reinsurance contract liabilities
(223.4)
83.7
(139.7)
Net reinsurance contract assets/(liabilities) at 01 January 2022
(252.4)
1,787.0
1,534.6
Expected claims and other expenses recovery
(1,002.1)
270.3
(731.8)
Changes in the risk adjustment recognised for the risk expired
(140.0)
65.7
(74.3)
CSM recognised for the services received
(195.3)
\u2014
(195.3)
Other amounts including experience adjustments
36.0
\u2014
36.0
Allocation of reinsurance premium
(1,301.4)
336.0
(965.4)
Effect of changes in the risk of reinsurers\u2019 non-performance
(1.4)
(31.2)
(32.6)
Claims recovered
368.3
365.1
733.4
Other incurred directly attributable expenses
5.1
(6.8)
(1.7)
Changes that relate to past service \u2013 adjustments to incurred claims recovery
\u2014
254.8
254.8
Amounts recoverable from reinsurers for incurred claims
372.0
581.9
953.9
Net expenses from reinsurance contracts held
(929.4)
917.9
(11.5)
Finance expenses from reinsurance contracts held
(22.5)
(74.0)
(96.5)
Foreign exchange gains/(losses)
12.8
(13.6)
(0.8)
Other amounts recognised in total comprehensive income
(9.7)
(87.6)
(97.3)
Premiums paid net of ceding commissions and other directly attributable expenses paid
961.7
\u2014
961.7
Recoveries from reinsurance
\u2014
(373.4)
(373.4)
Total cash flows
961.7
(373.4)
588.3
Closing reinsurance contract assets
24.9
2,150.4
2,175.3
Closing reinsurance contract liabilities
(254.7)
93.5
(161.2)
Net reinsurance contract assets/(liabilities) at 31 December 2022
(229.8)
2,243.9
2,014.1
1 Includes loss recovery component of $3.4m at 01 January 2022 and $3.8m at 31 December 2022.
28 Insurance and reinsurance contracts continued
28c New business
i) Impact of insurance contracts issued in the year
The following tables show the impact of new insurance contracts issued in the period. These are broken down by contracts
which were/were not deemed to be onerous on initial recognition.
Non-onerous
contracts
originated
Onerous
contracts
originated
Total
Year ended 31 December 2023
$m
$m
$m
Estimated present value of future cash outflows:
- Insurance acquisition cash flows
(759.3)
(68.1)
(827.4)
- Claims and other directly attributable expenses
(2,489.8)
(176.7)
(2,666.5)
Estimated present value of future cash inflows
4,115.0
249.1
4,364.1
Risk adjustment for non-financial risk
(249.3)
(14.9)
(264.2)
Contractual service margin
(616.6)
\u2014
(616.6)
Net increase in insurance contract liabilities
\u2014
(10.6)
(10.6)
Non-onerous
contracts
originated
Onerous
contracts
originated
Total
Year ended 31 December 2022
$m
$m
$m
Estimated present value of future cash outflows:
- Insurance acquisition cash flows
(531.9)
(112.1)
(644.0)
- Claims and other directly attributable expenses
(1,720.7)
(391.2)
(2,111.9)
Estimated present value of future cash inflows
3,077.9
576.3
3,654.2
Risk adjustment for non-financial risk
(217.7)
(107.1)
(324.8)
Contractual service margin
(607.6)
\u2014
(607.6)
Net increase in insurance contract liabilities
\u2014
(34.1)
(34.1)
ii) Impact of reinsurance contracts held in the year
The following table shows the impact of new reinsurance contracts initially recognised in the period which were not deemed to
originate with a loss recovery component. Contracts originating with a loss recovery component are $0.3m (2022: $12.1m).
2023
2022
$m
$m
Estimated present value of future cash outflows
(1,253.5)
(1,671.6)
Estimated present value of future cash inflows
817.2
1,025.4
Risk adjustment for non-financial risk
84.2
74.1
Contractual service margin
352.1
572.1
Net increase in reinsurance contract assets
\u2014
\u2014
28 Insurance and reinsurance contracts continued
28d Future CSM release
The tables below show when the Group expects to release the closing CSM to the profit or loss in appropriate future time
bands. It is presented for both insurance contracts issued and reinsurance contracts held.
2023
2022
Insurance contracts issued
$m
$m
Number of years until expected to be recognised
1
299.0
301.7
2
14.7
12.5
3
10.5
8.9
4
7.6
6.6
5
5.1
4.8
6-10
7.1
6.5
>10
\u2014
\u2014
Total
344.0
341.0
2023
2022
Reinsurance contracts held
$m
$m
Number of years until expected to be recognised
1
118.7
143.0
2
3.7
4.4
3
2.6
3.0
4
1.8
2.2
5
1.2
1.7
6-10
1.6
3.0
>10
\u2014
\u2014
Total
129.6
157.3
28 Insurance and reinsurance contracts continued
28e Claims development
The following tables show the estimates of cumulative ultimate claims for each successive underwriting year from five years
prior to the reporting date, reconciled back to LIC. This information has been provided on a gross of reinsurance basis and
separately for reinsurance contracts held. As the Group has not previously published claims development information on an
IFRS 17 basis, only claims development from the 2019 underwriting year onward (being five years before the end of the annual
reporting period in which IFRS 17 was first applied by the Group) has been disclosed below. In the below tables, historic periods
have been revalued using current exchange rates. The cumulative estimate of claims and recoveries comprise expected claims
and reinsurance recovery cash flows only and do not include the risk adjustment, premiums or acquisition costs.
Underwriting year
Insurance contracts issued
2019
2020
2021
2022
2023
Total
2023
$m
$m
$m
$m
$m
$m
At end of underwriting year
1,712.5
2,309.3
2,699.4
3,123.8
3,112.0
1 year later
2,205.2
2,696.3
2,966.1
3,030.4
2 years later
2,236.2
2,802.2
2,782.1
3 years later
2,231.5
2,649.2
4 years later
2,221.9
Cumulative gross estimate of claims
2,221.9
2,649.2
2,782.1
3,030.4
3,112.0
13,795.6
Cumulative payments to date
(1,696.9)
(1,765.3)
(1,319.5)
(941.9)
(287.3)
(6,010.9)
Carrying amount relating to 2018 and prior
underwriting years
1,102.7
Less liability for remaining coverage claims only
(1,835.6)
Impact of discounting (LIC)
(555.5)
LIC risk adjustment for non-financial risk
639.0
Gross discounted LIC
7,135.3
Underwriting year
Reinsurance contracts held
2019
2020
2021
2022
2023
Total
2023
$m
$m
$m
$m
$m
$m
At end of underwriting year
(290.9)
(455.4)
(700.1)
(934.1)
(520.9)
1 year later
(412.1)
(635.1)
(708.9)
(884.2)
2 years later
(376.4)
(700.0)
(708.1)
3 years later
(394.9)
(577.1)
4 years later
(423.5)
Cumulative gross estimate of claims recoveries
(423.5)
(577.1)
(708.1)
(884.2)
(520.9)
(3,113.8)
Cumulative payments to date
263.5
347.1
119.0
69.5
13.8
812.9
Carrying amount relating to 2018 and prior
underwriting years
(451.9)
Less asset for remaining coverage claims only
338.7
Impact of discounting (AIC)
190.4
AIC risk adjustment for non-financial risk
(191.4)
Reinsurance discounted AIC
(2,415.1)
", "dimensions": { "concept": "ifrs-full:DisclosureOfReinsuranceExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-364": { "value": "
8 Net financial result
Finance income/(expense) from insurance contracts issued and reinsurance contracts held represents the interest accreted
and the effect of changes in discount rates and other financial assumptions. The net financial result is comprised of the
Group's net investment income/(loss) and its net insurance finance income/(expense).
2023
2022
$m
$m
Interest and dividends on financial assets at fair value
215.3
101.1
Interest on cash and cash equivalents
16.8
0.5
Net realised fair value losses on financial assets at FVTPL
(69.2)
(7.6)
Net unrealised fair value gains/(losses) on financial assets at FVTPL
325.2
(266.8)
Investment income/(expense) from financial assets
488.1
(172.8)
Investment management expenses
(7.9)
(6.9)
Net investment income/(loss)
480.2
(179.7)
Interest accreted
(379.1)
(153.7)
Effect of changes in financial assumptions
209.8
433.2
Net finance (expense)/income from insurance contracts issued
(169.3)
279.5
Interest accreted
84.4
28.5
Effect of changes in financial assumptions
(68.5)
(125.0)
Net finance income/(expense) from reinsurance contracts held
15.9
(96.5)
Net insurance finance (expense)/income
(153.4)
183.0
Net financial result
326.8
3.3
Investment income by category of financial asset
The tables below show the Group's investment income/(expense), split by category of financial asset. Note that 'Other financial
assets' includes cash and cash equivalents and derivative financial assets.
Debt securities and
syndicate loans
Capital\u00a0
growth assets
Other\u00a0
financial assets
Total
2023
$m
$m
$m
$m
Interest and dividends received
208.4
3.7
20.0
232.1
Net realised (losses)/gains
(117.8)
52.6
(4.0)
(69.2)
Net unrealised fair value gains
291.2
34.0
\u2013
325.2
Total investment income from financial assets
381.8
90.3
16.0
488.1
Debt securities and
syndicate loans
Capital\u00a0
growth assets
Other\u00a0
financial assets
Total
2022
$m
$m
$m
$m
Interest and dividends received
96.6
3.6
1.4
101.6
Net realised (losses)/gains
(93.3)
31.9
53.8
(7.6)
Net unrealised fair value losses
(235.6)
(30.9)
(0.3)
(266.8)
Total investment expense from financial assets
(232.3)
4.6
54.9
(172.8)
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestExpenseExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-363": { "value": "
8 Net financial result
Finance income/(expense) from insurance contracts issued and reinsurance contracts held represents the interest accreted
and the effect of changes in discount rates and other financial assumptions. The net financial result is comprised of the
Group's net investment income/(loss) and its net insurance finance income/(expense).
2023
2022
$m
$m
Interest and dividends on financial assets at fair value
215.3
101.1
Interest on cash and cash equivalents
16.8
0.5
Net realised fair value losses on financial assets at FVTPL
(69.2)
(7.6)
Net unrealised fair value gains/(losses) on financial assets at FVTPL
325.2
(266.8)
Investment income/(expense) from financial assets
488.1
(172.8)
Investment management expenses
(7.9)
(6.9)
Net investment income/(loss)
480.2
(179.7)
Interest accreted
(379.1)
(153.7)
Effect of changes in financial assumptions
209.8
433.2
Net finance (expense)/income from insurance contracts issued
(169.3)
279.5
Interest accreted
84.4
28.5
Effect of changes in financial assumptions
(68.5)
(125.0)
Net finance income/(expense) from reinsurance contracts held
15.9
(96.5)
Net insurance finance (expense)/income
(153.4)
183.0
Net financial result
326.8
3.3
Investment income by category of financial asset
The tables below show the Group's investment income/(expense), split by category of financial asset. Note that 'Other financial
assets' includes cash and cash equivalents and derivative financial assets.
Debt securities and
syndicate loans
Capital\u00a0
growth assets
Other\u00a0
financial assets
Total
2023
$m
$m
$m
$m
Interest and dividends received
208.4
3.7
20.0
232.1
Net realised (losses)/gains
(117.8)
52.6
(4.0)
(69.2)
Net unrealised fair value gains
291.2
34.0
\u2013
325.2
Total investment income from financial assets
381.8
90.3
16.0
488.1
Debt securities and
syndicate loans
Capital\u00a0
growth assets
Other\u00a0
financial assets
Total
2022
$m
$m
$m
$m
Interest and dividends received
96.6
3.6
1.4
101.6
Net realised (losses)/gains
(93.3)
31.9
53.8
(7.6)
Net unrealised fair value losses
(235.6)
(30.9)
(0.3)
(266.8)
Total investment expense from financial assets
(232.3)
4.6
54.9
(172.8)
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-362": { "value": "
8 Net financial result
Finance income/(expense) from insurance contracts issued and reinsurance contracts held represents the interest accreted
and the effect of changes in discount rates and other financial assumptions. The net financial result is comprised of the
Group's net investment income/(loss) and its net insurance finance income/(expense).
2023
2022
$m
$m
Interest and dividends on financial assets at fair value
215.3
101.1
Interest on cash and cash equivalents
16.8
0.5
Net realised fair value losses on financial assets at FVTPL
(69.2)
(7.6)
Net unrealised fair value gains/(losses) on financial assets at FVTPL
325.2
(266.8)
Investment income/(expense) from financial assets
488.1
(172.8)
Investment management expenses
(7.9)
(6.9)
Net investment income/(loss)
480.2
(179.7)
Interest accreted
(379.1)
(153.7)
Effect of changes in financial assumptions
209.8
433.2
Net finance (expense)/income from insurance contracts issued
(169.3)
279.5
Interest accreted
84.4
28.5
Effect of changes in financial assumptions
(68.5)
(125.0)
Net finance income/(expense) from reinsurance contracts held
15.9
(96.5)
Net insurance finance (expense)/income
(153.4)
183.0
Net financial result
326.8
3.3
Investment income by category of financial asset
The tables below show the Group's investment income/(expense), split by category of financial asset. Note that 'Other financial
assets' includes cash and cash equivalents and derivative financial assets.
Debt securities and
syndicate loans
Capital\u00a0
growth assets
Other\u00a0
financial assets
Total
2023
$m
$m
$m
$m
Interest and dividends received
208.4
3.7
20.0
232.1
Net realised (losses)/gains
(117.8)
52.6
(4.0)
(69.2)
Net unrealised fair value gains
291.2
34.0
\u2013
325.2
Total investment income from financial assets
381.8
90.3
16.0
488.1
Debt securities and
syndicate loans
Capital\u00a0
growth assets
Other\u00a0
financial assets
Total
2022
$m
$m
$m
$m
Interest and dividends received
96.6
3.6
1.4
101.6
Net realised (losses)/gains
(93.3)
31.9
53.8
(7.6)
Net unrealised fair value losses
(235.6)
(30.9)
(0.3)
(266.8)
Total investment expense from financial assets
(232.3)
4.6
54.9
(172.8)
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExpenseExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-366": { "value": "
9 Other income
2023
2022
$m
$m
Commissions received by Beazley service companies
42.8
20.0
Profit commissions from syndicates
29.9
7.2
Managing agent fees from third party syndicates
3.6
4.0
Other income
2.2
0.9
Total other income
78.5
32.1
Commissions received by Beazley service companies
Commissions are received from non-Group syndicates by Group service companies writing business on their behalf. These are
recognised as the services are provided, and therefore the performance obligations of the contracts are met. Commission is
payable to the Group by syndicate 623 due to Group service companies writing business on behalf of the syndicate. While the
commercial purpose of the contract is to pass business to syndicate 623, the remuneration is triggered by incurring expenses,
irrespective of volume of business gained. Fees are recognised as the services are provided, and therefore the performance
obligations of the contracts are met. In addition, the Group charges syndicates 5623 and 4321 for a portion of the profit-related
remuneration paid to its underwriting staff. Payment is therefore triggered by the underlying profitability of the syndicate.
Profit commissions from syndicates
Profit commission agreements are in place between the third party capital syndicates managed by the Group and their
managing agent, Beazley Furlonge Limited. Under these agreements, the transaction price represents a fixed percentage on
profit by year of account. As such, the profitability of the syndicates is a performance criterion. No other variable consideration
(for example: discounts, rebates, refunds, incentives) is attached. The value of each transaction price is derived at the reporting
date from the actual profits made by the syndicates, and therefore represents the most likely amount of consideration at the
reporting date.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFeeAndCommissionIncomeExpenseExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-365": { "value": "
9 Other income
2023
2022
$m
$m
Commissions received by Beazley service companies
42.8
20.0
Profit commissions from syndicates
29.9
7.2
Managing agent fees from third party syndicates
3.6
4.0
Other income
2.2
0.9
Total other income
78.5
32.1
Commissions received by Beazley service companies
Commissions are received from non-Group syndicates by Group service companies writing business on their behalf. These are
recognised as the services are provided, and therefore the performance obligations of the contracts are met. Commission is
payable to the Group by syndicate 623 due to Group service companies writing business on behalf of the syndicate. While the
commercial purpose of the contract is to pass business to syndicate 623, the remuneration is triggered by incurring expenses,
irrespective of volume of business gained. Fees are recognised as the services are provided, and therefore the performance
obligations of the contracts are met. In addition, the Group charges syndicates 5623 and 4321 for a portion of the profit-related
remuneration paid to its underwriting staff. Payment is therefore triggered by the underlying profitability of the syndicate.
Profit commissions from syndicates
Profit commission agreements are in place between the third party capital syndicates managed by the Group and their
managing agent, Beazley Furlonge Limited. Under these agreements, the transaction price represents a fixed percentage on
profit by year of account. As such, the profitability of the syndicates is a performance criterion. No other variable consideration
(for example: discounts, rebates, refunds, incentives) is attached. The value of each transaction price is derived at the reporting
date from the actual profits made by the syndicates, and therefore represents the most likely amount of consideration at the
reporting date.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-367": { "value": "
10 Operating expenses
2023
2022
$m
$m
Staff costs
527.6
355.6
Other administrative expenses
401.2
325.0
Total administrative expenses
928.8
680.6
Recharged to third party syndicates
(115.5)
(75.8)
Expenses reclassified within the insurance service result
(447.5)
(387.2)
Total operating expenses
365.8
217.6
Depreciation of $17.1m (2022: $15.6m) and amortisation of $16.2m (2022: $14.3m) is included within other administrative
expenses.
Net staff costs
2023
2022
$m
$m
Wages and salaries
259.8
215.8
Short term incentive payments
167.5
78.1
Social security
45.3
30.0
Share based remuneration
33.8
14.7
Pension costs\u00b9
21.2
17.0
Staff costs
527.6
355.6
Recharged to third party syndicates
(78.2)
(53.1)
Net staff costs
449.4
302.5
1 Pension costs primarily include contributions made under the defined contribution scheme. Further information on the defined benefit pension scheme can be
found in Note 17.
Average number of employees
A breakdown by category of employee is disclosed below.
2023
2022
Directors
11
10
Senior managers
145
107
Other employees
1,988
1,691
Total average number of employees
2,144
1,808
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-368": { "value": "
Net staff costs
2023
2022
$m
$m
Wages and salaries
259.8
215.8
Short term incentive payments
167.5
78.1
Social security
45.3
30.0
Share based remuneration
33.8
14.7
Pension costs\u00b9
21.2
17.0
Staff costs
527.6
355.6
Recharged to third party syndicates
(78.2)
(53.1)
Net staff costs
449.4
302.5
1 Pension costs primarily include contributions made under the defined contribution scheme. Further information on the defined benefit pension scheme can be
found in Note 17.
Average number of employees
A breakdown by category of employee is disclosed below.
2023
2022
Directors
11
10
Senior managers
145
107
Other employees
1,988
1,691
Total average number of employees
2,144
1,808
17 Retirement benefit asset
2023
2022
$m
$m
Present value of funded obligations
(34.9)
(31.1)
Fair value of plan assets
39.4
35.7
Retirement benefit asset in the statement of financial position
4.5
4.6
Amounts recognised in the statement of profit or loss:
Interest cost
(1.5)
(1.1)
Expected return on plan assets
1.7
1.4
Retirement benefit return recognised in the statement of profit or loss
0.2
0.3
Beazley Furlonge Limited operates a defined benefit pension scheme (\u2018the Beazley Furlonge Limited Pension Scheme\u2019), which
closed to new entrants in 2002 and to future accrual in 2006.
The scheme is administered by a trust that is legally separated from the Group.
The pension scheme trustees completed a transaction that insures all of the scheme\u2019s liabilities to a third party via a bulk
annuity buy-in with an external insurance company in 2022. The annuity contracts meet the criteria to be classified as qualifying
insurance policies as defined in IAS 19 as the cash flows match the timing and value of the benefits payable to members that
they cover. These annuities are thus valued at the present value of the obligations insured.
At the reporting date, the trustees and the Company retain all obligations to ensure benefits due to scheme members are paid.
Following the buy-in transaction the Group expects to make no further contributions to the scheme.
Historically the scheme exposed the Group to additional actuarial, interest rate and market risk. However as a result of the buy-
in transaction in 2022 these risks are now born by the insurance company to which liabilities have been insured. The buy-in
transaction does expose the Group to additional credit risk with regard to the insurance company from whom the annuities were
purchased. This counterparty has an investment grade credit rating and therefore the Group considers the credit risk to be
minimal.
17 Retirement benefit asset continued
Included below is a reconciliation from opening to closing of the present value of funded obligations and the fair value of plan
assets. The amount recognised in the statement of comprehensive income is the net position of the actuarial gains/losses due
to changes in financial assumptions and the loss/gain on asset return.
2023
2022
$m
$m
Movement in present value of funded obligations recognised in the statement of financial position
Balance at 1 January
31.1
56.9
Interest cost
1.5
1.0
Actuarial loss/(gain) due to changes in financial assumptions
2.0
(22.1)
Benefits paid
(0.5)
(0.5)
Foreign exchange loss/(gain)
0.8
(4.2)
Balance at 31 December
34.9
31.1
2023
2022
$m
$m
Movement in fair value of plan assets recognised in the statement of financial position
Balance at 1 January
35.7
75.0
Expected return on plan assets
1.7
1.3
Gain/(loss) on asset return
1.9
(34.6)
Administrative expenses
(0.3)
\u2014
Benefits paid
(0.5)
(0.5)
Foreign exchange gain/(loss)
0.9
(5.5)
Balance at 31 December
39.4
35.7
2023
2022
$m
$m
Plan assets are comprised as follows:
Purchased annuities
34.9
31.1
Cash
4.5
4.6
Total
39.4
35.7
", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-369": { "value": "
11 Auditor's remuneration
2023
2022
$m
$m
Operating expenses include amounts receivable by the Group\u2019s auditors in respect of:
\u2013 audit of the Group\u2019s annual report & accounts
6.5
1.7
\u2013 audit of subsidiaries pursuant to legislation
3.6
3.1
\u2013 audit-related assurance services
1.1
1.4
\u2013 other non-audit services
0.9
0.7
Total auditor's remuneration
12.1
6.9
Other than the fees disclosed above, no other fees were paid to the Co mpany\u2019s auditor. Audit-related assurance services
primarily comprise the review and audit of regulatory reporting pursuant to legislation and review of the Group\u2019s condensed
interim financial statements. Included within the 2023 audit fees are fees of $5.1m (2022: $0.5m) that relate to the audit of
IFRS 17 balances and transition, including the opening balance sheet and 2022 restated comparatives. Fees incurred for other
non-audit services primarily relate to reporting required by Regulators and additional assurance work performed on material
included within the annual report.", "dimensions": { "concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-370": { "value": "
12 Finance costs
2023
2022
$m
$m
Interest expense on financial liabilities
31.6
31.5
Interest expense on lease liabilities
3.1
3.1
Interest and charges related to letters of credit
5.9
4.1
Equity raise costs not charged to share premium
\u2014
0.7
Total finance costs
40.6
39.4
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceCostExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-371": { "value": "
13 Tax expense
2023
2022\u00b9
$m
$m
Current tax expense
Current tax expense
121.8
53.2
Prior year adjustment
1.5
(9.9)
123.3
43.3
Deferred tax expense
Origination and reversal of temporary differences
97.3
58.5
Difference between current and deferred tax rates
6.8
(1.0)
Prior year adjustments
0.2
(0.1)
104.3
57.4
Tax expense
227.6
100.7
1 Restated for the year ended 31 December 2022 following the adoption of IFRS 17.
Reconciliation of tax expense
The Group makes the majority of its profit in Ireland, the UK and the US. The weighted average of statutory tax rates based on
the profits earned in each country in which the Group operates is 17.6% (2022: 19.0%), whereas the tax charged for the year
ending 31\u00a0December 2023 as a percentage of profit before tax is 18.1% ( 2022: 17.2%). The reasons for the difference are
explained below:
2023
2023
20221
2022
$m
%
$m
%
Profit before tax
1,254.4
584.0
Tax calculated at the weighted average of statutory tax rate
221.4
17.6
111.0
19.0
Effects of:
\u2013 non-deductible/(non-taxable) expenses
(2.0)
(0.2)
1.9
0.3
\u2013 losses not previously recognised
(1.2)
(0.1)
\u2014
\u2014
\u2013 tax charge/(relief) on remuneration
0.9
0.1
(1.2)
(0.2)
\u2013 under/(over) provided in prior years
1.7
0.1
(10.0)
(1.7)
\u2013 Difference between current and deferred tax rates 2
6.8
0.6
(1.0)
(0.2)
Tax expense for the year
227.6
18.1
100.7
17.2
1 Restated for the year ended 31 December 2022 following the adoption of IFRS 17.
2 The Finance Act 2021 provided for an increase in the UK corporation tax rate from 19% to 25% effective from 1 April 2023. This tax rate change has been
reflected in the calculation of the deferred tax balances as at 31 December 2023.
Global minimum tax rate
The Organisation for Economic Co-operation and Development (\"OECD\") released the Pillar Two framework to ensure that large
multinational enterprises pay a minimum effective corporate tax rate of 15% on the income arising in each jurisdiction in which
they operate. In June 2023, the UK enacted legislation to implement these new rules in respect of accounting periods
beginning on or after 31 December 2023.
We continue to assess the development of Pillar Two and expect that the impact will not be significant as the Group mainly
operates in jurisdictions with a statutory tax rate above 15%. We anticipate the main impact for the Group will be in Ireland,
where the tax rate is 12.5%. In December 2023, Ireland enacted a Qualified Domestic Minimum Top-Up Tax such that in-scope
businesses pay at least a 15% effective tax rate on their profits. Based on the FY 2023 results, the impact is estimated to be
an additional $18m of corporate income tax payable in Ireland. The impact on the Beazley Group will depend on the actual
profits in each period.
25 Deferred tax
2023
20221
$m
$m
Deferred tax asset
46.9
30.8
Deferred tax liability
(202.2)
(79.2)
Net deferred tax liability
(155.3)
(48.4)
1 Deferred tax amounts as at 31 December 2022 have been restated on adoption of IFRS 17. Refer below for further details.
Balance
01\u00a0Jan 23
Recognised in total
comprehensive income
Recognised in
equity
FX translation
differences
Balance
31\u00a0Dec 23
$m
$m
$m
$m
$m
Plant and equipment
(0.8)
(0.3)
\u2014
\u2014
(1.1)
Intangible assets
(1.8)
0.5
\u2014
\u2014
(1.3)
Underwriting profits
7.4
(101.6)
\u2014
\u2014
(94.2)
Deferred acquisition costs
1.7
(1.7)
\u2014
\u2014
\u2014
Tax losses carried forward
4.0
5.7
\u2014
\u2014
9.7
Share based payments
8.4
1.5
(0.9)
\u2014
9.0
Unrealised gains/(losses) on investments
9.9
(11.1)
\u2014
\u2014
(1.2)
IFRS 17 adjustments
(83.7)
(3.4)
\u2014
\u2014
(87.1)
Other
6.5
6.8
\u2014
(2.4)
10.9
Net deferred tax asset/(liability)
(48.4)
(103.6)
(0.9)
(2.4)
(155.3)
Balance
01\u00a0Jan 22\u00b9\u00a0 \u00a0 \u00a0 \u00a0
Recognised in total
comprehensive income
Recognised in
equity
FX translation
differences
Balance
31\u00a0Dec 22\u00a0
$m
$m
$m
$m
$m
Plant and equipment
(1.2)
0.4
\u2014
\u2014
(0.8)
Intangible assets
(0.5)
(1.3)
\u2014
\u2014
(1.8)
Underwriting profits
14.2
(6.8)
\u2014
\u2014
7.4
Deferred acquisition costs
(7.8)
9.5
\u2014
\u2014
1.7
Tax losses carried forward
9.6
(5.6)
\u2014
\u2014
4.0
Share based payments
2.6
3.1
3.1
(0.4)
8.4
Unrealised gains/(losses) on investments
(1.7)
11.6
\u2014
\u2014
9.9
IFRS 17 adjustments
(13.4)
(70.3)
\u2014
\u2014
(83.7)
Other
1.2
4.7
0.6
\u2014
6.5
Net deferred tax asset/(liability)
3.0
(54.7)
3.7
(0.4)
(48.4)
1 Deferred tax amounts as at 01 January 2022 have been restated on adoption of IFRS 17.
Geographical analysis
Deferred tax assets and deferred tax liabilities relating to the same tax authority are presented net in the Group\u2019s balance
sheet. A geographical analysis has been included below.
2023
2022
$m
$m
UK
(152.8)
(35.3)
US
46.7
29.8
Ireland
(38.7)
(39.0)
Other\u00b9
(10.5)
(3.9)
Net deferred tax liability
(155.3)
(48.4)
1\u00a0 Includes Canada, France, Germany, Spain and Switzerland.
25 Deferred tax continued
Under IFRS 17, the timing of the recognition of the Group\u2019s profits differs significantly from the basis on which corporate taxes
are levied in the tax jurisdictions where the Group operates. None of the Group\u2019s material profit making entities pay corporate
taxes based on IFRS 17 profits and therefore significant temporary differences arise. In some jurisdictions, such as the UK and
Ireland, profits are recognised earlier under IFRS 17 and thus a deferred tax liability is recognised. The Group expects this to
unwind over time as profits are recognised (offset by new profits on an IFRS 17 basis). In the US, profits are recognised more
slowly on an IFRS 17 basis than under the US Stat basis on which tax is determined, with the Group recognising a deferred tax
asset of $23.2m (2022: $13.1m). The Group is of the view that sufficient future profits will arise on an IFRS 17 basis to realise
this deferred tax asset.
The Group has recognised a deferred tax liability of $94.2m (2022: asset of $7.4m) which relates to timing differences
between the recognition of the Group\u2019s share of syndicate profits and when they are taxed. Profits or losses arising from
membership of a syndicate are deferred for tax purposes until the year in which the result is declared. Typically, a year of
account lasts for 36 months and is declared the following year. The deferred tax liability relates to the results of the 2021,
2022 and 2023 Years of Account. The 2020 Year of Account closed at the end of 2022 and was declared and taxed in 2023.
Additionally the Group recognises deferred tax assets of $9.7m (2022: $4.0m) which depend on the availability of future
taxable profits to offset tax losses previously recognised. The Group has concluded that it is probable that these deferred tax
assets will be recovered using estimated future taxable profits based on approved business plans. The losses which make up
this part of the deferred tax asset can be carried forward indefinitely and have no expiry date. The Group has no unrecognised
trading losses as at December 31 2023 (2022: nil) and has unrecognised capital losses of $4.0m (2022: $2.2m).
Pillar Two Taxes
No deferred taxes have been recognised by the Group in relation to the OECD's project to implement a global minimum tax rate.
Refer to Note 13 for further details.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-372": { "value": "
13 Tax expense
2023
2022\u00b9
$m
$m
Current tax expense
Current tax expense
121.8
53.2
Prior year adjustment
1.5
(9.9)
123.3
43.3
Deferred tax expense
Origination and reversal of temporary differences
97.3
58.5
Difference between current and deferred tax rates
6.8
(1.0)
Prior year adjustments
0.2
(0.1)
104.3
57.4
Tax expense
227.6
100.7
1 Restated for the year ended 31 December 2022 following the adoption of IFRS 17.
Reconciliation of tax expense
The Group makes the majority of its profit in Ireland, the UK and the US. The weighted average of statutory tax rates based on
the profits earned in each country in which the Group operates is 17.6% (2022: 19.0%), whereas the tax charged for the year
ending 31\u00a0December 2023 as a percentage of profit before tax is 18.1% ( 2022: 17.2%). The reasons for the difference are
explained below:
2023
2023
20221
2022
$m
%
$m
%
Profit before tax
1,254.4
584.0
Tax calculated at the weighted average of statutory tax rate
221.4
17.6
111.0
19.0
Effects of:
\u2013 non-deductible/(non-taxable) expenses
(2.0)
(0.2)
1.9
0.3
\u2013 losses not previously recognised
(1.2)
(0.1)
\u2014
\u2014
\u2013 tax charge/(relief) on remuneration
0.9
0.1
(1.2)
(0.2)
\u2013 under/(over) provided in prior years
1.7
0.1
(10.0)
(1.7)
\u2013 Difference between current and deferred tax rates 2
6.8
0.6
(1.0)
(0.2)
Tax expense for the year
227.6
18.1
100.7
17.2
1 Restated for the year ended 31 December 2022 following the adoption of IFRS 17.
2 The Finance Act 2021 provided for an increase in the UK corporation tax rate from 19% to 25% effective from 1 April 2023. This tax rate change has been
reflected in the calculation of the deferred tax balances as at 31 December 2023.
Global minimum tax rate
The Organisation for Economic Co-operation and Development (\"OECD\") released the Pillar Two framework to ensure that large
multinational enterprises pay a minimum effective corporate tax rate of 15% on the income arising in each jurisdiction in which
they operate. In June 2023, the UK enacted legislation to implement these new rules in respect of accounting periods
beginning on or after 31 December 2023.
We continue to assess the development of Pillar Two and expect that the impact will not be significant as the Group mainly
operates in jurisdictions with a statutory tax rate above 15%. We anticipate the main impact for the Group will be in Ireland,
where the tax rate is 12.5%. In December 2023, Ireland enacted a Qualified Domestic Minimum Top-Up Tax such that in-scope
businesses pay at least a 15% effective tax rate on their profits. Based on the FY 2023 results, the impact is estimated to be
an additional $18m of corporate income tax payable in Ireland. The impact on the Beazley Group will depend on the actual
profits in each period.", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-373": { "value": "
14 Earnings per share
2023
2022
Profit after tax\u00b9 ($m)
1,026.8
483.3
Weighted average number of shares in issue (m)
663.8
611.7
Adjusted weighted average number of shares in issue (m)
678.3
619.7
Basic (cents)
154.7c
79.0c
Diluted (cents)
151.4c
78.0c
Basic (pence)
124.8p
63.4p
Diluted (pence)
122.1p
62.6p
1 The Profit after tax figure has been restated for the year ended 31 December 2022 following the adoption of IFRS 17. The adoption of IFRS 9 has not had a
material impact on the Group\u2019s basic or diluted earnings per share in the year to 31 December 2023.
Basic earnings per share is calculated by dividing profit after tax of $1,026.8m (2022: $483.3m) by the weighted average
number of shares in issue during the year of 663.8m (2022: 611.7m).
Diluted earnings per share is calculated by dividing profit after tax of $1,026.8m (2022: $483.3m) by the adjusted weighted
average number of shares of 678.3m (2022: 619.7m) in issue. This assumes conversion of dilutive potential ordinary shares,
being shares from equity settled employee compensation schemes. Share options with performance conditions attaching to
them have been excluded from the weighted average number of shares to the extent that these conditions have not been met
at the reporting date.
Further details of equity compensation plans can be found in Note 24 as well as in the Directors\u2019 remuneration report on pages
124 to 145.
Note that both calculations exclude the shares held in the Employee Share Options Plan of 9.8m (31 December 2022: 5.7m)
until such time as they vest unconditionally with the employees.", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-374": { "value": "1026800000", "decimals": -5, "dimensions": { "concept": "ifrs-full:ProfitLossAttributableToOwnersOfParent", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:USD" } }, "f-375": { "value": "1026800000", "decimals": -5, "dimensions": { "concept": "ifrs-full:ProfitLossAttributableToOwnersOfParent", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:USD" } }, "f-376": { "value": "
15 Dividends per share
An interim dividend of 14.2p covering the whole of 2023 (2022: 13.5p) will be payable on 3 May 2024 to Beazley plc
shareholders registered on 22 March 2024. The Group expects the total amount to be paid in respect of the interim dividend to
be approximately \u00a395.5m (2022: \u00a390.6m). These financial statements do not provide for the interim dividend as a liability.", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-377": { "value": "
16 Intangible assets
Goodwill
Syndicate
capacity
Licences
IT
development
costs
Renewal
rights
Total
$m
$m
$m
$m
$m
$m
Opening cost at 01\u00a0January 2023
72.0
13.7
9.3
125.3
58.9
279.2
Derecognition
\u2014
\u2014
\u2014
(13.2)
\u2014
(13.2)
Additions
\u2014
17.6
\u2014
33.3
\u2014
50.9
Foreign exchange gain
\u2014
\u2014
\u2014
3.3
\u2014
3.3
Closing cost at 31\u00a0December 2023
72.0
31.3
9.3
148.7
58.9
320.2
Opening amortisation and impairment at 01\u00a0January 2023
(10.0)
\u2014
\u2014
(81.5)
(58.9)
(150.4)
Amortisation
\u2014
\u2014
\u2014
(16.2)
\u2014
(16.2)
Derecognition
\u2014
\u2014
\u2014
13.2
\u2014
13.2
Foreign exchange loss
\u2014
\u2014
\u2014
(1.5)
\u2014
(1.5)
Closing amortisation and impairment at 31\u00a0December 2023
(10.0)
\u2014
\u2014
(86.0)
(58.9)
(154.9)
Carrying amount at 31\u00a0December 2023
62.0
31.3
9.3
62.7
\u2014
165.3
Goodwill
Syndicate
capacity
Licences
IT
development
costs
Renewal
rights
Total
$m
$m
$m
$m
$m
$m
Opening cost at 01\u00a0January 2022
72.0
10.7
9.3
115.4
61.4
268.8
Additions
\u2014
3.0
\u2014
19.7
\u2014
22.7
Foreign exchange loss
\u2014
\u2014
\u2014
(9.8)
(2.5)
(12.3)
Closing cost at 31\u00a0December 2022
72.0
13.7
9.3
125.3
58.9
279.2
Opening amortisation and impairment at 01\u00a0January 2022
(10.0)
\u2014
\u2014
(74.3)
(61.0)
(145.3)
Amortisation
\u2014
\u2014
\u2014
(13.6)
(0.7)
(14.3)
Foreign exchange gain
\u2014
\u2014
\u2014
6.4
2.8
9.2
Closing amortisation and impairment at 31\u00a0December 2022
(10.0)
\u2014
\u2014
(81.5)
(58.9)
(150.4)
Carrying amount at 31\u00a0December 2022
62.0
13.7
9.3
43.8
\u2014
128.8
16 Intangible assets continued
Impairment tests
Goodwill, syndicate capacity and US insurance authorisation licences are deemed to have indefinite useful lives as they are
expected to have a recoverable amount that does not erode or become obsolete over the course of time. Consequently, these
intangible assets are not amortised but are instead annually tested for impairment. For the purpose of impairment testing, they
are allocated to the following cash-generating units (\u201cCGUs\u201d):
Cyber Risks
Digital
MAP Risks
Property
Risks
Specialty
Risks
Total
2023
$m
$m
$m
$m
$m
$m
Goodwill
1.7
0.3
31.9
25.7
2.4
62.0
Syndicate capacity
5.7
0.7
6.7
9.2
9.0
31.3
Licences
2.8
0.6
\u2014
1.9
4.0
9.3
Total
10.2
1.6
38.6
36.8
15.4
102.6
Cyber Risks
Digital
MAP Risks
Property
Risks
Specialty
Risks
Total
2022
$m
$m
$m
$m
$m
$m
Goodwill
1.7
0.3
31.9
25.7
2.4
62.0
Syndicate capacity
3.1
0.6
3.0
3.7
3.3
13.7
Licences
2.8
0.6
\u2014
1.9
4.0
9.3
Total
7.6
1.5
34.9
31.3
9.7
85.0
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group\u2019s share of the fair value of the
identifiable assets, liabilities and contingent liabilities of the acquired subsidiary at the date of acquisition. Goodwill is carried
at cost less accumulated impairment losses.
The Group determines the recoverable amount of its indefinite useful life intangible assets using the value-in-use (\u201cVIU\u201d). This is
estimated by discounting the CGU's expected future cash flows sourced from financial budgets approved by management which
cover a five-year period. These cash flows give consideration to the Group's capital requirements, ensuring that a suitable
solvency range is maintained. A discount rate based on weighted average cost of capital of 16.6% (2022: 10.9%) has been
applied to determine the present value of projected future cash flows. This has been calculated using independent measures of
the risk-free rate of return and is indicative of the Group\u2019s risk profile relative to the market.
The Group has performed the following sensitivity analysis to ensure that the key assumptions used in deriving the VIU for each
CGU considers the potential adverse effects of any changes in economic or regulatory environments. As a result, management
has determined that a reasonably possible change in any of the key assumptions outlined above would not have a material
impact on the outcome of impairment testing.
\u2022 Projected cash flows \u2013 The Group has used projected cash flows generated from operating profit consistent with five-year
financial forecasts. Sensitivity testing has been performed to model the impact of reasonably possible changes in these
profits (5% and 10% fall) when compared to the base impairment analysis and headroom. Within these ranges, the
recoverable amounts remain supportable.
\u2022 Future market conditions \u2013 To test each CGU's sensitivity to variances in forecast profits, the discount rate has been flexed
to 5% above and 5% below the central assumption. Within this range, the recovery of goodwill was stress tested and remains
supportable across all CGUs. Headroom was calculated in respect of the VIU of all of the Group\u2019s other intangible assets.
\u2022 Premium growth rates/Retention rates \u2013 The Group has used a terminal growth rate of 0% (2022: 0%) to extrapolate
projections beyond the covered five-year period.
The impairment test for goodwill is carried out annually and confirms that the recoverable amount exceeds the carrying amount,
therefore no impairment or reversal of impairment is required.
16 Intangible assets continued", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-378": { "value": "
16 Intangible assets continued
Impairment tests
Goodwill, syndicate capacity and US insurance authorisation licences are deemed to have indefinite useful lives as they are
expected to have a recoverable amount that does not erode or become obsolete over the course of time. Consequently, these
intangible assets are not amortised but are instead annually tested for impairment. For the purpose of impairment testing, they
are allocated to the following cash-generating units (\u201cCGUs\u201d):
Cyber Risks
Digital
MAP Risks
Property
Risks
Specialty
Risks
Total
2023
$m
$m
$m
$m
$m
$m
Goodwill
1.7
0.3
31.9
25.7
2.4
62.0
Syndicate capacity
5.7
0.7
6.7
9.2
9.0
31.3
Licences
2.8
0.6
\u2014
1.9
4.0
9.3
Total
10.2
1.6
38.6
36.8
15.4
102.6
Cyber Risks
Digital
MAP Risks
Property
Risks
Specialty
Risks
Total
2022
$m
$m
$m
$m
$m
$m
Goodwill
1.7
0.3
31.9
25.7
2.4
62.0
Syndicate capacity
3.1
0.6
3.0
3.7
3.3
13.7
Licences
2.8
0.6
\u2014
1.9
4.0
9.3
Total
7.6
1.5
34.9
31.3
9.7
85.0
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group\u2019s share of the fair value of the
identifiable assets, liabilities and contingent liabilities of the acquired subsidiary at the date of acquisition. Goodwill is carried
at cost less accumulated impairment losses.
The Group determines the recoverable amount of its indefinite useful life intangible assets using the value-in-use (\u201cVIU\u201d). This is
estimated by discounting the CGU's expected future cash flows sourced from financial budgets approved by management which
cover a five-year period. These cash flows give consideration to the Group's capital requirements, ensuring that a suitable
solvency range is maintained. A discount rate based on weighted average cost of capital of 16.6% (2022: 10.9%) has been
applied to determine the present value of projected future cash flows. This has been calculated using independent measures of
the risk-free rate of return and is indicative of the Group\u2019s risk profile relative to the market.
The Group has performed the following sensitivity analysis to ensure that the key assumptions used in deriving the VIU for each
CGU considers the potential adverse effects of any changes in economic or regulatory environments. As a result, management
has determined that a reasonably possible change in any of the key assumptions outlined above would not have a material
impact on the outcome of impairment testing.
\u2022 Projected cash flows \u2013 The Group has used projected cash flows generated from operating profit consistent with five-year
financial forecasts. Sensitivity testing has been performed to model the impact of reasonably possible changes in these
profits (5% and 10% fall) when compared to the base impairment analysis and headroom. Within these ranges, the
recoverable amounts remain supportable.
\u2022 Future market conditions \u2013 To test each CGU's sensitivity to variances in forecast profits, the discount rate has been flexed
to 5% above and 5% below the central assumption. Within this range, the recovery of goodwill was stress tested and remains
supportable across all CGUs. Headroom was calculated in respect of the VIU of all of the Group\u2019s other intangible assets.
\u2022 Premium growth rates/Retention rates \u2013 The Group has used a terminal growth rate of 0% (2022: 0%) to extrapolate
projections beyond the covered five-year period.
The impairment test for goodwill is carried out annually and confirms that the recoverable amount exceeds the carrying amount,
therefore no impairment or reversal of impairment is required.
16 Intangible assets continued
Syndicate capacity
The syndicate capacity represents the cost of purchasing the Group\u2019s participation in the combined syndicates. The capacity is
capitalised at cost in the statement of financial position. It has an indefinite useful life and is carried at cost less accumulated
impairment. It is annually tested for impairment by reference to the latest auction prices provided by Lloyd\u2019s. The Group\u2019s
intangible assets relating to syndicate capacity is allocated across all CGUs.
During the year the Group purchased \u00a335.5m of capacity on syndicate 623/2623 (2022: \u00a39.2m) at a cost of $17.6m (2022:
$3.0m).
Based upon the latest market prices, management has concluded that the fair value exceeds the carrying amount and as such
no impairment or reversal of impairment is necessary.
Licenses
US insurance authorisation licences represent the privilege to write insurance business in particular states in the US. Licences
are allocated to the relevant CGU. There is no active market for licences, therefore the recoverable amount is estimated as the
present value of projected future cash flows which are sourced from management approved budgets. Key assumptions are
consistent with those outlined in the Goodwill section above. Licences are annually tested for impairment and based upon all
available evidence, the results of the testing indicate that no impairment or reversal of impairment is required.", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-381": { "value": "
18 Financial assets and liabilities
18a Carrying values of financial assets and liabilities
Set out below are the carrying values of the Group's \u2018financial assets at fair value\u2019 and \u2018financial liabilities\u2019 per the statement of
financial position. These amounts exclude the following financial assets and liabilities which are presented separately:
\u2022 Cash and cash equivalents carried at amortised cost (refer to Section d and Note 21); and
\u2022 Amounts due from managed syndicates, other receivables, lease liabilities, and other payables, all of which are carried at
amortised cost (per Section d).
2023
2022
$m
$m
Debt securities:
\u2013 Government issued
4,469.1
5,006.3
\u2013 Corporate bonds
\u00a0 \u2013 Investment grade
3,578.3
2,050.5
\u00a0 \u2013 High yield
489.0
308.7
Syndicate loans
34.1
32.5
Total debt securities and syndicate loans
8,570.5
7,398.0
Equity funds
282.7
159.4
Hedge funds
582.2
530.6
Illiquid assets
220.1
222.9
Total capital growth assets
1,085.0
912.9
Total financial investments at fair value through statement of profit or loss
9,655.5
8,310.9
Derivative financial assets
10.0
34.7
Total financial assets at fair value
9,665.5
8,345.6
Investment corporate bonds are rated BBB-/Baa3 or higher by at least one major rating agency, while high yield corporate
bonds have lower credit ratings. Hedge funds are investment vehicles pursuing alternative investment strategies, structured to
have minimal correlation to traditional asset classes. Equity funds are investment vehicles which invest in equity securities and
provide diversified exposure to global equity markets. Illiquid assets are investment vehicles that predominantly target private
lending opportunities, often with longer investment horizons. The fair value of these assets at 31\u00a0December 2023 excludes an
unfunded commitment of $32.0m (2022: $30.5m).
2023
2022
$m
$m
Tier 2 subordinated debt (2026)
249.5
249.4
Tier 2 subordinated debt (2029)
298.8
298.6
Derivative financial liabilities
6.3
14.5
Total financial liabilities
554.6
562.5
The Group has given a fixed and floating charge over certain of its investments and other assets to secure obligations to
Lloyd\u2019s in respect of its corporate member subsidiary. Further details are provided in Note 33.
For a maturity analysis showing the financial assets and liabilities due within and after one year of the reporting date, refer to
Note 30d.
18 Financial assets and liabilities continued
18b Valuation hierarchy
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair
value hierarchy described as follows. If the inputs used to measure the fair value of an asset or a liability could be categorised
in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of
the fair value hierarchy as the lowest level input that is significant to the entire measurement.
Fair value is the price at which an orderly transaction to sell an asset or to transfer a liability would take place between market
participants at the measurement date. Fair value is a market-based measure and in the absence of observable market prices in
an active market, it is measured using the assumptions that market participants would use when pricing the asset or liability.
The best evidence of the fair value of a financial instrument at initial recognition is the transaction price, i.e. the fair value of
the consideration given or received, unless the fair value of that instrument is evidenced by comparison with other observable
current market transactions in the same instrument (i.e. without modification or repackaging) or based on a valuation technique
whose variables include only data from observable markets. When the transaction price provides the best evidence of fair value
at initial recognition, the financial instrument is initially measured at the transaction price and any difference between this price
and the value initially obtained from a valuation model is subsequently recognised in profit or loss depending on the individual
facts and circumstances of the transaction but before the valuation is supported wholly by observable market data or the
transaction is closed out.
Level 1 \u2013 Valuations based on quoted prices in active markets for identical instruments. An active market is a market in which
transactions for the instrument occur with sufficient frequency and volume on an ongoing basis such that quoted prices reflect
prices at which an orderly transaction would take place between market participants at the measurement date.
Level 2 \u2013 Valuations based on quoted prices in markets that are not active, or based on pricing models for which significant
inputs can be corroborated by observable market data, directly or indirectly (e.g. interest rates and exchange rates). Level 2
inputs include:
\u2022 Quoted prices for similar assets and liabilities in active markets;
\u2022 Quoted prices for identical or similar assets and liabilities in markets that are not active, the prices are not current, or price
quotations vary substantially either over time or among market makers, or in which little information is released publicly;
\u2022 Inputs other than quoted prices that are observable for the asset or liability (for example, interest rates and yield curves
observable at commonly quoted intervals, implied volatilities and credit spreads); and
\u2022 Market corroborated inputs. Included within level 2 are government bonds and treasury bills, equity funds and corporate
bonds which are not actively traded, hedge funds and senior secured loans.
Level 3 \u2013 Valuations based on inputs that are unobservable or for which there is limited market activity against which to
measure fair value. The availability of financial data can vary for different financial assets and is affected by a wide variety of
factors, including the type of financial instrument, whether it is new and not yet established in the marketplace, and other
characteristics specific to each transaction. To the extent that valuation is based on models or inputs that are unobservable in
the market, the determination of fair value requires more judgement. Accordingly the degree of judgement exercised by
management in determining fair value is greatest for instruments classified in level 3. The Group uses prices and inputs that
are current as of the measurement date for valuation of these instruments.
18 Financial assets and liabilities continued
Valuation approach - level 2 instruments
a) For the Group\u2019s level 2 debt securities, our fund administrator obtains the prices used in the valuation from independent
pricing vendors. The independent pricing vendors derive an evaluated price from observable market inputs. These inputs are
verified in their pricing assumptions such as weighted average life, discount margins, default rates, and recovery and
prepayments assumptions for mortgage securities.
b) For our hedge funds, the pricing and valuation of each fund is undertaken by administrators in accordance with each
underlying fund\u2019s valuation policy. Individual fund prices are communicated by the administrators to all investors via the monthly
investor statements. The fair value of the hedge fund portfolios are calculated by reference to the underlying net asset values of
each of the individual funds. Our hedge funds are managed by Falcon Money Management Holdings Limited, an associate of
the Group.
c) Subordinated debt and tier 2 subordinated debt fair value are based on quoted market prices.
Valuation approach - level 3 instruments
a) Our illiquid fund investments are generally closed ended limited partnerships or open ended funds. The Group relies on a
third party fund manager to manage these investments and provide valuations. Note that while the funds report with full
transparency on their underlying investments, the investments themselves are predominantly in private and unquoted
instruments. The valuation techniques used by the fund managers to establish the fair values therefore require a degree of
estimation. For example, these may incorporate discounted cash flow models or a more market-based approach, whilst the
main inputs might include discount rates, fundamental pricing multiples, recent transaction prices, or comparable market
information to create a benchmark multiple.
b) Syndicate loans are non-tradeable instruments provided by our Group syndicates to the Central Fund at Lloyd\u2019s in respect of
the 2019 and 2020 underwriting years. These are valued internally using discounted cash flow models provided by Lloyd's to
the market, designed to appropriately reflect the credit and illiquidity risk of the instruments. Valuation outputs are then
validated using a control model, with the following inputs and assumptions. Note that these internally valued instruments are
deemed by management to be inherently more subjective than external valuations.
\u2022 Cash flows are comprised of the notional cost of the loans, annual interest income, and the final repayment of the loans at
the end of the 5-year term. The weighted average interest rate applicable across all syndicate loans is 3.8% (2022: 3.8%).
\u2022 A discount rate of 7.0% (2022: 9.2%) is applied. This is calculated using a combination of the long-term treasury bond risk-
free rate, the industry/geographic average regression beta, and a selected risk premium.
There were no changes in the valuation techniques during the year compared to those described in the Group's 2022 Annual
Report and Accounts.
18 Financial assets and liabilities continued
18c Fair values of financial assets and liabilities
The following table shows the fair values of financial assets and financial liabilities, including their levels in the fair value
hierarchy.
Level 1
Level 2
Level 3
Total
2023
$m
$m
$m
$m
Financial assets carried at fair value
Fixed and floating rate debt securities
\u2013 Government issued
3,291.9
1,177.2
\u2014
4,469.1
\u2013 Corporate bonds
\u00a0 \u2013 Investment grade
1,596.7
1,981.6
\u2014
3,578.3
\u00a0 \u2013 High yield
488.1
0.9
\u2014
489.0
Syndicate loans
\u2014
\u2014
34.1
34.1
Equity funds
282.7
\u2014
\u2014
282.7
Hedge funds
\u2014
582.2
\u2014
582.2
Illiquid assets
\u2014
\u2014
220.1
220.1
Derivative financial assets
10.0
\u2014
\u2014
10.0
Total financial assets carried at fair value
5,669.4
3,741.9
254.2
9,665.5
Financial liabilities carried at fair value
Derivative financial liabilities
6.3
\u2014
\u2014
6.3
Total financial liabilities carried at fair value
6.3
\u2014
\u2014
6.3
Fair value of financial liabilities carried at amortised cost
Tier 2 subordinated debt (2026)
\u2014
241.7
\u2014
241.7
Tier 2 subordinated debt (2029)
\u2014
271.9
\u2014
271.9
Total fair value of financial liabilities carried at amortised cost
\u2014
513.6
\u2014
513.6
Level 1
Level 2
Level 3
Total
2022
$m
$m
$m
$m
Financial assets carried at fair value
Fixed and floating rate debt securities
\u2013 Government issued
4,022.5
983.8
\u2014
5,006.3
\u2013 Corporate bonds
\u00a0 \u2013 Investment grade
893.8
1,156.7
\u2014
2,050.5
\u00a0 \u2013 High yield
34.2
274.5
\u2014
308.7
Syndicate loans
\u2014
\u2014
32.5
32.5
Equity funds
159.4
\u2014
\u2014
159.4
Hedge funds
\u2014
530.6
\u2014
530.6
Illiquid assets
\u2014
\u2014
222.9
222.9
Derivative financial assets
34.7
\u2014
\u2014
34.7
Total financial assets carried at fair value
5,144.6
2,945.6
255.4
8,345.6
Financial liabilities carried at fair value
Derivative financial liabilities
14.5
\u2014
\u2014
14.5
Total financial liabilities carried at fair value
14.5
\u2014
\u2014
14.5
Fair value of financial liabilities carried at amortised cost
Tier 2 subordinated debt (2026)
\u2014
240.3
\u2014
240.3
Tier 2 subordinated debt (2029)
\u2014
265.9
\u2014
265.9
Total fair value of financial liabilities carried at amortised cost
\u2014
506.2
\u2014
506.2
18 Financial assets and liabilities continued
18d Financial assets and liabilities measured at amortised cost
The tables above exclude the following financial assets and liabilities that are, in accordance with the Group\u2019s accounting
policies, measured at amortised cost. For all of these, the carrying amounts included below are deemed to be reasonable
approximations of fair values at the reporting date.
2023
2022
$m
$m
Cash and cash equivalents
812.3
652.5
Amounts due from managed syndicates
25.4
1.9
Other receivables
272.1
179.9
Total financial assets at amortised cost 1
1,109.8
834.3
Lease liabilities
76.6
72.7
Amounts due to managed syndicates
304.3
308.0
Other payables
207.3
184.5
Total financial liabilities at amortised cost
588.2
565.2
1 The Group has recognised expected credit losses (\"ECLs\") of $1.8m against its financial assets held at amortised cost as at 31 December 2023. Refer to Note
2 for the ECLs recognised on adoption of IFRS 9 as at 01 January 2023.
18e Transfers
The Group determines whether transfers have occurred between levels in the fair value hierarchy by assessing categorisation at
the end of the reporting period. The following transfers between levels 1 & 2 for the period ended 31 December 2023 reflect
the level of trading activities including frequency and volume derived from market data obtained from an independent external
valuation tool. There were no transfers into or out of level 3 in the year to 31 December 2023 (2022: no transfers).
Level 1
Level 2
31\u00a0December 2023 vs 31\u00a0December 2022 transfer from level 2 to level 1
$m
$m
\u2013 Corporate Bonds \u2013 Investment grade
446.0
(446.0)
Level 1
Level 2
31\u00a0December 2023 vs 31\u00a0December 2022 transfer from level\u00a0 1 to level 2
$m
$m
\u2013 Corporate Bonds \u2013 Investment grade
(525.3)
525.3
The values shown in the transfer tables above are translated using spot foreign exchange rates as at 31\u00a0December 2023.
18f Level 3 investment reconciliations
The table below shows a reconciliation from the opening balances to the closing balances of level 3 fair values. All realised and
unrealised gains/(losses) are recognised through net investment income in the statement of profit or loss (refer to Note 8).
2023
2022
$m
$m
Opening position as at 01 January
255.4
315.8
Purchases
21.8
13.0
Sales
(37.4)
(81.4)
Realised gain
20.2
13.2
Unrealised loss
(6.6)
(2.7)
Foreign exchange gain/(loss)
0.8
(2.5)
Closing position as at 31 December
254.2
255.4
18 Financial assets and liabilities continued
18g Unconsolidated structured entities
A structured entity is defined as an entity that has been designed so that voting or similar rights are not the dominant factor in
deciding who controls the entity, such as when any voting rights relate to administrative tasks only, or when the relevant
activities are directed by means of contractual arrangements.
As part of its standard investment activities the Group holds fixed interest investments in high yield bond funds, as well as
capital growth investments in equity funds, hedge funds and illiquid assets which in accordance with IFRS 12 are classified as
unconsolidated structured entities. The Group does not sponsor any of the unconsolidated structured entities. The assets
classified as unconsolidated structured entities are held at fair value on the statement of financial position. As at 31 December
the investments comprising the Group\u2019s unconsolidated structured entities are as follows:
2023
2022
$m
$m
High yield bond funds
489.0
308.7
Equity funds
282.7
159.4
Hedge funds
582.2
530.6
Illiquid assets
220.1
222.9
Investments through unconsolidated structured entities
1,574.0
1,221.6
The majority of our unconsolidated structured entity exposures fall within our capital growth assets. The capital growth assets
are held in investee funds managed by asset managers who apply various investment strategies to accomplish their respective
investment objectives. The Group\u2019s investments in investee funds are subject to the terms and conditions of the respective
investee fund\u2019s offering documentation and are susceptible to market price risk arising from uncertainties about future values
of those investee funds. Investment decisions are made after extensive due diligence on the underlying fund, its strategy and
the overall quality of the underlying fund\u2019s manager and assets.
The right to sell or request redemption of investments in high yield bond funds, asset backed securities, equity funds and
hedge funds ranges in frequency from daily to semi-annually. The Group did not sponsor any of the respective structured
entities. The Group\u2019s maximum exposure to loss from its interests in investee funds is equal to the total fair value of its
investments in investee funds and unfunded commitments.
18 Financial assets and liabilities continued
18h Currency exposures
The currency exposures of our financial assets held are detailed below:
UK \u00a3
CAD $
EUR \u20ac
Sub Total
US $
Total
2023
$m
$m
$m
$m
$m
$m
Financial assets at FVTPL:
- Fixed and floating rate debt securities
789.6
432.5
\u2014
1,222.1
7,314.3
8,536.4
- Syndicate loans
34.1
\u2014
\u2014
34.1
\u2014
34.1
- Equity Linked Funds
\u2014
\u2014
\u2014
\u2014
282.7
282.7
- Hedge funds
\u2014
\u2014
\u2014
\u2014
582.2
582.2
- Illiquid assets
6.4
\u2014
45.9
52.3
167.8
220.1
- Derivative financial assets
\u2014
\u2014
\u2014
\u2014
10.0
10.0
Cash and cash equivalents
125.8
51.5
93.5
270.8
541.5
812.3
Amounts due from managed syndicates and other
receivables
27.6
9.4
51.4
88.4
209.1
297.5
Total
983.5
493.4
190.8
1,667.7
9,107.6
10,775.3
UK \u00a3
CAD $
EUR \u20ac
Sub Total
US $
Total
2022
$m
$m
$m
$m
$m
$m
Financial assets at FVTPL:
- Fixed and floating rate debt securities
636.1
365.9
\u2014
1,002.0
6,363.5
7,365.5
- Syndicate loans
32.5
\u2014
\u2014
32.5
\u2014
32.5
- Equity Linked Funds
\u2014
\u2014
\u2014
\u2014
159.4
159.4
- Hedge funds
\u2014
\u2014
\u2014
\u2014
530.6
530.6
- Illiquid assets
0.1
\u2014
46.2
46.3
176.6
222.9
- Derivative financial assets
\u2014
\u2014
\u2014
\u2014
34.7
34.7
Cash and cash equivalents
93.1
53.8
83.4
230.3
422.2
652.5
Amounts due from managed syndicates and
other receivables
9.5
3.4
32.8
45.7
136.1
181.8
Total
771.3
423.1
162.4
1,356.8
7,823.1
9,179.9
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-380": { "value": "
18 Financial assets and liabilities
18a Carrying values of financial assets and liabilities
Set out below are the carrying values of the Group's \u2018financial assets at fair value\u2019 and \u2018financial liabilities\u2019 per the statement of
financial position. These amounts exclude the following financial assets and liabilities which are presented separately:
\u2022 Cash and cash equivalents carried at amortised cost (refer to Section d and Note 21); and
\u2022 Amounts due from managed syndicates, other receivables, lease liabilities, and other payables, all of which are carried at
amortised cost (per Section d).
2023
2022
$m
$m
Debt securities:
\u2013 Government issued
4,469.1
5,006.3
\u2013 Corporate bonds
\u00a0 \u2013 Investment grade
3,578.3
2,050.5
\u00a0 \u2013 High yield
489.0
308.7
Syndicate loans
34.1
32.5
Total debt securities and syndicate loans
8,570.5
7,398.0
Equity funds
282.7
159.4
Hedge funds
582.2
530.6
Illiquid assets
220.1
222.9
Total capital growth assets
1,085.0
912.9
Total financial investments at fair value through statement of profit or loss
9,655.5
8,310.9
Derivative financial assets
10.0
34.7
Total financial assets at fair value
9,665.5
8,345.6
Investment corporate bonds are rated BBB-/Baa3 or higher by at least one major rating agency, while high yield corporate
bonds have lower credit ratings. Hedge funds are investment vehicles pursuing alternative investment strategies, structured to
have minimal correlation to traditional asset classes. Equity funds are investment vehicles which invest in equity securities and
provide diversified exposure to global equity markets. Illiquid assets are investment vehicles that predominantly target private
lending opportunities, often with longer investment horizons. The fair value of these assets at 31\u00a0December 2023 excludes an
unfunded commitment of $32.0m (2022: $30.5m).
2023
2022
$m
$m
Tier 2 subordinated debt (2026)
249.5
249.4
Tier 2 subordinated debt (2029)
298.8
298.6
Derivative financial liabilities
6.3
14.5
Total financial liabilities
554.6
562.5
The Group has given a fixed and floating charge over certain of its investments and other assets to secure obligations to
Lloyd\u2019s in respect of its corporate member subsidiary. Further details are provided in Note 33.
For a maturity analysis showing the financial assets and liabilities due within and after one year of the reporting date, refer to
Note 30d.
18 Financial assets and liabilities continued
18b Valuation hierarchy
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair
value hierarchy described as follows. If the inputs used to measure the fair value of an asset or a liability could be categorised
in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of
the fair value hierarchy as the lowest level input that is significant to the entire measurement.
Fair value is the price at which an orderly transaction to sell an asset or to transfer a liability would take place between market
participants at the measurement date. Fair value is a market-based measure and in the absence of observable market prices in
an active market, it is measured using the assumptions that market participants would use when pricing the asset or liability.
The best evidence of the fair value of a financial instrument at initial recognition is the transaction price, i.e. the fair value of
the consideration given or received, unless the fair value of that instrument is evidenced by comparison with other observable
current market transactions in the same instrument (i.e. without modification or repackaging) or based on a valuation technique
whose variables include only data from observable markets. When the transaction price provides the best evidence of fair value
at initial recognition, the financial instrument is initially measured at the transaction price and any difference between this price
and the value initially obtained from a valuation model is subsequently recognised in profit or loss depending on the individual
facts and circumstances of the transaction but before the valuation is supported wholly by observable market data or the
transaction is closed out.
Level 1 \u2013 Valuations based on quoted prices in active markets for identical instruments. An active market is a market in which
transactions for the instrument occur with sufficient frequency and volume on an ongoing basis such that quoted prices reflect
prices at which an orderly transaction would take place between market participants at the measurement date.
Level 2 \u2013 Valuations based on quoted prices in markets that are not active, or based on pricing models for which significant
inputs can be corroborated by observable market data, directly or indirectly (e.g. interest rates and exchange rates). Level 2
inputs include:
\u2022 Quoted prices for similar assets and liabilities in active markets;
\u2022 Quoted prices for identical or similar assets and liabilities in markets that are not active, the prices are not current, or price
quotations vary substantially either over time or among market makers, or in which little information is released publicly;
\u2022 Inputs other than quoted prices that are observable for the asset or liability (for example, interest rates and yield curves
observable at commonly quoted intervals, implied volatilities and credit spreads); and
\u2022 Market corroborated inputs. Included within level 2 are government bonds and treasury bills, equity funds and corporate
bonds which are not actively traded, hedge funds and senior secured loans.
Level 3 \u2013 Valuations based on inputs that are unobservable or for which there is limited market activity against which to
measure fair value. The availability of financial data can vary for different financial assets and is affected by a wide variety of
factors, including the type of financial instrument, whether it is new and not yet established in the marketplace, and other
characteristics specific to each transaction. To the extent that valuation is based on models or inputs that are unobservable in
the market, the determination of fair value requires more judgement. Accordingly the degree of judgement exercised by
management in determining fair value is greatest for instruments classified in level 3. The Group uses prices and inputs that
are current as of the measurement date for valuation of these instruments.
18 Financial assets and liabilities continued
Valuation approach - level 2 instruments
a) For the Group\u2019s level 2 debt securities, our fund administrator obtains the prices used in the valuation from independent
pricing vendors. The independent pricing vendors derive an evaluated price from observable market inputs. These inputs are
verified in their pricing assumptions such as weighted average life, discount margins, default rates, and recovery and
prepayments assumptions for mortgage securities.
b) For our hedge funds, the pricing and valuation of each fund is undertaken by administrators in accordance with each
underlying fund\u2019s valuation policy. Individual fund prices are communicated by the administrators to all investors via the monthly
investor statements. The fair value of the hedge fund portfolios are calculated by reference to the underlying net asset values of
each of the individual funds. Our hedge funds are managed by Falcon Money Management Holdings Limited, an associate of
the Group.
c) Subordinated debt and tier 2 subordinated debt fair value are based on quoted market prices.
Valuation approach - level 3 instruments
a) Our illiquid fund investments are generally closed ended limited partnerships or open ended funds. The Group relies on a
third party fund manager to manage these investments and provide valuations. Note that while the funds report with full
transparency on their underlying investments, the investments themselves are predominantly in private and unquoted
instruments. The valuation techniques used by the fund managers to establish the fair values therefore require a degree of
estimation. For example, these may incorporate discounted cash flow models or a more market-based approach, whilst the
main inputs might include discount rates, fundamental pricing multiples, recent transaction prices, or comparable market
information to create a benchmark multiple.
b) Syndicate loans are non-tradeable instruments provided by our Group syndicates to the Central Fund at Lloyd\u2019s in respect of
the 2019 and 2020 underwriting years. These are valued internally using discounted cash flow models provided by Lloyd's to
the market, designed to appropriately reflect the credit and illiquidity risk of the instruments. Valuation outputs are then
validated using a control model, with the following inputs and assumptions. Note that these internally valued instruments are
deemed by management to be inherently more subjective than external valuations.
\u2022 Cash flows are comprised of the notional cost of the loans, annual interest income, and the final repayment of the loans at
the end of the 5-year term. The weighted average interest rate applicable across all syndicate loans is 3.8% (2022: 3.8%).
\u2022 A discount rate of 7.0% (2022: 9.2%) is applied. This is calculated using a combination of the long-term treasury bond risk-
free rate, the industry/geographic average regression beta, and a selected risk premium.
There were no changes in the valuation techniques during the year compared to those described in the Group's 2022 Annual
Report and Accounts.
18 Financial assets and liabilities continued
18c Fair values of financial assets and liabilities
The following table shows the fair values of financial assets and financial liabilities, including their levels in the fair value
hierarchy.
Level 1
Level 2
Level 3
Total
2023
$m
$m
$m
$m
Financial assets carried at fair value
Fixed and floating rate debt securities
\u2013 Government issued
3,291.9
1,177.2
\u2014
4,469.1
\u2013 Corporate bonds
\u00a0 \u2013 Investment grade
1,596.7
1,981.6
\u2014
3,578.3
\u00a0 \u2013 High yield
488.1
0.9
\u2014
489.0
Syndicate loans
\u2014
\u2014
34.1
34.1
Equity funds
282.7
\u2014
\u2014
282.7
Hedge funds
\u2014
582.2
\u2014
582.2
Illiquid assets
\u2014
\u2014
220.1
220.1
Derivative financial assets
10.0
\u2014
\u2014
10.0
Total financial assets carried at fair value
5,669.4
3,741.9
254.2
9,665.5
Financial liabilities carried at fair value
Derivative financial liabilities
6.3
\u2014
\u2014
6.3
Total financial liabilities carried at fair value
6.3
\u2014
\u2014
6.3
Fair value of financial liabilities carried at amortised cost
Tier 2 subordinated debt (2026)
\u2014
241.7
\u2014
241.7
Tier 2 subordinated debt (2029)
\u2014
271.9
\u2014
271.9
Total fair value of financial liabilities carried at amortised cost
\u2014
513.6
\u2014
513.6
Level 1
Level 2
Level 3
Total
2022
$m
$m
$m
$m
Financial assets carried at fair value
Fixed and floating rate debt securities
\u2013 Government issued
4,022.5
983.8
\u2014
5,006.3
\u2013 Corporate bonds
\u00a0 \u2013 Investment grade
893.8
1,156.7
\u2014
2,050.5
\u00a0 \u2013 High yield
34.2
274.5
\u2014
308.7
Syndicate loans
\u2014
\u2014
32.5
32.5
Equity funds
159.4
\u2014
\u2014
159.4
Hedge funds
\u2014
530.6
\u2014
530.6
Illiquid assets
\u2014
\u2014
222.9
222.9
Derivative financial assets
34.7
\u2014
\u2014
34.7
Total financial assets carried at fair value
5,144.6
2,945.6
255.4
8,345.6
Financial liabilities carried at fair value
Derivative financial liabilities
14.5
\u2014
\u2014
14.5
Total financial liabilities carried at fair value
14.5
\u2014
\u2014
14.5
Fair value of financial liabilities carried at amortised cost
Tier 2 subordinated debt (2026)
\u2014
240.3
\u2014
240.3
Tier 2 subordinated debt (2029)
\u2014
265.9
\u2014
265.9
Total fair value of financial liabilities carried at amortised cost
\u2014
506.2
\u2014
506.2
18 Financial assets and liabilities continued
18d Financial assets and liabilities measured at amortised cost
The tables above exclude the following financial assets and liabilities that are, in accordance with the Group\u2019s accounting
policies, measured at amortised cost. For all of these, the carrying amounts included below are deemed to be reasonable
approximations of fair values at the reporting date.
2023
2022
$m
$m
Cash and cash equivalents
812.3
652.5
Amounts due from managed syndicates
25.4
1.9
Other receivables
272.1
179.9
Total financial assets at amortised cost 1
1,109.8
834.3
Lease liabilities
76.6
72.7
Amounts due to managed syndicates
304.3
308.0
Other payables
207.3
184.5
Total financial liabilities at amortised cost
588.2
565.2
1 The Group has recognised expected credit losses (\"ECLs\") of $1.8m against its financial assets held at amortised cost as at 31 December 2023. Refer to Note
2 for the ECLs recognised on adoption of IFRS 9 as at 01 January 2023.
18e Transfers
The Group determines whether transfers have occurred between levels in the fair value hierarchy by assessing categorisation at
the end of the reporting period. The following transfers between levels 1 & 2 for the period ended 31 December 2023 reflect
the level of trading activities including frequency and volume derived from market data obtained from an independent external
valuation tool. There were no transfers into or out of level 3 in the year to 31 December 2023 (2022: no transfers).
Level 1
Level 2
31\u00a0December 2023 vs 31\u00a0December 2022 transfer from level 2 to level 1
$m
$m
\u2013 Corporate Bonds \u2013 Investment grade
446.0
(446.0)
Level 1
Level 2
31\u00a0December 2023 vs 31\u00a0December 2022 transfer from level\u00a0 1 to level 2
$m
$m
\u2013 Corporate Bonds \u2013 Investment grade
(525.3)
525.3
The values shown in the transfer tables above are translated using spot foreign exchange rates as at 31\u00a0December 2023.
18f Level 3 investment reconciliations
The table below shows a reconciliation from the opening balances to the closing balances of level 3 fair values. All realised and
unrealised gains/(losses) are recognised through net investment income in the statement of profit or loss (refer to Note 8).
2023
2022
$m
$m
Opening position as at 01 January
255.4
315.8
Purchases
21.8
13.0
Sales
(37.4)
(81.4)
Realised gain
20.2
13.2
Unrealised loss
(6.6)
(2.7)
Foreign exchange gain/(loss)
0.8
(2.5)
Closing position as at 31 December
254.2
255.4
18 Financial assets and liabilities continued
18g Unconsolidated structured entities
A structured entity is defined as an entity that has been designed so that voting or similar rights are not the dominant factor in
deciding who controls the entity, such as when any voting rights relate to administrative tasks only, or when the relevant
activities are directed by means of contractual arrangements.
As part of its standard investment activities the Group holds fixed interest investments in high yield bond funds, as well as
capital growth investments in equity funds, hedge funds and illiquid assets which in accordance with IFRS 12 are classified as
unconsolidated structured entities. The Group does not sponsor any of the unconsolidated structured entities. The assets
classified as unconsolidated structured entities are held at fair value on the statement of financial position. As at 31 December
the investments comprising the Group\u2019s unconsolidated structured entities are as follows:
2023
2022
$m
$m
High yield bond funds
489.0
308.7
Equity funds
282.7
159.4
Hedge funds
582.2
530.6
Illiquid assets
220.1
222.9
Investments through unconsolidated structured entities
1,574.0
1,221.6
The majority of our unconsolidated structured entity exposures fall within our capital growth assets. The capital growth assets
are held in investee funds managed by asset managers who apply various investment strategies to accomplish their respective
investment objectives. The Group\u2019s investments in investee funds are subject to the terms and conditions of the respective
investee fund\u2019s offering documentation and are susceptible to market price risk arising from uncertainties about future values
of those investee funds. Investment decisions are made after extensive due diligence on the underlying fund, its strategy and
the overall quality of the underlying fund\u2019s manager and assets.
The right to sell or request redemption of investments in high yield bond funds, asset backed securities, equity funds and
hedge funds ranges in frequency from daily to semi-annually. The Group did not sponsor any of the respective structured
entities. The Group\u2019s maximum exposure to loss from its interests in investee funds is equal to the total fair value of its
investments in investee funds and unfunded commitments.
18 Financial assets and liabilities continued
18h Currency exposures
The currency exposures of our financial assets held are detailed below:
UK \u00a3
CAD $
EUR \u20ac
Sub Total
US $
Total
2023
$m
$m
$m
$m
$m
$m
Financial assets at FVTPL:
- Fixed and floating rate debt securities
789.6
432.5
\u2014
1,222.1
7,314.3
8,536.4
- Syndicate loans
34.1
\u2014
\u2014
34.1
\u2014
34.1
- Equity Linked Funds
\u2014
\u2014
\u2014
\u2014
282.7
282.7
- Hedge funds
\u2014
\u2014
\u2014
\u2014
582.2
582.2
- Illiquid assets
6.4
\u2014
45.9
52.3
167.8
220.1
- Derivative financial assets
\u2014
\u2014
\u2014
\u2014
10.0
10.0
Cash and cash equivalents
125.8
51.5
93.5
270.8
541.5
812.3
Amounts due from managed syndicates and other
receivables
27.6
9.4
51.4
88.4
209.1
297.5
Total
983.5
493.4
190.8
1,667.7
9,107.6
10,775.3
UK \u00a3
CAD $
EUR \u20ac
Sub Total
US $
Total
2022
$m
$m
$m
$m
$m
$m
Financial assets at FVTPL:
- Fixed and floating rate debt securities
636.1
365.9
\u2014
1,002.0
6,363.5
7,365.5
- Syndicate loans
32.5
\u2014
\u2014
32.5
\u2014
32.5
- Equity Linked Funds
\u2014
\u2014
\u2014
\u2014
159.4
159.4
- Hedge funds
\u2014
\u2014
\u2014
\u2014
530.6
530.6
- Illiquid assets
0.1
\u2014
46.2
46.3
176.6
222.9
- Derivative financial assets
\u2014
\u2014
\u2014
\u2014
34.7
34.7
Cash and cash equivalents
93.1
53.8
83.4
230.3
422.2
652.5
Amounts due from managed syndicates and
other receivables
9.5
3.4
32.8
45.7
136.1
181.8
Total
771.3
423.1
162.4
1,356.8
7,823.1
9,179.9
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-379": { "value": "
18 Financial assets and liabilities
18a Carrying values of financial assets and liabilities
Set out below are the carrying values of the Group's \u2018financial assets at fair value\u2019 and \u2018financial liabilities\u2019 per the statement of
financial position. These amounts exclude the following financial assets and liabilities which are presented separately:
\u2022 Cash and cash equivalents carried at amortised cost (refer to Section d and Note 21); and
\u2022 Amounts due from managed syndicates, other receivables, lease liabilities, and other payables, all of which are carried at
amortised cost (per Section d).
2023
2022
$m
$m
Debt securities:
\u2013 Government issued
4,469.1
5,006.3
\u2013 Corporate bonds
\u00a0 \u2013 Investment grade
3,578.3
2,050.5
\u00a0 \u2013 High yield
489.0
308.7
Syndicate loans
34.1
32.5
Total debt securities and syndicate loans
8,570.5
7,398.0
Equity funds
282.7
159.4
Hedge funds
582.2
530.6
Illiquid assets
220.1
222.9
Total capital growth assets
1,085.0
912.9
Total financial investments at fair value through statement of profit or loss
9,655.5
8,310.9
Derivative financial assets
10.0
34.7
Total financial assets at fair value
9,665.5
8,345.6
Investment corporate bonds are rated BBB-/Baa3 or higher by at least one major rating agency, while high yield corporate
bonds have lower credit ratings. Hedge funds are investment vehicles pursuing alternative investment strategies, structured to
have minimal correlation to traditional asset classes. Equity funds are investment vehicles which invest in equity securities and
provide diversified exposure to global equity markets. Illiquid assets are investment vehicles that predominantly target private
lending opportunities, often with longer investment horizons. The fair value of these assets at 31\u00a0December 2023 excludes an
unfunded commitment of $32.0m (2022: $30.5m).
2023
2022
$m
$m
Tier 2 subordinated debt (2026)
249.5
249.4
Tier 2 subordinated debt (2029)
298.8
298.6
Derivative financial liabilities
6.3
14.5
Total financial liabilities
554.6
562.5
The Group has given a fixed and floating charge over certain of its investments and other assets to secure obligations to
Lloyd\u2019s in respect of its corporate member subsidiary. Further details are provided in Note 33.
For a maturity analysis showing the financial assets and liabilities due within and after one year of the reporting date, refer to
Note 30d.
18 Financial assets and liabilities continued
18b Valuation hierarchy
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair
value hierarchy described as follows. If the inputs used to measure the fair value of an asset or a liability could be categorised
in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of
the fair value hierarchy as the lowest level input that is significant to the entire measurement.
Fair value is the price at which an orderly transaction to sell an asset or to transfer a liability would take place between market
participants at the measurement date. Fair value is a market-based measure and in the absence of observable market prices in
an active market, it is measured using the assumptions that market participants would use when pricing the asset or liability.
The best evidence of the fair value of a financial instrument at initial recognition is the transaction price, i.e. the fair value of
the consideration given or received, unless the fair value of that instrument is evidenced by comparison with other observable
current market transactions in the same instrument (i.e. without modification or repackaging) or based on a valuation technique
whose variables include only data from observable markets. When the transaction price provides the best evidence of fair value
at initial recognition, the financial instrument is initially measured at the transaction price and any difference between this price
and the value initially obtained from a valuation model is subsequently recognised in profit or loss depending on the individual
facts and circumstances of the transaction but before the valuation is supported wholly by observable market data or the
transaction is closed out.
Level 1 \u2013 Valuations based on quoted prices in active markets for identical instruments. An active market is a market in which
transactions for the instrument occur with sufficient frequency and volume on an ongoing basis such that quoted prices reflect
prices at which an orderly transaction would take place between market participants at the measurement date.
Level 2 \u2013 Valuations based on quoted prices in markets that are not active, or based on pricing models for which significant
inputs can be corroborated by observable market data, directly or indirectly (e.g. interest rates and exchange rates). Level 2
inputs include:
\u2022 Quoted prices for similar assets and liabilities in active markets;
\u2022 Quoted prices for identical or similar assets and liabilities in markets that are not active, the prices are not current, or price
quotations vary substantially either over time or among market makers, or in which little information is released publicly;
\u2022 Inputs other than quoted prices that are observable for the asset or liability (for example, interest rates and yield curves
observable at commonly quoted intervals, implied volatilities and credit spreads); and
\u2022 Market corroborated inputs. Included within level 2 are government bonds and treasury bills, equity funds and corporate
bonds which are not actively traded, hedge funds and senior secured loans.
Level 3 \u2013 Valuations based on inputs that are unobservable or for which there is limited market activity against which to
measure fair value. The availability of financial data can vary for different financial assets and is affected by a wide variety of
factors, including the type of financial instrument, whether it is new and not yet established in the marketplace, and other
characteristics specific to each transaction. To the extent that valuation is based on models or inputs that are unobservable in
the market, the determination of fair value requires more judgement. Accordingly the degree of judgement exercised by
management in determining fair value is greatest for instruments classified in level 3. The Group uses prices and inputs that
are current as of the measurement date for valuation of these instruments.
18 Financial assets and liabilities continued
Valuation approach - level 2 instruments
a) For the Group\u2019s level 2 debt securities, our fund administrator obtains the prices used in the valuation from independent
pricing vendors. The independent pricing vendors derive an evaluated price from observable market inputs. These inputs are
verified in their pricing assumptions such as weighted average life, discount margins, default rates, and recovery and
prepayments assumptions for mortgage securities.
b) For our hedge funds, the pricing and valuation of each fund is undertaken by administrators in accordance with each
underlying fund\u2019s valuation policy. Individual fund prices are communicated by the administrators to all investors via the monthly
investor statements. The fair value of the hedge fund portfolios are calculated by reference to the underlying net asset values of
each of the individual funds. Our hedge funds are managed by Falcon Money Management Holdings Limited, an associate of
the Group.
c) Subordinated debt and tier 2 subordinated debt fair value are based on quoted market prices.
Valuation approach - level 3 instruments
a) Our illiquid fund investments are generally closed ended limited partnerships or open ended funds. The Group relies on a
third party fund manager to manage these investments and provide valuations. Note that while the funds report with full
transparency on their underlying investments, the investments themselves are predominantly in private and unquoted
instruments. The valuation techniques used by the fund managers to establish the fair values therefore require a degree of
estimation. For example, these may incorporate discounted cash flow models or a more market-based approach, whilst the
main inputs might include discount rates, fundamental pricing multiples, recent transaction prices, or comparable market
information to create a benchmark multiple.
b) Syndicate loans are non-tradeable instruments provided by our Group syndicates to the Central Fund at Lloyd\u2019s in respect of
the 2019 and 2020 underwriting years. These are valued internally using discounted cash flow models provided by Lloyd's to
the market, designed to appropriately reflect the credit and illiquidity risk of the instruments. Valuation outputs are then
validated using a control model, with the following inputs and assumptions. Note that these internally valued instruments are
deemed by management to be inherently more subjective than external valuations.
\u2022 Cash flows are comprised of the notional cost of the loans, annual interest income, and the final repayment of the loans at
the end of the 5-year term. The weighted average interest rate applicable across all syndicate loans is 3.8% (2022: 3.8%).
\u2022 A discount rate of 7.0% (2022: 9.2%) is applied. This is calculated using a combination of the long-term treasury bond risk-
free rate, the industry/geographic average regression beta, and a selected risk premium.
There were no changes in the valuation techniques during the year compared to those described in the Group's 2022 Annual
Report and Accounts.
18 Financial assets and liabilities continued
18c Fair values of financial assets and liabilities
The following table shows the fair values of financial assets and financial liabilities, including their levels in the fair value
hierarchy.
Level 1
Level 2
Level 3
Total
2023
$m
$m
$m
$m
Financial assets carried at fair value
Fixed and floating rate debt securities
\u2013 Government issued
3,291.9
1,177.2
\u2014
4,469.1
\u2013 Corporate bonds
\u00a0 \u2013 Investment grade
1,596.7
1,981.6
\u2014
3,578.3
\u00a0 \u2013 High yield
488.1
0.9
\u2014
489.0
Syndicate loans
\u2014
\u2014
34.1
34.1
Equity funds
282.7
\u2014
\u2014
282.7
Hedge funds
\u2014
582.2
\u2014
582.2
Illiquid assets
\u2014
\u2014
220.1
220.1
Derivative financial assets
10.0
\u2014
\u2014
10.0
Total financial assets carried at fair value
5,669.4
3,741.9
254.2
9,665.5
Financial liabilities carried at fair value
Derivative financial liabilities
6.3
\u2014
\u2014
6.3
Total financial liabilities carried at fair value
6.3
\u2014
\u2014
6.3
Fair value of financial liabilities carried at amortised cost
Tier 2 subordinated debt (2026)
\u2014
241.7
\u2014
241.7
Tier 2 subordinated debt (2029)
\u2014
271.9
\u2014
271.9
Total fair value of financial liabilities carried at amortised cost
\u2014
513.6
\u2014
513.6
Level 1
Level 2
Level 3
Total
2022
$m
$m
$m
$m
Financial assets carried at fair value
Fixed and floating rate debt securities
\u2013 Government issued
4,022.5
983.8
\u2014
5,006.3
\u2013 Corporate bonds
\u00a0 \u2013 Investment grade
893.8
1,156.7
\u2014
2,050.5
\u00a0 \u2013 High yield
34.2
274.5
\u2014
308.7
Syndicate loans
\u2014
\u2014
32.5
32.5
Equity funds
159.4
\u2014
\u2014
159.4
Hedge funds
\u2014
530.6
\u2014
530.6
Illiquid assets
\u2014
\u2014
222.9
222.9
Derivative financial assets
34.7
\u2014
\u2014
34.7
Total financial assets carried at fair value
5,144.6
2,945.6
255.4
8,345.6
Financial liabilities carried at fair value
Derivative financial liabilities
14.5
\u2014
\u2014
14.5
Total financial liabilities carried at fair value
14.5
\u2014
\u2014
14.5
Fair value of financial liabilities carried at amortised cost
Tier 2 subordinated debt (2026)
\u2014
240.3
\u2014
240.3
Tier 2 subordinated debt (2029)
\u2014
265.9
\u2014
265.9
Total fair value of financial liabilities carried at amortised cost
\u2014
506.2
\u2014
506.2
18 Financial assets and liabilities continued
18d Financial assets and liabilities measured at amortised cost
The tables above exclude the following financial assets and liabilities that are, in accordance with the Group\u2019s accounting
policies, measured at amortised cost. For all of these, the carrying amounts included below are deemed to be reasonable
approximations of fair values at the reporting date.
2023
2022
$m
$m
Cash and cash equivalents
812.3
652.5
Amounts due from managed syndicates
25.4
1.9
Other receivables
272.1
179.9
Total financial assets at amortised cost 1
1,109.8
834.3
Lease liabilities
76.6
72.7
Amounts due to managed syndicates
304.3
308.0
Other payables
207.3
184.5
Total financial liabilities at amortised cost
588.2
565.2
1 The Group has recognised expected credit losses (\"ECLs\") of $1.8m against its financial assets held at amortised cost as at 31 December 2023. Refer to Note
2 for the ECLs recognised on adoption of IFRS 9 as at 01 January 2023.
18e Transfers
The Group determines whether transfers have occurred between levels in the fair value hierarchy by assessing categorisation at
the end of the reporting period. The following transfers between levels 1 & 2 for the period ended 31 December 2023 reflect
the level of trading activities including frequency and volume derived from market data obtained from an independent external
valuation tool. There were no transfers into or out of level 3 in the year to 31 December 2023 (2022: no transfers).
Level 1
Level 2
31\u00a0December 2023 vs 31\u00a0December 2022 transfer from level 2 to level 1
$m
$m
\u2013 Corporate Bonds \u2013 Investment grade
446.0
(446.0)
Level 1
Level 2
31\u00a0December 2023 vs 31\u00a0December 2022 transfer from level\u00a0 1 to level 2
$m
$m
\u2013 Corporate Bonds \u2013 Investment grade
(525.3)
525.3
The values shown in the transfer tables above are translated using spot foreign exchange rates as at 31\u00a0December 2023.
18f Level 3 investment reconciliations
The table below shows a reconciliation from the opening balances to the closing balances of level 3 fair values. All realised and
unrealised gains/(losses) are recognised through net investment income in the statement of profit or loss (refer to Note 8).
2023
2022
$m
$m
Opening position as at 01 January
255.4
315.8
Purchases
21.8
13.0
Sales
(37.4)
(81.4)
Realised gain
20.2
13.2
Unrealised loss
(6.6)
(2.7)
Foreign exchange gain/(loss)
0.8
(2.5)
Closing position as at 31 December
254.2
255.4
18 Financial assets and liabilities continued
18g Unconsolidated structured entities
A structured entity is defined as an entity that has been designed so that voting or similar rights are not the dominant factor in
deciding who controls the entity, such as when any voting rights relate to administrative tasks only, or when the relevant
activities are directed by means of contractual arrangements.
As part of its standard investment activities the Group holds fixed interest investments in high yield bond funds, as well as
capital growth investments in equity funds, hedge funds and illiquid assets which in accordance with IFRS 12 are classified as
unconsolidated structured entities. The Group does not sponsor any of the unconsolidated structured entities. The assets
classified as unconsolidated structured entities are held at fair value on the statement of financial position. As at 31 December
the investments comprising the Group\u2019s unconsolidated structured entities are as follows:
2023
2022
$m
$m
High yield bond funds
489.0
308.7
Equity funds
282.7
159.4
Hedge funds
582.2
530.6
Illiquid assets
220.1
222.9
Investments through unconsolidated structured entities
1,574.0
1,221.6
The majority of our unconsolidated structured entity exposures fall within our capital growth assets. The capital growth assets
are held in investee funds managed by asset managers who apply various investment strategies to accomplish their respective
investment objectives. The Group\u2019s investments in investee funds are subject to the terms and conditions of the respective
investee fund\u2019s offering documentation and are susceptible to market price risk arising from uncertainties about future values
of those investee funds. Investment decisions are made after extensive due diligence on the underlying fund, its strategy and
the overall quality of the underlying fund\u2019s manager and assets.
The right to sell or request redemption of investments in high yield bond funds, asset backed securities, equity funds and
hedge funds ranges in frequency from daily to semi-annually. The Group did not sponsor any of the respective structured
entities. The Group\u2019s maximum exposure to loss from its interests in investee funds is equal to the total fair value of its
investments in investee funds and unfunded commitments.
18 Financial assets and liabilities continued
18h Currency exposures
The currency exposures of our financial assets held are detailed below:
UK \u00a3
CAD $
EUR \u20ac
Sub Total
US $
Total
2023
$m
$m
$m
$m
$m
$m
Financial assets at FVTPL:
- Fixed and floating rate debt securities
789.6
432.5
\u2014
1,222.1
7,314.3
8,536.4
- Syndicate loans
34.1
\u2014
\u2014
34.1
\u2014
34.1
- Equity Linked Funds
\u2014
\u2014
\u2014
\u2014
282.7
282.7
- Hedge funds
\u2014
\u2014
\u2014
\u2014
582.2
582.2
- Illiquid assets
6.4
\u2014
45.9
52.3
167.8
220.1
- Derivative financial assets
\u2014
\u2014
\u2014
\u2014
10.0
10.0
Cash and cash equivalents
125.8
51.5
93.5
270.8
541.5
812.3
Amounts due from managed syndicates and other
receivables
27.6
9.4
51.4
88.4
209.1
297.5
Total
983.5
493.4
190.8
1,667.7
9,107.6
10,775.3
UK \u00a3
CAD $
EUR \u20ac
Sub Total
US $
Total
2022
$m
$m
$m
$m
$m
$m
Financial assets at FVTPL:
- Fixed and floating rate debt securities
636.1
365.9
\u2014
1,002.0
6,363.5
7,365.5
- Syndicate loans
32.5
\u2014
\u2014
32.5
\u2014
32.5
- Equity Linked Funds
\u2014
\u2014
\u2014
\u2014
159.4
159.4
- Hedge funds
\u2014
\u2014
\u2014
\u2014
530.6
530.6
- Illiquid assets
0.1
\u2014
46.2
46.3
176.6
222.9
- Derivative financial assets
\u2014
\u2014
\u2014
\u2014
34.7
34.7
Cash and cash equivalents
93.1
53.8
83.4
230.3
422.2
652.5
Amounts due from managed syndicates and
other receivables
9.5
3.4
32.8
45.7
136.1
181.8
Total
771.3
423.1
162.4
1,356.8
7,823.1
9,179.9
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-382": { "value": "
19 Derivative financial instruments
Derivative financial instruments are utilised by the Group to manage its exposure to market risks on existing assets and
liabilities. For currency risk, over-the-counter foreign exchange forward agreements are used to economically hedge the balance
sheet's net assets by currency exposure.
The assets and liabilities of these contracts are detailed below. The Group has the right and intention to settle each contract on
a net basis.
2023
2022
Notional contract
amount
Market value
of derivative
position
Notional contract
amount
Market value
of derivative
position
$m
$m
$m
$m
Contract assets
648.8
10.0
560.1
34.7
Contract liabilities
436.4
(6.3)
549.7
(14.5)
Total derivative financial instruments
3.7
20.2
", "dimensions": { "concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-383": { "value": "
20 Other assets
2023
2022
$m
$m
Investment in associates
0.3
0.4
Prepayments and accrued income
56.4
22.0
Due from syndicate 623
19.1
\u2014
Due from syndicate 4321
6.3
1.9
Other receivables
272.1
179.9
Total other assets
354.2
204.2
Other assets are due within one year of the reporting date, with the exception of the Group's investment in associates and
$13.7m (2022: $6.1m) of accrued income which is due after one year of the reporting date.
Investment in associates
The Group\u2019s investment in associates consists of the following:
2023
Country/region
of incorporation
% interest
held
Falcon Money Management Holdings Limited (and subsidiaries)
Malta\u00b9
25%
Pegasus Underwriting Limited
Hong Kong\u00b2
33%
CyberAcu View LLC
USA\u00b3
14%
1 259 St Paul Street, Valletta, Malta
2 Suite 126, 12/F Somptuex Central, 52-54 Wellington Street, Hong Kong
3 8130 Lakewood Main Street, Suite 103 #329. Lakewood Ranch, FL 34202
The Group has the ability to appoint a member to the board of CyberAcuView LLC to represent its interest, therefore the Group
is deemed to have significant influence and this investment is recognised as an associate.
A share of loss on associates of $0.1m (2022: $0.2m) has been recognised in profit or loss for the year.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherAssetsExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-384": { "value": "
21 Cash and cash equivalents
2023
2022
$m
$m
Cash at bank and in hand
812.3
652.5
Total cash and cash equivalents
812.3
652.5
Included within Cash and cash equivalents held by the Group are balances totalling $132.6m (31 December 2022: $184.0m)
not available for immediate use by the Group outside of the Lloyd's syndicate within which they are held. Additionally, $73.1m
(31 December 2022: $66.0m) is pledged cash held against Funds at Lloyd's, and $13.3m (31 December 2022: $43.6m) is
held in Lloyd's Singapore trust accounts which are only available for use by the Group to meet local claim and expense
obligations.", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-385": { "value": "
22 Share capital
2023
2022
No. of
shares (m)
$m
No. of
shares (m)
$m
Ordinary shares of 5p each
Issued and fully paid
672.5
46.7
671.2
46.6
Balance at 01 January
671.2
46.6
609.2
42.9
Issue of shares to satisfy employee share schemes
1.3
0.1
1.0
0.1
Equity raise
\u2014
\u2014
61.0
3.6
Balance at 31 December
672.5
46.7
671.2
46.6
There are no limits to the authorised share capital of the Company.
On 16 November 2022, the Group completed an equity raise with the issue of 60,959,017 new ordinary shares of 5 pence
each in the share capital of the Company. This equity raise was primarily comprised of 60,403,895 Placing shares, in addition
to Retail Offer shares and Subscription shares.
The shares were issued at a price of 575 pence per share, representing a discount of 8.0% to the closing share price of 625
pence on 15 November 2022. This represented approximately 9.99% of the Company's issued ordinary share capital on the day
prior to the equity raise. In aggregate, the equity raise represented net proceeds of \u00a3340.8m ($404.4m).
No share premium was recorded in relation to the Placing shares as merger relief under the Companies Act was available. The
premium over the nominal value of these shares was credited to a merger reserve and subsequently recognised in retained
earnings as it was deemed to be distributable.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-386": { "value": "
23 Other reserves
Employee
share options
reserve
Employee
share trust
reserve
Total
$m
$m
$m
Balance at 01\u00a0January 2022
17.0
(21.0)
(4.0)
Share based payments
15.7
\u2014
15.7
Tax on share option vestings
3.1
\u2014
3.1
Acquisition of own shares held in trust
\u2014
(17.8)
(17.8)
Transfer of shares to employees
(7.2)
2.6
(4.6)
Balance at 31\u00a0December 2022
28.6
(36.2)
(7.6)
Share based payments
36.2
\u2014
36.2
Tax on share option vestings
0.7
\u2014
0.7
Acquisition of own shares held in trust
\u2014
(33.6)
(33.6)
Transfer of shares to employees
(14.8)
6.3
(8.5)
Balance at 31\u00a0December 2023
50.7
(63.5)
(12.8)
The employee share options reserve is held in accordance with IFRS 2 Share-based payments. For awards satisfied by the
employee share trust (\"EBT\"), shares are purchased on the market and carried at cost. For further information refer t o Note 24.
A reconciliation of the amounts included within the EBT reserve is provided below.
2023
2022
Number (m)
Number (m)
Balance at 01 January
5.7
3.1
Additions
5.1
3.0
Transfer of shares to employees
(1.0)
(0.4)
Balance at 31 December
9.8
5.7
", "dimensions": { "concept": "ifrs-full:DisclosureOfReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-387": { "value": "
24 Equity compensation plans
The Group offers the following equity compensation plans: long term incentive plan (\u201cLTIP\u201d), save-as-you-earn (\"SAYE\") plan,
deferred share plan, and retention share plan. Provided vesting conditions are met, the methods of settlement for each plan are
as follows:
\u2022 LTIPs \u2013 share options which entitle executives and senior management to acquire shares in the Company, satisfied either
through new issue or the EBT;
\u2022 SAYE \u2013 share options which entitle the Group\u2019s employees to buy shares at a set option price. These are satisfied through
new issue;
\u2022 Deferred awards \u2013 conditional awards granted to employees in the form of shares, satisfied through the EBT; and
\u2022 Retention shares \u2013 conditional awards granted to senior management in the form of shares, satisfied through the EBT.
The terms and conditions of the grants are as follows:
Equity compensation plans
No. outstanding (m)
Vesting conditions
Contractual life
LTIP (5 year)
6.1
Five years' service + NAVps + minimum shareholding
10 years
LTIP (3 year)
8.9
Three years' service + NAVps + minimum shareholding + ESG
10 years
SAYE (UK)
2.6
Three years' service
6 months
SAYE (US)
0.2
Two years\u2019 service
3 months
SAYE (Others)
0.2
Two years\u2019 service
Various
Total options outstanding
18.0
Deferred share plan
3.6
Three years\u2019 service
N/A
Retention plan
0.1
Three to six years\u2019 service (25% per year)
N/A
Total outstanding
21.7
In summary the vesting conditions are defined as:
\u2022 two, three, five or six years\u2019 service \u2013 an employee has to remain in employment until the second, third, fifth or sixth
anniversary respectively from the grant date;
\u2022 NAVps \u2013 the net asset value per share (\"NAVps\") growth, after adjusting for the effect of dividends, is greater than the risk-
free rate of return plus a premium per year;
\u2022 the CEO and Group Finance Director (\"Executive Directors\") must hold and maintain a shareholding of 300% and 200%
respectively of base salary. The Executive Directors must maintain 100% of their shareholding requirement for two years post-
departure. Other executive management and senior management of the business are expected to hold and maintain a
shareholding of 150% and 100% respectively of base salary; and
\u2022 ESG requirements \u2013 newly introduced in 2023, the Group must reduce its carbon emissions and increase its female and
people of colour representation at the Board and Senior Manager level.
Further details can be found in the Directors\u2019 remuneration report on pages 124 to 145. The total gain on Directors\u2019 exercises
of share option plans during the year was \u00a30.5m (2022: \u00a30.2m).
Number of options and exercise prices
The following table summarises the number of options outstanding at the balance sheet date, the weighted average remaining
contractual life of these options, and the weighted average share price at exercise of options exercised during the year.
2023
2022
Weighted average
exercise price
(pence per share)
No. of\u00a0
options
(m)
Weighted average
exercise price
(pence per share)
No. of
options
(m)
Outstanding at 01 January
56.5
15.9
80.7
14.9
Forfeited during the year
40.9
(2.2)
74.5
(3.2)
Exercised during the year\u00b9
76.6
(1.4)
124.3
(1.1)
Granted during the year
57.8
5.7
54.5
5.3
Outstanding at 31 December\u00b2
58.0
18.0
56.5
15.9
Exercisable at 31 December
\u2014
\u2014
\u2014
\u2014
1 The weighted average share price at the point of exercise of these options was 610.2p (2022: 498.7p).
2 The weighted average remaining contractual life for the outstanding options at end of the year was 1.33 years (2022: 1.89 years).
24 Equity compensation plans continued
The range of exercise prices for options outstanding at the end of the year were as follows:
2023
2022
Exercise prices (pence per option)
No. outstanding (m)
No. outstanding (m)
0 \u2013 100
15.0
13.0
201 \u2013 300
1.6
1.8
301 \u2013 400
0.6
0.7
401 \u2013 500
0.7
0.4
501 \u2013 518
0.1
\u2014
Total options outstanding
18.0
15.9
Fair values
The fair values of the LTIP and SAYE plans are measured using the Black Scholes model, taking into account the terms and
conditions upon which the options were granted.
For these plans, amounts are recognised in the profit or loss as an employee expense over the period in which the employees
become unconditionally entitled to the options, with a corresponding increase in the employee share options reserve. The
amount recognised as an expense is adjusted to reflect the actual number once vested. The below table is a summary of the
assumptions used to calculate the fair value of share options awarded during the year ended 31 December 2023.
2023
2022
Share options charge to employee share options reserve
33.8
14.7
LTIP
Weighted average share price (pence per option)
614.0
509.9
Weighted average fair value (pence per option)
613.9
509.8
Weighted average exercise price (pence per option)
\u2013
\u2013
Average expected life of options (years)
2.9yrs
4.3yrs
Expected volatility
35.0%
38.9%
Expected dividend yield
\u2014%
\u2014%
Average risk-free interest rate
3.9%
3.0%
SAYE
Weighted average share price (pence per option)
582.5
435.7
Weighted average fair value (pence per option)
184.2
143.4
Weighted average exercise price (pence per option)
480.1
350.6
Average expected life of options (years)
3.3yrs
3.3yrs
Expected volatility
34.8%
39.3%
Expected dividend yield
2.5%
2.6%
Average risk-free interest rate
3.8%
2.6%
The expected volatility is based on historic volatility over a period of at least two years.
For the deferred share plan and retention share plan, fair values are determined based on the share price at date of grant.
Amounts are recognised in the statement of profit or loss on a straight-line basis over a period of three years and six years
respectively.", "dimensions": { "concept": "ifrs-full:DisclosureOfTermsAndConditionsOfSharebasedPaymentArrangementExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-389": { "value": "
26 Subordinated liabilities
In November 2016, the Group issued $250m of subordinated Tier 2 notes due in 2026. Annual interest, at a fixed rate of
5.875%, is payable in May and November each year. In September 2019, the Group issued $300m of subordinated Tier 2
notes due in 2029. Annual interest, at a fixed rate of 5.5% is payable in March and September each year.
The carrying amounts of the subordinated liabilities are as follows. The total fair value of the Group's subordinated liabilities is
$513.6m (2022: $506.2m).
Tier 2
subordinated
debt (2029)
Tier 2
subordinated
debt (2026)
Total
$m
$m
$m
Opening balance at 01\u00a0January 2022
298.4
249.2
547.6
Amortisation of capitalised borrowing costs
0.2
0.2
0.4
Closing balance at 31\u00a0December 2022
298.6
249.4
548.0
Amortisation of capitalised borrowing costs
0.2
0.1
0.3
Closing balance at 31\u00a0December 2023
298.8
249.5
548.3
The annual interest expense on the Group's subordinated liabilities is included in Note 8. Accrued interest of $7.4m (2022:
$7.4m) is included within Other liabilities in Note 29.", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingCostsExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-388": { "value": "
26 Subordinated liabilities
In November 2016, the Group issued $250m of subordinated Tier 2 notes due in 2026. Annual interest, at a fixed rate of
5.875%, is payable in May and November each year. In September 2019, the Group issued $300m of subordinated Tier 2
notes due in 2029. Annual interest, at a fixed rate of 5.5% is payable in March and September each year.
The carrying amounts of the subordinated liabilities are as follows. The total fair value of the Group's subordinated liabilities is
$513.6m (2022: $506.2m).
Tier 2
subordinated
debt (2029)
Tier 2
subordinated
debt (2026)
Total
$m
$m
$m
Opening balance at 01\u00a0January 2022
298.4
249.2
547.6
Amortisation of capitalised borrowing costs
0.2
0.2
0.4
Closing balance at 31\u00a0December 2022
298.6
249.4
548.0
Amortisation of capitalised borrowing costs
0.2
0.1
0.3
Closing balance at 31\u00a0December 2023
298.8
249.5
548.3
The annual interest expense on the Group's subordinated liabilities is included in Note 8. Accrued interest of $7.4m (2022:
$7.4m) is included within Other liabilities in Note 29.", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingsExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-390": { "value": "
27 Leases
The Group leases offices, IT equipment and motor vehicles. The leased offices are in several locations and the leases of large
offices such as London and New York typically run for a period of 10 years with an option to renew the lease after that date or
continue on a rolling month-by-month basis. Lease payments are renegotiated as agreed in the lease contracts. Information
about leases for which the Group is a lessee are presented below. Note that the right-of-use assets do not meet the definition
of investment property as per IAS 40.
Right-of-use assets
Offices
IT equipment
Motor vehicle
Total
$m
$m
$m
$m
Balance at 01\u202fJanuary 2022
63.4
12.0
0.1
75.5
Depreciation
(8.0)
(4.2)
(0.1)
(12.3)
Additions
0.9
\u2014
\u2014
0.9
Foreign exchange translation differences
(3.0)
(0.6)
\u2014
(3.6)
Balance at 31\u202fDecember 2022
53.3
7.2
\u2014
60.5
Depreciation
(9.6)
(3.3)
\u2014
(12.9)
Additions
10.9
\u2014
\u2014
10.9
Foreign exchange translation differences
0.8
0.1
\u2014
0.9
Balance at 31\u202fDecember 2023
55.4
4.0
\u2014
59.4
Lease liabilities
Offices
IT equipment
Motor vehicle
Total
$m
$m
$m
$m
Balance at 01\u202fJanuary 2022
72.1
12.1
0.1
84.3
Lease payments
(6.9)
(4.5)
(0.2)
(11.6)
Interest on lease liabilities and dilapidation provision
2.8
0.4
\u2014
3.2
Additions to lease portfolio
0.9
\u2014
\u2014
0.9
Foreign exchange translation differences
(3.5)
(0.7)
0.1
(4.1)
Balance at 31\u202fDecember 2022
65.4
7.3
\u2014
72.7
Lease payments
(8.5)
(3.5)
\u2014
(12.0)
Interest on lease liabilities and dilapidation provision
3.1
0.2
\u2014
3.3
Additions to lease portfolio
10.9
\u2014
\u2014
10.9
Foreign exchange translation differences
1.5
0.2
\u2014
1.7
Balance at 31\u202fDecember 2023
72.4
4.2
\u2014
76.6
The amount falling due within 12 months is $13.5m (2022: $9.6m). For a detailed maturity analysis, refer to Note 30d.
", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-391": { "value": "
28 Insurance and reinsurance contracts
28a Reconciliations by measurement component
This section shows how the net carrying amounts of insurance contracts issued and reinsurance contracts held by the Group
have changed during the year, as a result of changes in cash flows and amounts recognised in profit or loss. An explanation of
how amounts have moved in the year is set out in Note 2.
i) Insurance contracts issued
The tables below set out the estimated present value of future cash flows, the risk adjustment for non-financial risk and the
CSM for insurance contracts issued.
Present value of
future cash
flows
Risk adjustment
for non-financial
risk
CSM
Total
31 December 2023
$m
$m
$m
$m
Opening insurance contract assets
123.5
(12.9)
(26.5)
84.1
Opening insurance contract liabilities
(6,324.0)
(711.3)
(314.5)
(7,349.8)
Net insurance contract liabilities at 01 January 2023
(6,200.5)
(724.2)
(341.0)
(7,265.7)
CSM recognised in profit or loss for services provided
\u2014
\u2014
691.4
691.4
Changes in the risk adjustment for non-financial risk for risk expired
\u2014
316.8
\u2014
316.8
Experience adjustments
893.3
(285.5)
\u2014
607.8
Total changes relating to current service
893.3
31.3
691.4
1,616.0
Changes in estimates that adjust the CSM
135.0
(19.1)
(115.9)
\u2014
Changes in estimates that result in onerous contract losses or
reversal of such losses
6.0
(1.1)
7.5
12.4
Contracts initially recognised in the period
870.2
(264.2)
(616.6)
(10.6)
Total changes relating to future service
1,011.2
(284.4)
(725.0)
1.8
Total changes relating to past service - adjustments to the LIC
16.2
215.8
\u2014
232.0
Recognised in insurance service result
1,920.7
(37.3)
(33.6)
1,849.8
Finance (expenses)/income from insurance contracts issued
(190.2)
(13.9)
34.8
(169.3)
Foreign exchange gains/(losses)
1.9
(0.6)
(4.2)
(2.9)
Other amounts recognised in total comprehensive income
(188.3)
(14.5)
30.6
(172.2)
Premiums received net of insurance acquisition cash flows
(4,526.4)
\u2014
\u2014
(4,526.4)
Claims and other directly attributable expenses paid
2,223.8
\u2014
\u2014
2,223.8
Total cash flows
(2,302.6)
\u2014
\u2014
(2,302.6)
Closing insurance contract assets
103.8
(1.2)
(1.1)
101.5
Closing insurance contract liabilities
(6,874.5)
(774.8)
(342.9)
(7,992.2)
Net insurance contract liabilities at 31 December 2023
(6,770.7)
(776.0)
(344.0)
(7,890.7)
28 Insurance and reinsurance contracts continued
Present value of
future cash
flows
Risk adjustment
for non-financial
risk
CSM
Total
31 December 2022
$m
$m
$m
$m
Opening insurance contract assets
\u2014
\u2014
\u2014
\u2014
Opening insurance contract liabilities
(5,628.3)
(740.3)
(190.9)
(6,559.5)
Net insurance contract liabilities at 01 January 2022
(5,628.3)
(740.3)
(190.9)
(6,559.5)
CSM recognised in profit or loss for services provided
\u2014
\u2014
565.2
565.2
Changes in the risk adjustment for non-financial risk for risk expired
\u2014
274.7
\u2014
274.7
Experience adjustments
518.4
(268.6)
\u2014
249.8
Total changes relating to current service
518.4
6.1
565.2
1,089.7
Changes in estimates that adjust the CSM
57.2
61.5
(118.7)
\u2014
Changes in estimates that result in onerous contract losses or
reversal of such losses
42.7
(3.0)
18.5
58.2
Contracts initially recognised in the period
898.3
(324.8)
(607.6)
(34.1)
Total changes relating to future service
998.2
(266.3)
(707.8)
24.1
Total changes relating to past service - adjustments to the LIC
(517.3)
237.9
\u2014
(279.4)
Recognised in insurance service result
999.3
(22.3)
(142.6)
834.4
Finance income/(expenses) from insurance contracts issued
261.8
29.5
(11.8)
279.5
Foreign exchange gains
45.9
8.9
4.3
59.1
Other amounts recognised in total comprehensive income
307.7
38.4
(7.5)
338.6
Premiums received net of insurance acquisition cash flows
(4,141.0)
\u2014
\u2014
(4,141.0)
Claims and other directly attributable expenses paid
2,261.8
\u2014
\u2014
2,261.8
Total cash flows
(1,879.2)
\u2014
\u2014
(1,879.2)
Closing insurance contract assets
123.5
(12.9)
(26.5)
84.1
Closing insurance contract liabilities
(6,324.0)
(711.3)
(314.5)
(7,349.8)
Net insurance contract liabilities at 31 December 2022
(6,200.5)
(724.2)
(341.0)
(7,265.7)
28 Insurance and reinsurance contracts continued
ii) Reinsurance contracts held
The tables below set out the estimates of the present value of future cash flows, risk adjustment for non-financial risk and CSM
for reinsurance contracts held.
Present value of
future cash
flows
Risk adjustment
for non-financial
risk
CSM
Total
31 December 2023
$m
$m
$m
$m
Opening reinsurance contract assets
1,853.3
184.6
137.4
2,175.3
Opening reinsurance contract liabilities
(193.8)
12.7
19.9
(161.2)
Net reinsurance contract assets at 01 January 2023
1,659.5
197.3
157.3
2,014.1
CSM recognised in profit or loss for the services provided
\u2014
\u2014
(290.8)
(290.8)
Changes in the risk adjustment for non-financial risk for the risk
expired
\u2014
(105.2)
\u2014
(105.2)
Experience adjustments
(139.0)
84.2
\u2014
(54.8)
Total changes relating to current service
(139.0)
(21.0)
(290.8)
(450.8)
Changes in estimates that adjust the CSM
91.6
(16.1)
(75.5)
\u2014
Contracts initially recognised in the period
(436.3)
84.2
352.1
\u2014
Total changes relating to future service
(344.7)
68.1
276.6
\u2014
Adjustments to incurred claims recovery
(110.9)
(41.3)
\u2014
(152.2)
Effect of changes in the risk of reinsurers non-performance
4.2
\u2014
\u2014
4.2
Total changes relating to past service
(106.7)
(41.3)
\u2014
(148.0)
Recognised in insurance service result
(590.4)
5.8
(14.2)
(598.8)
Finance income/(expenses) from reinsurance contracts held
24.0
5.7
(13.8)
15.9
Foreign exchange (losses)/gains
(20.6)
15.8
0.3
(4.5)
Other amounts recognised in total comprehensive income
3.4
21.5
(13.5)
11.4
Premiums paid net of ceding commissions and other directly
attributable expenses paid
1,080.4
\u2014
\u2014
1,080.4
Recoveries from reinsurance
(413.9)
\u2014
\u2014
(413.9)
Total cash flows
666.5
\u2014
\u2014
666.5
Closing reinsurance contract assets
2,143.4
166.2
117.1
2,426.7
Closing reinsurance contract liabilities
(404.4)
58.4
12.5
(333.5)
Net reinsurance contract assets at 31 December 2023
1,739.0
224.6
129.6
2,093.2
28 Insurance and reinsurance contracts continued
Present value of
future cash
flows
Risk adjustment
for non-financial
risk
CSM
Total
31 December 2022
$m
$m
$m
$m
Opening reinsurance contract assets
1,453.7
177.0
43.6
1,674.3
Opening reinsurance contract liabilities
(156.6)
13.8
3.1
(139.7)
Net reinsurance contract assets at 01 January 2022
1,297.1
190.8
46.7
1,534.6
CSM recognised in profit or loss for the services provided
\u2014
\u2014
(195.3)
(195.3)
Changes in the risk adjustment for non-financial risk for the risk
expired
\u2014
(74.3)
\u2014
(74.3)
Experience adjustments
(29.8)
65.7
\u2014
35.9
Total changes relating to current service
(29.8)
(8.6)
(195.3)
(233.7)
Changes in estimates that adjust the CSM
264.4
7.1
(271.5)
\u2014
Contracts initially recognised in the period
(646.2)
74.1
572.1
\u2014
Total changes relating to future service
(381.8)
81.2
300.6
\u2014
Adjustments to incurred claims recovery
307.8
(53.0)
\u2014
254.8
Effect of changes in the risk of reinsurers non-performance
(32.6)
\u2014
\u2014
(32.6)
Total changes relating to past service
275.2
(53.0)
\u2014
222.2
Recognised in insurance service result
(136.4)
19.6
105.3
(11.5)
Finance expenses from reinsurance contracts held
(82.6)
(10.7)
(3.2)
(96.5)
Foreign exchange (losses)/gains
(6.9)
(2.4)
8.5
(0.8)
Other amounts recognised in total comprehensive income
(89.5)
(13.1)
5.3
(97.3)
Premiums paid net of ceding commissions and other directly
attributable expenses paid
961.7
\u2014
\u2014
961.7
Recoveries from reinsurance
(373.4)
\u2014
\u2014
(373.4)
Total cash flows
588.3
\u2014
\u2014
588.3
Closing reinsurance contract assets
1,853.3
184.6
137.4
2,175.3
Closing reinsurance contract liabilities
(193.8)
12.7
19.9
(161.2)
Net reinsurance contract assets at 31 December 2022
1,659.5
197.3
157.3
2,014.1
28 Insurance and reinsurance contracts continued
28b Analysis of the liability for remaining coverage and the liability for incurred claims
i) Insurance contracts issued
The tables below analyse insurance contract assets and liabilities between the LRC and the LIC for insurance contracts issued.
LRC
LIC
Total
Excluding
Loss
Component
Loss
Component
31 December 2023
$m
$m
$m
$m
Opening insurance contract assets
87.2
\u2014
(3.1)
84.1
Opening insurance contract liabilities
(824.7)
(10.1)
(6,515.0)
(7,349.8)
Net insurance contract liabilities at 01 January 2023
(737.5)
(10.1)
(6,518.1)
(7,265.7)
Insurance revenue
5,442.4
\u2014
\u2014
5,442.4
Insurance service expenses:
- Incurred claims and other directly attributable expenses
(86.3)
\u2014
(2,825.3)
(2,911.6)
- Changes that relate to past service - adjustments to the LIC
\u2014
\u2014
232.0
232.0
- Losses on onerous contracts and reversal of those losses
\u2014
1.8
\u2014
1.8
- Insurance acquisition cash flows amortisation
(914.8)
\u2014
\u2014
(914.8)
Recognised in insurance service result
4,441.3
1.8
(2,593.3)
1,849.8
Finance income/(expenses) from insurance contracts issued
70.8
\u2014
(240.1)
(169.3)
Foreign exchange gains/(losses)
4.7
\u2014
(7.6)
(2.9)
Other amounts recognised in total comprehensive income
75.5
\u2014
(247.7)
(172.2)
Premiums received net of insurance acquisition cash flows
(4,526.4)
\u2014
\u2014
(4,526.4)
Claims and other directly attributable expenses paid
\u2014
\u2014
2,223.8
2,223.8
Total cash flows
(4,526.4)
\u2014
2,223.8
(2,302.6)
Closing insurance contract assets
101.7
\u2014
(0.2)
101.5
Closing insurance contract liabilities
(848.8)
(8.3)
(7,135.1)
(7,992.2)
Net insurance contract liabilities at 31 December 2023
(747.1)
(8.3)
(7,135.3)
(7,890.7)
28 Insurance and reinsurance contracts continued
LRC
LIC
Total
Excluding
Loss
Component
Loss
Component
31 December 2022
$m
$m
$m
$m
Opening insurance contract assets
\u2014
\u2014
\u2014
\u2014
Opening insurance contract liabilities
(688.1)
(34.3)
(5,837.1)
(6,559.5)
Net insurance contract liabilities at 01 January 2022
(688.1)
(34.3)
(5,837.1)
(6,559.5)
Insurance revenue
4,848.4
\u2014
\u2014
4,848.4
Insurance service expenses:
- Incurred claims and other directly attributable expenses
(41.0)
\u2014
(2,867.6)
(2,908.6)
- Changes that relate to past service - adjustments to the LIC
\u2014
\u2014
(279.4)
(279.4)
- Losses on onerous contracts and reversal of those losses
\u2014
24.1
\u2014
24.1
- Insurance acquisition cash flows amortisation
(850.1)
\u2014
\u2014
(850.1)
Recognised in insurance service result
3,957.3
24.1
(3,147.0)
834.4
Finance income from insurance contracts issued
129.5
\u2014
150.0
279.5
Foreign exchange gains
4.8
0.1
54.2
59.1
Other amounts recognised in total comprehensive income
134.3
0.1
204.2
338.6
Premiums received net of insurance acquisition cash flows
(4,141.0)
\u2014
\u2014
(4,141.0)
Claims and other directly attributable expenses paid
\u2014
\u2014
2,261.8
2,261.8
Total cash flows
(4,141.0)
\u2014
2,261.8
(1,879.2)
Closing insurance contract assets
87.2
\u2014
(3.1)
84.1
Closing insurance contract liabilities
(824.7)
(10.1)
(6,515.0)
(7,349.8)
Net insurance contract liabilities at 31 December 2022
(737.5)
(10.1)
(6,518.1)
(7,265.7)
28 Insurance and reinsurance contracts continued
ii) Reinsurance contracts held
The tables below analyse reinsurance contract assets and liabilities between the ARC and AIC for reinsurance contracts held.
ARC\u00b9
AIC
Total
31 December 2023
$m
$m
$m
Opening reinsurance contract assets
24.9
2,150.4
2,175.3
Opening reinsurance contract liabilities
(254.7)
93.5
(161.2)
Net reinsurance contract assets at 01 January 2023
(229.8)
2,243.9
2,014.1
Expected claims and other expenses recovery
(1,419.8)
679.3
(740.5)
Changes in the risk adjustment recognised for the risk expired
(189.4)
84.2
(105.2)
CSM recognised for the services received
(290.8)
\u2014
(290.8)
Other amounts including experience adjustments
9.2
\u2014
9.2
Allocation of reinsurance premium
(1,890.8)
763.5
(1,127.3)
Effect of changes in the risk of reinsurers\u2019 non-performance
(1.3)
5.5
4.2
Claims recovered
767.1
(87.0)
680.1
Other incurred directly attributable expenses
(0.5)
(3.1)
(3.6)
Changes that relate to past service \u2013 adjustments to incurred claims recovery
\u2014
(152.2)
(152.2)
Amounts recoverable from reinsurers for incurred claims
765.3
(236.8)
528.5
Net expenses from reinsurance contracts held
(1,125.5)
526.7
(598.8)
Finance (expenses)/income from reinsurance contracts held
(40.9)
56.8
15.9
Foreign exchange (losses)/gains
(6.1)
1.6
(4.5)
Other amounts recognised in total comprehensive income
(47.0)
58.4
11.4
Premiums paid net of ceding commissions and other directly attributable expenses paid
1,080.4
\u2014
1,080.4
Recoveries from reinsurance
\u2014
(413.9)
(413.9)
Total cash flows
1,080.4
(413.9)
666.5
Closing reinsurance contract assets
758.4
1,668.3
2,426.7
Closing reinsurance contract liabilities
(1,080.3)
746.8
(333.5)
Net reinsurance contract assets at 31 December 2023
(321.9)
2,415.1
2,093.2
1 Includes loss recovery component of $3.8m at 01 January 2023 and $0.9m at 31 December 2023.
28 Insurance and reinsurance contracts continued
ARC\u00b9
AIC
Total
31 December 2022
$m
$m
$m
Opening reinsurance contract assets
(29.0)
1,703.3
1,674.3
Opening reinsurance contract liabilities
(223.4)
83.7
(139.7)
Net reinsurance contract assets/(liabilities) at 01 January 2022
(252.4)
1,787.0
1,534.6
Expected claims and other expenses recovery
(1,002.1)
270.3
(731.8)
Changes in the risk adjustment recognised for the risk expired
(140.0)
65.7
(74.3)
CSM recognised for the services received
(195.3)
\u2014
(195.3)
Other amounts including experience adjustments
36.0
\u2014
36.0
Allocation of reinsurance premium
(1,301.4)
336.0
(965.4)
Effect of changes in the risk of reinsurers\u2019 non-performance
(1.4)
(31.2)
(32.6)
Claims recovered
368.3
365.1
733.4
Other incurred directly attributable expenses
5.1
(6.8)
(1.7)
Changes that relate to past service \u2013 adjustments to incurred claims recovery
\u2014
254.8
254.8
Amounts recoverable from reinsurers for incurred claims
372.0
581.9
953.9
Net expenses from reinsurance contracts held
(929.4)
917.9
(11.5)
Finance expenses from reinsurance contracts held
(22.5)
(74.0)
(96.5)
Foreign exchange gains/(losses)
12.8
(13.6)
(0.8)
Other amounts recognised in total comprehensive income
(9.7)
(87.6)
(97.3)
Premiums paid net of ceding commissions and other directly attributable expenses paid
961.7
\u2014
961.7
Recoveries from reinsurance
\u2014
(373.4)
(373.4)
Total cash flows
961.7
(373.4)
588.3
Closing reinsurance contract assets
24.9
2,150.4
2,175.3
Closing reinsurance contract liabilities
(254.7)
93.5
(161.2)
Net reinsurance contract assets/(liabilities) at 31 December 2022
(229.8)
2,243.9
2,014.1
1 Includes loss recovery component of $3.4m at 01 January 2022 and $3.8m at 31 December 2022.
28 Insurance and reinsurance contracts continued
28c New business
i) Impact of insurance contracts issued in the year
The following tables show the impact of new insurance contracts issued in the period. These are broken down by contracts
which were/were not deemed to be onerous on initial recognition.
Non-onerous
contracts
originated
Onerous
contracts
originated
Total
Year ended 31 December 2023
$m
$m
$m
Estimated present value of future cash outflows:
- Insurance acquisition cash flows
(759.3)
(68.1)
(827.4)
- Claims and other directly attributable expenses
(2,489.8)
(176.7)
(2,666.5)
Estimated present value of future cash inflows
4,115.0
249.1
4,364.1
Risk adjustment for non-financial risk
(249.3)
(14.9)
(264.2)
Contractual service margin
(616.6)
\u2014
(616.6)
Net increase in insurance contract liabilities
\u2014
(10.6)
(10.6)
Non-onerous
contracts
originated
Onerous
contracts
originated
Total
Year ended 31 December 2022
$m
$m
$m
Estimated present value of future cash outflows:
- Insurance acquisition cash flows
(531.9)
(112.1)
(644.0)
- Claims and other directly attributable expenses
(1,720.7)
(391.2)
(2,111.9)
Estimated present value of future cash inflows
3,077.9
576.3
3,654.2
Risk adjustment for non-financial risk
(217.7)
(107.1)
(324.8)
Contractual service margin
(607.6)
\u2014
(607.6)
Net increase in insurance contract liabilities
\u2014
(34.1)
(34.1)
ii) Impact of reinsurance contracts held in the year
The following table shows the impact of new reinsurance contracts initially recognised in the period which were not deemed to
originate with a loss recovery component. Contracts originating with a loss recovery component are $0.3m (2022: $12.1m).
2023
2022
$m
$m
Estimated present value of future cash outflows
(1,253.5)
(1,671.6)
Estimated present value of future cash inflows
817.2
1,025.4
Risk adjustment for non-financial risk
84.2
74.1
Contractual service margin
352.1
572.1
Net increase in reinsurance contract assets
\u2014
\u2014
28 Insurance and reinsurance contracts continued
28d Future CSM release
The tables below show when the Group expects to release the closing CSM to the profit or loss in appropriate future time
bands. It is presented for both insurance contracts issued and reinsurance contracts held.
2023
2022
Insurance contracts issued
$m
$m
Number of years until expected to be recognised
1
299.0
301.7
2
14.7
12.5
3
10.5
8.9
4
7.6
6.6
5
5.1
4.8
6-10
7.1
6.5
>10
\u2014
\u2014
Total
344.0
341.0
2023
2022
Reinsurance contracts held
$m
$m
Number of years until expected to be recognised
1
118.7
143.0
2
3.7
4.4
3
2.6
3.0
4
1.8
2.2
5
1.2
1.7
6-10
1.6
3.0
>10
\u2014
\u2014
Total
129.6
157.3
28 Insurance and reinsurance contracts continued
28e Claims development
The following tables show the estimates of cumulative ultimate claims for each successive underwriting year from five years
prior to the reporting date, reconciled back to LIC. This information has been provided on a gross of reinsurance basis and
separately for reinsurance contracts held. As the Group has not previously published claims development information on an
IFRS 17 basis, only claims development from the 2019 underwriting year onward (being five years before the end of the annual
reporting period in which IFRS 17 was first applied by the Group) has been disclosed below. In the below tables, historic periods
have been revalued using current exchange rates. The cumulative estimate of claims and recoveries comprise expected claims
and reinsurance recovery cash flows only and do not include the risk adjustment, premiums or acquisition costs.
Underwriting year
Insurance contracts issued
2019
2020
2021
2022
2023
Total
2023
$m
$m
$m
$m
$m
$m
At end of underwriting year
1,712.5
2,309.3
2,699.4
3,123.8
3,112.0
1 year later
2,205.2
2,696.3
2,966.1
3,030.4
2 years later
2,236.2
2,802.2
2,782.1
3 years later
2,231.5
2,649.2
4 years later
2,221.9
Cumulative gross estimate of claims
2,221.9
2,649.2
2,782.1
3,030.4
3,112.0
13,795.6
Cumulative payments to date
(1,696.9)
(1,765.3)
(1,319.5)
(941.9)
(287.3)
(6,010.9)
Carrying amount relating to 2018 and prior
underwriting years
1,102.7
Less liability for remaining coverage claims only
(1,835.6)
Impact of discounting (LIC)
(555.5)
LIC risk adjustment for non-financial risk
639.0
Gross discounted LIC
7,135.3
Underwriting year
Reinsurance contracts held
2019
2020
2021
2022
2023
Total
2023
$m
$m
$m
$m
$m
$m
At end of underwriting year
(290.9)
(455.4)
(700.1)
(934.1)
(520.9)
1 year later
(412.1)
(635.1)
(708.9)
(884.2)
2 years later
(376.4)
(700.0)
(708.1)
3 years later
(394.9)
(577.1)
4 years later
(423.5)
Cumulative gross estimate of claims recoveries
(423.5)
(577.1)
(708.1)
(884.2)
(520.9)
(3,113.8)
Cumulative payments to date
263.5
347.1
119.0
69.5
13.8
812.9
Carrying amount relating to 2018 and prior
underwriting years
(451.9)
Less asset for remaining coverage claims only
338.7
Impact of discounting (AIC)
190.4
AIC risk adjustment for non-financial risk
(191.4)
Reinsurance discounted AIC
(2,415.1)
", "dimensions": { "concept": "ifrs-full:DisclosureOfInsuranceContractsExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-392": { "value": "
29 Other liabilities
2023
2022
$m
$m
Accrued expenses including staff bonuses
98.9
31.5
Due to syndicate 623
\u2014
21.8
Due to syndicate 5623
217.7
208.4
Due to syndicate 6107
86.6
77.8
Other payables
207.3
184.5
Total other liabilities
610.5
524.0
All other liabilities are payable within one year of the reporting date.
Profit uplift payment
The Group has agreed a potential profit uplift commission payment to the Members of Syndicate 623 on the 2023 year of
account contingent upon the underwriting profit recognised in certain entities in the 2025 to 2028 financial years, which would
become payable in 2029.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-393": { "value": "
30 Risk and sensitivity analysis
The symbol \u2020 by a table or numerical information means it has not been audited.
30a Insurance risk
The Group issues insurance contracts under which it accepts significant insurance risk from persons or organisations that are
directly exposed to an underlying loss from an insured event. Insurance risk arises from this risk transfer due to inherent
uncertainties about the occurrence, amount and timing of cash flows associated with the insured event. The four key
components of insurance risk are underwriting, reinsurance, claims management and reserving. Each element is considered
below.
i. Underwriting risk
Underwriting risk comprises four elements that apply to all insurance products offered by the Group:
\u2022 cycle risk \u2013 the risk that business is written without full knowledge as to the (in)adequacy of rates, terms and conditions;
\u2022 event risk \u2013 the risk that individual risk losses or catastrophes lead to claims that are higher than anticipated in plans and
pricing;
\u2022 pricing risk \u2013 the risk that the level of expected loss is understated in the pricing process; and
\u2022 expense risk \u2013 the risk that the allowance for expenses and inflation in pricing is inadequate.
The Group\u2019s underwriting strategy is to seek a diverse and balanced portfolio of risks in order to limit the variability of
outcomes. This is achieved by accepting a spread of business over time, segmented between different products, geographies
and sizes. The annual business plans for each underwriting team reflect the Group\u2019s underwriting strategy, and set out the
classes of business, the territories and the industry sectors in which business is to be written which are approved by the
appropriate Boards.
Our underwriters determine premiums for risks written based on a range of criteria tailored specifically to each individual risk.
These factors include but are not limited to financial exposure, loss history, risk characteristics, limits, deductibles, terms and
conditions, and acquisition expenses depending on the type of risk. A proportion of the Group\u2019s insurance risks are transacted
by third parties under delegated underwriting and claims authorities. Each third party is thoroughly vetted by our coverholder
approval group before it can bind risks, and is subject to monitoring to maintain underwriting quality and confirm ongoing
compliance with contractual guidelines. All underwriters also have a right to refuse renewal or change the terms and conditions
of insurance contracts upon renewal. Rate monitoring details, including limits, deductibles, exposures, terms and conditions
and risk characteristics, are also captured and the results are combined to monitor the rating environment for each class of
business.
The Group also recognises that insurance events are, by their nature, random, and the actual number and size of events during
any one year may vary from those estimated using established statistical techniques. To address this, the Group sets out the
exposure that it is prepared to accept in certain territories to a range of events such as natural catastrophes and specific
scenarios which may result in large industry losses. This is monitored through regular calculation of realistic disaster scenarios
(\"RDS\"). The aggregate position is monitored at the time of underwriting a risk, and reports are regularly produced to highlight
the key aggregations to which the Group is exposed.
The Group uses a number of modelling tools to monitor its exposures against the agreed risk appetite set and to simulate
catastrophe losses in order to measure the effectiveness of its reinsurance programmes. Stress and scenario tests are also
run using these models. The range of scenarios considered includes natural catastrophe, cyber, marine, liability, political,
terrorism and war events.
30 Risk and sensitivity analysis continued
One of the largest types of event exposure relates to natural catastrophe events such as windstorms or earthquakes, with the
increasing risk from climate change impacting the frequency and severity of natural catastrophes. The Group continues to
monitor its exposure in this area. Where possible, the Group measures geographic accumulations and uses its knowledge of
the business, historical loss behaviour and commercial catastrophe modelling software to assess the expected range of losses
at different return periods. Upon application of the reinsurance coverage purchased, the key gross and net exposures are
calculated on the basis of extreme events at a range of return periods. The Group\u2019s catastrophe risk appetite is set by the risk
management function and approved by the Board and the business plans of each team are determined within these
parameters. The Board may adjust these limits over time as conditions change. In 2023, the Group operated to a catastrophe
risk appetite for a probabilistic 1-in-250 years US event of \u2020 $534.0m (2022: $438.0m) net of reinsurance. This represents an
increase of 22% in 2023.
Lloyd\u2019s has also defined its own specific set of RDS events for which all syndicates with relevant exposures must report. Of
these, the three largest (net of reinsurance) events which could have impacted Beazley in 2022 and 2023 were as follows.
\u2020
Modelled
PML\u00b9(before
reinsurance)
Modelled
PML\u00b9(after
reinsurance)
2023
$m
$m
Lloyd\u2019s prescribed natural catastrophe event (total incurred losses)
Los Angeles earthquake (2023: $78bn)
827.2
325.1
San Francisco earthquake (2023: $80bn)
854.1
315.0
Gulf of Mexico windstorm (2023: $118bn)
927.5
291.3
\u2020
Modelled
PML\u00b9(before
reinsurance)
Modelled
PML\u00b9(after
reinsurance)
2022
$m
$m
Lloyd\u2019s prescribed natural catastrophe event (total incurred losses)
Los Angeles earthquake (2022: $78bn)
692.4
266.8
US Northeast windstorm (2022: $81bn)
579.6
257.2
Gulf of Mexico windstorm (2022: $118bn)
725.0
253.2
1 Probable market loss.
The tables above show each event independent of each other and considered on their own.
\u2022 Net of reinsurance exposures for the Los Angeles quake scenario have increased by $58.3m or 22% in 2023, with gross
exposures increasing by $134.8m or 19%. The increase in gross exposures is being driven by growth in the Property Risks
division and specifically direct Property, which is also leading to the increase in the San Francisco quake and Gulf of Mexico
windstorm events. The increase in net exposure is less than the increase in gross as additional Reinsurance was bought
during 2023 for the Property Risks division.
\u2022 For 2023, the second largest scenario is now the San Francisco earthquake scenario which has replaced the US Northeast
windstorm scenario. The San Francisco earthquake scenario has increased by $139.3m or 19% gross and $66.3m or 27%
net (2022: $714.8m gross and $248.7m net). Similar to the Los Angeles quake scenario, the increase in net exposure is
less than gross as additional Reinsurance was bought during 2023.
\u2022 Windstorm exposures have increased in the Gulf of Mexico during 2023, which has resulted in the Gulf of Mexico scenario
increasing by $38.1m or 15% net, with the gross exposure increasing by $202.5m or 28%. Similar to the two earthquake
scenarios, the net exposure has increased less than gross due to additional Reinsurance being bought for the Property Risks
division.
\u2022 The net natural catastrophe risk appetite increased by 22% in 2023 to $534.0m from $438.0m in 2022, with the increase in
appetite being driven by the Property Risks division.
The net exposure of the Group to each of these modelled events at a given point in time is a function of assumptions made
about how and where the event occurs, its magnitude, the amount of business written that is exposed to each event and the
reinsurance arrangements in place.
30 Risk and sensitivity analysis continued
The Group also has exposure to man-made claim aggregations, such as those arising from terrorism, liability, and cyber events.
Beazley chooses to underwrite cyber insurance within the Cyber Risks and Specialty Risks divisions using our team of specialist
underwriters, claims managers and data breach services managers. Other than for affirmative cyber coverage, Beazley\u2019s
preference is to exclude cyber exposure where possible.
To manage the potential exposure, the Board has approved a risk appetite for the aggregation of cyber related claims which is
monitored by reference to the largest of seventeen realistic disaster scenarios that have been developed internally. These
scenarios include the failure of a data aggregator, the failure of a shared hardware or software platform, the failure of a cloud
provider, and physical damage scenarios. Whilst it is not possible to be precise, as there is sparse data on actual aggregated
events, these severe scenarios are expected to be very infrequent. To manage underwriting exposures, the Group has
developed limits of authority and business plans which are binding upon all staff authorised to underwrite and are specific to
underwriters, classes of business and industry. In 2023, the maximum line that any one underwriter could commit the managed
syndicates to was $150m. In most cases, maximum lines for classes of business were much lower than this.
The Board also manages cyber to a 1-250 net probabilistic budget of $651.0m net of reinsurance for the Group. The
reinsurance programmes that protect the Cyber and Specialty Risks divisions would partially mitigate the cost of most, but not
all, Cyber catastrophes. The largest Cyber net realistic disaster scenario for the Group as at 31 December 2023 was just under
$205m. Beazley also reports on Cyber exposure to Lloyd\u2019s using the three largest internal realistic disaster scenarios and three
new prescribed scenarios which include a cloud provider scenario and a ransomware scenario.
Exposure by operating division
In 2023, the Group\u2019s business consisted of five operating divisions. The following table sets out the Group\u2019s insurance revenue
by operating division.
2023
2022
%
%
Cyber Risks
22%
21%
Digital
4%
4%
MAP Risks
19%
20%
Property Risks
20%
17%
Specialty Risks
35%
38%
Total
100%
100%
Concentration by geography
Included below is a geographical analysis of the Group's insurance revenue based on placement of risk.
2023
2022
%
%
UK (Lloyd\u2019s)
83%
82%
US (Non-Lloyd\u2019s)
11%
13%
Europe (Non-Lloyd\u2019s)
6%
5%
Total
100%
100%
Sensitivity analysis
The table below analyses the impact on the Group\u2019s profit after tax and equity of changes in underwriting risk variables that
were reasonably possible at the reporting date. This analysis has been performed assuming a uniform percentage change in
loss ratios used to determine best estimate cash flows within the liability for remaining coverage, and a uniform percentage
change in the best estimate liability within the liability for incurred claims, including any consequential impact on the risk
adjustment or CSM. It should be noted that movements in these variables are non\u2013linear.
Profit after tax / Equity\u00b9
Profit after tax / Equity\u00b9
Gross
Net
Gross
Net
2023
2023
2022
2022
$m
$m
$m
$m
Reserves (5% increase)
(289.4)
(179.6)
(266.5)
(172.6)
Reserves (5% decrease)
287.7
178.0
263.9
171.1
1 Impact of changes in risk variables is consistent across profit after tax and equity
30 Risk and sensitivity analysis continued
ii. Reinsurance risk
Reinsurance risk arises for the Group where reinsurance contracts put in place to reduce gross insurance risk do not perform as
anticipated, resulting in coverage disputes or proving inadequate in terms of the vertical or horizontal limits purchased. Failure
of a reinsurer to pay a valid claim is considered a credit risk, which is detailed in the credit risk section on page 236. In some
cases, the Group deems it more economic to hold capital than to purchase reinsurance. These decisions are regularly reviewed.
The reinsurance security committee examines and approves all reinsurers to ensure that they possess suitable security. The
Group\u2019s ceded reinsurance team ensures that these guidelines are followed, undertakes the administration of reinsurance
contracts, and monitors and instigates our responses to any erosion of the reinsurance programmes.
iii. Claims management risk
Claims management risk may arise within the Group in the event of inaccurate or incomplete case reserves and claims
settlements, poor service quality or excessive claims handling costs. These risks may damage the Group brand and undermine
its ability to win and retain business, or incur punitive damages. These risks can occur at any stage of the claims life cycle. The
Group\u2019s claims teams are focused on delivering quality, reliability and speed of service to both internal and external clients.
Their aim is to adjust and process claims in a fair, efficient and timely manner, in accordance with the policy\u2019s terms and
conditions, the regulatory environment, and the business\u2019s broader interests. Case reserves are set for all known claims
liabilities, including provisions for expenses, as soon as a reliable estimate can be made of the claims liability.
iv. Reserving and ultimate reserves risk
Reserving and ultimate reserves risk occurs within the Group where established insurance liabilities are insufficient due to
inaccurate forecasting, or where there is inadequate allowance for expenses and reinsurance bad debts in provisions. To
manage reserving and ultimate reserve risk, a risk adjustment for non-financial risk is included within the valuation of insurance
contract liabilities.
The following sensitivity analysis shows how a change in risk adjustment impacts profit after tax and equity. The sensitivity was
calculated by selecting the risk adjustment 2.5 points above/below the current confidence level on the distribution by which it is
calibrated and flowing the consequential impact through the CSM and liability for incurred claims. This was performed both
before and after risk mitigation by reinsurance. It should be noted that movements in these variables are non\u2013linear.
Profit after tax / Equity\u00b9
Profit after tax / Equity\u00b9
Gross
Net
Gross
Net
2023
2023
2022
2022
$m
$m
$m
$m
Change in risk adjustment (2.5% increase)
(80.0)
(57.9)
(67.8)
(49.4)
Change in risk adjustment (2.5% decrease)
78.5
56.7
60.5
44.1
1 Impact of changes in risk variables is consistent across profit after tax and equity
30 Risk and sensitivity analysis continued
30b Market risk
Market risk is referred to as \u2018asset risk\u2019 in the Group\u2019s risk management framework. This risk arises from adverse financial
market movements in addition to other external market forces. The four key components of asset risk are investments, foreign
exchange, interest rate, and prices of assets and derivatives. Each element is considered in further detail below.
i. Investments
Efficient management of market risk is key to the investment of Group assets for matching to future liabilities. Beazley uses an
Economic Scenario Generator to create multiple simulations of financial conditions in order to support stochastic analysis of
asset risk. Beazley uses these outputs to assess the value at risk of its investments, at different confidence levels, including \u20181
in 200\u2019, which reflects Solvency II modelling requirements, and \u20181 in 10\u2019, reflecting scenarios which are more likely to occur in
practice. It is assessed for investments in isolation and also in conjunction with the present value of our liabilities, to assist in
the monitoring and management of asset risk for solvency and capital purposes. By its nature, stochastic modelling does not
provide a precise measure of risk, and Economic Scenario Generator outputs are regularly validated against actual market
conditions. Beazley also uses a number of other qualitative measures to support the monitoring and management of investment
risk, including stress testing and scenario analysis.
The Group\u2019s investment strategy is developed with reference to an investment risk appetite, approved annually by the Board.
The asset risk element of our Solvency II internal model is used to monitor actual investment risk against this appetite, which
specifies how far investment return may deviate from target, at 90% confidence. The investment risk appetite was set at
$260m for 2023. From 2024, the investment risk appetite additionally incorporates interest rate risks to the present value of
our underwriting liabilities.
ii. Foreign exchange risk
The functional currency and presentational currency of Beazley plc and its main trading entities is US dollars. As a result, the
Group is mainly exposed to fluctuations in exchange rates for non-dollar denominated transactions and to net asset translation
risk on non-dollar functional currency entities.
The Group operates in four main currencies: US dollars, sterling, Canadian dollars and euros. Transactions in all currencies are
converted to US dollars on initial recognition, with any resulting monetary items being translated to the US dollar spot rate at
the reporting date. If any foreign exchange risk arises it is actively managed as described below.
In 2023, the Group managed its foreign exchange risk by periodically assessing its non-dollar exposures and hedging these to a
tolerable level while targeting to have net assets that are predominantly denominated in US dollars. As part of this hedging
strategy, exchange rate derivatives were used to rebalance currency exposure across the Group. Details of foreign currency
derivative contracts entered into with external parties are disclosed in Note 19. On a forward looking basis, an assessment is
made of expected future exposure development and appropriate currency trades are put in place to reduce risk. The Group\u2019s
underwriting capital is matched by currency to the principal underlying currencies of its insurance transactions. This helps to
mitigate the risk that the Group\u2019s capital required to underwrite business is materially affected by any future movements in
exchange rates.
The Group also has foreign operations with functional currencies that are different from the Group\u2019s presentational currency.
The effect of this on foreign exchange risk is that the Group is exposed to fluctuations in exchange rates for US dollar
denominated transactions and net assets arising in those foreign currency operations. It also gives rise to a currency
translation exposure for the Group to sterling, euro, Canadian dollars, Singapore dollars and Australian dollars on translation to
the Group\u2019s presentational currency. These exposures are minimal and are not hedged.
30 Risk and sensitivity analysis continued
Exposure and risk concentrations by currency
The following tables summarise the carrying values of the insurance/reinsurance contract assets and liabilities and overall net
assets held by the Group, categorised by its main currencies. For a breakdown of financial assets by currency, refer to Note
18(h).\u00a0 \u00a0
UK \u00a3
CAD $
EUR \u20ac
Subtotal
US $
Total $
2023
$m
$m
$m
$m
$m
$m
Insurance contract assets
2.4
13.6
(3.6)
12.4
89.1
101.5
Reinsurance contract assets
243.1
37.0
166.4
446.5
1,980.2
2,426.7
Other
574.8
257.8
69.2
901.8
10,235.4
11,137.2
Total assets
820.3
308.4
232.0
1,360.7
12,304.7
13,665.4
Insurance contract liabilities
(804.4)
(229.0)
(782.3)
(1,815.7)
(6,176.5)
(7,992.2)
Reinsurance contract liabilities
(31.2)
(0.6)
(7.7)
(39.5)
(294.0)
(333.5)
Other
(69.1)
20.7
441.0
392.6
(1,850.2)
(1,457.6)
Total liabilities
(904.7)
(208.9)
(349.0)
(1,462.6)
(8,320.7)
(9,783.3)
Net assets
(84.4)
99.5
(117.0)
(101.9)
3,984.0
3,882.1
UK \u00a3
CAD $
EUR \u20ac
Subtotal
US $
Total $
2022
$m
$m
$m
$m
$m
$m
Insurance contract assets
6.6
2.0
(18.2)
(9.6)
93.7
84.1
Reinsurance contract assets
236.7
78.3
35.0
350.0
1,825.3
2,175.3
Other
267.9
278.8
(352.4)
194.3
9,259.3
9,453.6
Total assets
511.2
359.1
(335.6)
534.7
11,178.3
11,713.0
Insurance contract liabilities
(470.5)
(363.7)
(42.4)
(876.6)
(6,473.2)
(7,349.8)
Reinsurance contract liabilities
(60.2)
(15.8)
(35.1)
(111.1)
(50.1)
(161.2)
Other
5.7
40.5
397.4
443.6
(1,690.6)
(1,247.0)
Total liabilities
(525.0)
(339.0)
319.9
(544.1)
(8,213.9)
(8,758.0)
Net assets
(13.8)
20.1
(15.7)
(9.4)
2,964.4
2,955.0
Sensitivity analysis
Fluctuations in the Group\u2019s trading currencies against the US dollar would result in a change in profit after tax and equity. The
table below gives an indication of this impact for reasonably possible percentage changes in the relative strength of the US
dollar against the value of sterling, the Canadian dollar and the euro, simultaneously. The analysis is prepared based on the net
assets held by the Group at the balance sheet date.
Profit after tax
Equity
2023
2022
2023
2022
Change in exchange rate of sterling, Canadian dollar and euro relative to
US dollar
$m
$m
$m
$m
Dollar weakens (30%)
(25.0)
(2.4)
45.2
39.9
Dollar weakens (20%)
(16.7)
(1.6)
30.1
26.6
Dollar weakens (10%)
(8.3)
(0.8)
15.1
13.3
Dollar strengthens (10%)
8.3
0.8
(15.1)
(13.3)
Dollar strengthens (20%)
16.7
1.6
(30.1)
(26.6)
Dollar strengthens (30%)
25.0
2.4
(45.2)
(39.9)
30 Risk and sensitivity analysis continued
iii. Interest rate risk
The Group\u2019s financial instruments (e.g. cash and cash equivalents, certain financial assets at fair value, and subordinated
debt), in addition to its insurance and reinsurance contracts, are exposed to movements in market interest rates. The Group
manages interest rate risk by primarily investing in short duration financial assets along with cash and cash equivalents. The
investment committee monitors the duration of these assets on a regular basis. The Group also entered into bond futures
contracts to manage the interest rate risk on bond portfolios.
Exposure and risk concentrations by duration
The following table shows the modified duration at the reporting date of the financial instruments that are exposed to
movements in market interest rates. Modified duration is a commonly used measure of volatility which represents the
percentage change of the price of a security to yield. The Group believes this gives a better indication than maturity of the likely
sensitivity of the portfolio to changes in interest rates.
<1 yr
1-2 yrs
2-3 yrs
3-4 yrs
4-5 yrs
5-10 yrs
Total
2023
$m
$m
$m
$m
$m
$m
$m
Financial assets at FVTPL:
- Fixed and floating rate debt securities
2,499.9
3,123.8
1,214.6
1,419.5
229.1
49.5
8,536.4
- Syndicate loans
7.6
26.5
\u2014
\u2014
\u2014
\u2014
34.1
Cash and cash equivalents
812.3
\u2014
\u2014
\u2014
\u2014
\u2014
812.3
Subordinated debt
\u2014
\u2014
(249.5)
\u2014
\u2014
(298.8)
(548.3)
Total financial instruments
3,319.8
3,150.3
965.1
1,419.5
229.1
(249.3)
8,834.5
<1 yr
1-2 yrs
2-3 yrs
3-4 yrs
4-5 yrs
5-10 yrs
Total
2022
$m
$m
$m
$m
$m
$m
$m
Financial assets at FVTPL:
- Fixed and floating rate debt securities
1,962.9
3,094.1
1,430.9
441.2
434.9
1.5
7,365.5
- Syndicate loans
\u2014
6.9
25.6
\u2014
\u2014
\u2014
32.5
Cash and cash equivalents
652.5
\u2014
\u2014
\u2014
\u2014
\u2014
652.5
Subordinated debt
\u2014
\u2014
\u2014
(249.4)
\u2014
(298.6)
(548.0)
Total financial instruments
2,615.4
3,101.0
1,456.5
191.8
434.9
(297.1)
7,502.5
30 Risk and sensitivity analysis continued
Sensitivity analysis
All elements of the carrying values of the Group's insurance and reinsurance contracts are exposed to interest rate risk. The
following analysis is performed for reasonably possible movements in key variables with all other variables held constant,
showing the impact on profit after tax and equity. The correlation of variables will have a significant effect in determining the
ultimate impact of interest rate risk, but to demonstrate the impact due to changes in variables, variables had to be changed on
an individual basis. It should be noted that movements in these variables are non\u2013linear.
Profit after tax / Equity\u00b9
2023
2022
Insurance and reinsurance contracts
$m
$m
Interest rate increases (150 bps)
114.3
95.8
Interest rate increases (100 bps)
77.1
64.5
Interest rate increases (50 bps)
39.1
32.6
Interest rate decreases (50 bps)
(40.0)
(33.5)
Interest rate decreases (100 bps)
(81.0)
(67.8)
Interest rate decreases (150 bps)
(123.0)
(102.8)
1 Impact of changes in risk variables is consistent across profit after tax and equity.
Profit after tax / Equity\u00b9
2023
2022
Financial assets
$m
$m
Interest rate increases (150 bps)
(190.6)
(179.0)
Interest rate increases (100 bps)
(127.1)
(119.3)
Interest rate increases (50 bps)
(63.5)
(59.7)
Interest rate decreases (50 bps)
63.5
59.7
Interest rate decreases (100 bps)
127.1
119.3
Interest rate decreases (150 bps)
190.6
179.0
1 Impact of changes in risk variables is consistent across profit after tax and equity.
iv. Price risk
Listed investments that are quoted in an active market are recognised in the statement of financial position at quoted bid price,
which is deemed to be approximate exit price. If the market for the investment is not considered to be active, then the Group
establishes fair value using valuation techniques (refer to Note 18). This includes comparison of orderly transactions between
market participants, reference to the current fair value of other investments that are substantially the same, discounted cash
flow models and other valuation techniques that are commonly used by market participants.
Price risk applies to financial assets that are susceptible to losses due to adverse changes in prices. At the reporting date, the
Group\u2019s exposure to price risk was $1,085.0m (2022: $912.9m). This is comprised of hedge funds, equity investments and
illiquid assets, with no significant concentrations in one area. Note that the price of debt securities is affected by interest rate
risk and credit risk, both of which have been described above. In addition, the Group does not have any insurance or
reinsurance contracts which are exposed to price risk.
30 Risk and sensitivity analysis continued
Sensitivity analysis
Included below is a sensitivity analysis of the Group's financial assets against price risk. With all other variables remaining
constant, changes in fair values of the Group's hedge funds, equity investments and illiquid assets would affect reported profit
after tax and equity as indicated in the following table.
Profit after tax / Equity\u00b9
2023
2022
$m
$m
Fair value increases (30%)
266.6
230.6
Fair value increases (20%)
177.7
153.7
Fair value increases (10%)
88.9
76.9
Fair value decreases (10%)
(88.9)
(76.9)
Fair value decreases (20%)
(177.7)
(153.7)
Fair value decreases (30%)
(266.6)
(230.6)
1 Impact of changes in risk variables is consistent across profit after tax and equity.
A 10% decrease in the fair value of the Group's level 3 financial assets would have an impact of ($20.8m) on profit after tax/
equity (2022: ($21.5m)).
30c Credit risk
This risk arises due to the failure of another party to perform its financial or contractual obligations to the Group in a timely
manner. The Group accepts credit risk overall and recognises credit risk is aligned to its appetite for insurance risk. The primary
sources of credit risk for the Group are:
\u2022 reinsurers \u2013 reinsurers may fail to pay valid claims against a reinsurance contract held by the Group;
\u2022 brokers and coverholders \u2013 counterparties may fail to pass on premiums or claims collected/paid on behalf of the Group; and
\u2022 investments \u2013 issuer may default, resulting in the Group losing all or part of the value of a financial instrument or a derivative
financial instrument.
An approval system exists for brokers with their credit and performance monitored. The investment committee has established
parameters for investment managers regarding the type, duration and quality of investments including credit ratings acceptable
to the Group. The performance of investment managers is regularly reviewed to confirm adherence to these guidelines. The
Group has developed processes to examine all reinsurers before entering into new business arrangements, and ongoing
relationships with Beazley are continually assessed. In addition, reinsurance recoverables are reviewed regularly to assess their
collectability.
2023
A.M. Best
Moody\u2019s
S&P
Tier 1
A++ to A-
Aaa to A3
AAA to A-
Tier 2
B++ to B-
Baa1 to Ba3
BBB+ to BB-
Tier 3
C++ to C-
B1 to Caa
B+ to CCC
Tier 4
D, E, F, S
Ca to C
R, (U,S) 3
30 Risk and sensitivity analysis continued
Maximum exposure
The following tables summarise the Group\u2019s maximum exposure to credit risk by reinsurance contract assets and financial
assets.
Tier 1
Tier 2
Tier 3
Tier 4
Unrated
Total
2023
$m
$m
$m
$m
$m
$m
Reinsurance contracts assets
2,387.5
\u2014
\u2014
\u2014
39.2
2,426.7
Financial assets at FVTPL:
- Fixed and floating rate debt securities
7,101.7
1,434.7
\u2014
\u2014
\u2014
8,536.4
- Syndicate loans
34.1
\u2014
\u2014
\u2014
\u2014
34.1
- Equity funds
\u2014
\u2014
\u2014
\u2014
282.7
282.7
- Hedge funds
\u2014
\u2014
\u2014
\u2014
582.2
582.2
- Illiquid assets
\u2014
\u2014
\u2014
\u2014
220.1
220.1
- Derivative financial assets
\u2014
\u2014
\u2014
\u2014
10.0
10.0
Cash and cash equivalents
812.3
\u2014
\u2014
\u2014
\u2014
812.3
Amounts due from managed syndicates and other
receivables
\u2014
\u2014
\u2014
\u2014
297.5
297.5
Total
10,335.6
1,434.7
\u2014
\u2014
1,431.7
13,202.0
Tier 1
Tier 2
Tier 3
Tier 4
Unrated
Total
2022
$m
$m
$m
$m
$m
$m
Reinsurance contracts assets
2,139.4
\u2014
\u2014
\u2014
35.9
2,175.3
Financial assets at FVTPL:
- Fixed and floating rate debt securities
6,767.1
598.4
\u2014
\u2014
\u2014
7,365.5
- Syndicate loans
32.5
\u2014
\u2014
\u2014
\u2014
32.5
- Equity funds
\u2014
\u2014
\u2014
\u2014
159.4
159.4
- Hedge funds
\u2014
\u2014
\u2014
\u2014
530.6
530.6
- Illiquid assets
\u2014
\u2014
\u2014
\u2014
222.9
222.9
- Derivative financial assets
\u2014
\u2014
\u2014
\u2014
34.7
34.7
Cash and cash equivalents
652.5
\u2014
\u2014
\u2014
\u2014
652.5
Amounts due from managed syndicates and other
receivables
\u2014
\u2014
\u2014
\u2014
181.8
181.8
Total
9,591.5
598.4
\u2014
\u2014
1,165.3
11,355.2
The Group's maximum exposure to credit risk from insurance contract assets is $101.5m (2022: $84.1m). Overall exposure to
credit risk is concentrated within Tier 1, with the largest counterparty being $3,258.7m of US treasuries (2022: $3,715.8m).
Financial investments falling within the unrated category are those for which there is no readily available market data to allow
classification within the respective tiers.
30 Risk and sensitivity analysis continued
Credit quality of reinsurance contract assets
Reinsurance recoveries are specifically referenced in IFRS 17 and explicitly de-scoped from IFRS 9 (refer to Note 2). IFRS 17
requires the effect of any risk of non-performance by the reinsurer, including the effects of collateral and losses from disputes,
to be considered when determining the estimates of the present value of future cash flows for the group of reinsurance
contracts held. The Group has developed an internal policy, which involves calculating and re-evaluating expected credit losses
for reinsurance assets and actively following up on disputes with reinsurers for recoveries. Reinsurance recoveries are
assessed for Non-Performance Risk Provision using a % of the reinsurance programme/year of account level under IFRS 17.
The Group has reinsurance recoveries that are past due at the reporting date. An aged analysis of these (on an undiscounted
basis) is presented below.
Up to 30 days
past due
30-60 days
past due
60-90 days
past due
Greater than 90
days past due
Total
2023
$m
$m
$m
$m
$m
Reinsurance recoveries
61.3
57.5
4.1
54.9
177.8
Up to 30 days
past due
30-60 days
past due
60-90 days
past due
Greater than 90
days past due
Total
2022
$m
$m
$m
$m
$m
Reinsurance recoveries
24.7
29.2
8.9
82.6
145.4
30d Liquidity risk
Liquidity risk arises where cash may not be available to pay obligations. The Group is exposed to daily calls on its available
cash resources, principally from claims arising from its insurance business which is an industry norm. In the majority of the
cases, these claims are settled from the premiums received held as assets. Beazley avoids the risk of having insufficient liquid
assets to meet expected cash flow requirements.
The Group\u2019s approach is to manage its liquidity position so that it can reasonably survive a significant individual or market loss
event (details of the Group\u2019s exposure to RDS are provided on pages 228 to 230). This means that the Group maintains
sufficient liquid assets, or assets that can be converted into liquid assets at short notice and without any significant capital
loss, to meet expected cash flow requirements. These liquid funds are regularly monitored using cash flow forecasting to
ensure that surplus funds are invested to achieve a higher rate of return. The Group also makes use of loan facilities and
subordinated liabilities, details of which can be found in Note 26. Further information on the Group\u2019s capital resources is
contained on pages 67 to 68.
Maturity analysis \u2013 Insurance and reinsurance contracts
Included below is a maturity analysis of the present value of future cash flows of the Group's net insurance contract liabilities
(per Note 28a). The tables also include the weighted average term to settlement, calculated based on undiscounted future cash
flows for total ultimate claims, excluding the risk adjustment and premium-related claims cash flows.
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
Total
Weighted
average
term to
claims
settlement
2023
$m
$m
$m
$m
$m
$m
$m
Years
Cyber Risks
503.0
372.8
214.5
116.0
56.7
64.8
1,327.8
1.9
Digital
65.6
44.5
21.7
10.8
5.2
6.6
154.4
1.5
MAP Risks
344.5
232.3
130.4
71.0
37.9
50.0
866.1
1.7
Property Risks
510.3
247.5
93.9
39.6
18.8
21.0
931.1
1.2
Specialty Risks
796.9
884.1
677.1
453.2
280.1
399.9
3,491.3
2.6
Net insurance contract liabilities
2,220.3
1,781.2
1,137.6
690.6
398.7
542.3
6,770.7
2.1
30 Risk and sensitivity analysis continued
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
Total
Weighted
average
term to
claims
settlement
2022
$m
$m
$m
$m
$m
$m
$m
Years
Cyber Risks
348.9
300.9
188.2
90.4
33.9
25.4
987.7
1.7
Digital
72.9
44.9
21.0
9.2
4.4
3.5
155.9
1.4
MAP Risks
399.0
266.5
141.5
79.0
42.0
54.8
982.8
1.7
Property Risks
550.2
236.8
88.4
35.4
15.7
14.9
941.4
1.2
Specialty Risks
734.5
776.2
605.7
412.0
250.1
354.2
3,132.7
2.6
Net insurance contract liabilities
2,105.5
1,625.3
1,044.8
626.0
346.1
452.8
6,200.5
2.1
No insurance contract liabilities held by the Group as at 31 December are payable on demand.
Included below is a maturity analysis of the present value of future cash flows of the Group's net reinsurance contract assets
(per Note 28a). The tables also include the weighted average term to settlement for claims recoveries, calculated based on
undiscounted future cash flows for total ultimate claims, excluding the risk adjustment and premium-related cash flows.
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
Total
Weighted
average
term to
settlement
of claims
recoveries
2023
$m
$m
$m
$m
$m
$m
$m
Years
Cyber Risks
(51.4)
169.3
94.6
51.4
24.3
26.5
314.7
1.7
Digital
(11.4)
9.3
4.5
1.9
0.9
0.9
6.1
1.5
MAP Risks
(70.4)
61.7
52.3
30.7
18.2
25.6
118.1
1.5
Property Risks
104.4
59.2
27.0
15.6
3.4
5.3
214.9
1.1
Specialty Risks
75.8
336.5
249.7
167.7
105.9
149.6
1,085.2
2.8
Net reinsurance contract assets
47.0
636.0
428.1
267.3
152.7
207.9
1,739.0
2.0
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
Total
Weighted
average
term to
settlement
of claims
recoveries
2022
$m
$m
$m
$m
$m
$m
$m
Years
Cyber Risks
(149.1)
153.3
105.8
51.2
17.8
12.6
191.6
1.7
Digital
(14.3)
13.6
6.4
2.5
1.2
0.8
10.2
1.4
MAP Risks
(168.7)
154.9
88.5
57.3
32.9
41.2
206.1
1.7
Property Risks
219.0
92.3
32.1
10.5
4.3
6.6
364.8
1.0
Specialty Risks
(108.7)
278.4
260.5
182.6
115.5
158.5
886.8
2.9
Net reinsurance contract assets
(221.8)
692.5
493.3
304.1
171.7
219.7
1,659.5
2.0
30 Risk and sensitivity analysis continued
Maturity analysis \u2013 Total liabilities
The following is a maturity analysis of the net contractual cash flows of the Group\u2019s liabilities as at 31 December. This excludes
current tax and deferred tax liabilities, and reinsurance contracts which are in a net asset position at 31 December.
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
Total
2023
$m
$m
$m
$m
$m
$m
$m
Net insurance contract liabilities
2,220.3
1,781.2
1,137.6
690.6
398.7
542.3
6,770.7
Financial liabilities:
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
- Derivative financial liabilities
6.3
\u2014
\u2014
\u2014
\u2014
\u2014
6.3
- Subordinated debt
31.2
31.2
278.9
16.5
16.5
311.4
685.7
Lease liabilities
13.5
10.3
9.2
8.2
7.7
32.6
81.5
Other liabilities
610.5
\u2014
\u2014
\u2014
\u2014
\u2014
610.5
Total liabilities
2,881.8
1,822.7
1,425.7
715.3
422.9
886.3
8,154.7
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
Total
2022
$m
$m
$m
$m
$m
$m
$m
Net insurance contract liabilities
2,105.5
1,625.3
1,044.8
626.0
346.1
452.8
6,200.5
Financial liabilities:
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
- Derivative financial liabilities
14.5
\u2014
\u2014
\u2014
\u2014
\u2014
14.5
- Subordinated debt
31.2
31.2
31.2
278.9
16.5
327.9
716.9
Lease liabilities
9.6
11.8
8.9
7.7
\u2014
37.3
75.3
Other liabilities
524.0
\u2014
\u2014
\u2014
\u2014
\u2014
524.0
Total liabilities
2,684.8
1,668.3
1,084.9
912.6
362.6
818.0
7,531.2
Maturity analysis \u2013 Financial assets
Included below is a maturity analysis of the Group\u2019s financial assets as at 31 December, based on their carrying values per the
balance sheet.
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
Total
2023
$m
$m
$m
$m
$m
$m
$m
Financial assets at FVTPL:
- Fixed and floating rate debt securities
2,014.6
3,061.5
1,336.2
929.6
1,045.3
149.2
8,536.4
- Syndicate loans
7.6
26.5
\u2014
\u2014
\u2014
\u2014
34.1
- Derivative financial assets
10.0
\u2014
\u2014
\u2014
\u2014
\u2014
10.0
Cash and cash equivalents
812.3
\u2014
\u2014
\u2014
\u2014
\u2014
812.3
Amounts due from managed syndicates
and other receivables
297.5
\u2014
\u2014
\u2014
\u2014
\u2014
297.5
Total financial assets
3,142.0
3,088.0
1,336.2
929.6
1,045.3
149.2
9,690.3
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
Total
2022
$m
$m
$m
$m
$m
$m
$m
Financial assets at FVTPL:
- Fixed and floating rate debt securities
1,854.9
2,651.4
1,676.5
431.0
652.8
98.9
7,365.5
- Syndicate loans
\u2014
6.9
25.6
\u2014
\u2014
\u2014
32.5
- Derivative financial assets
34.7
\u2014
\u2014
\u2014
\u2014
\u2014
34.7
Cash and cash equivalents
652.5
\u2014
\u2014
\u2014
\u2014
\u2014
652.5
Amounts due from managed syndicates
and other receivables
181.8
\u2014
\u2014
\u2014
\u2014
\u2014
181.8
Total financial assets
2,723.9
2,658.3
1,702.1
431.0
652.8
98.9
8,267.0
30 Risk and sensitivity analysis continued
Our capital growth assets have no defined maturity dates and have thus been excluded from the above maturity table. However,
all $282.7m (2022: $159.4m) of equity funds could be liquidated within two weeks, $440.2m (2022: $416.8m) of hedge fund
assets within six months and the remaining $142.0m (2022: $113.8m) of hedge fund assets within 18 months, in normal
market conditions. Illiquid assets are not readily realisable and principal will be returned over the life of these assets, which
may be up to 12 years. The Group makes regular interest payments for its subordinated debt. Further details are provided in
Notes 12 and 26.
30e Capital management
The Group follows a risk-based approach to determine the amount of capital required to support its activities. Recognised
stochastic modelling techniques are used to measure risk exposures, and capital to support business activities is allocated
according to risk profile. Stress and scenario analysis is regularly performed and the results are documented and reconciled to
the Board\u2019s risk appetite where necessary.
The Group has several requirements for capital, including:
\u2022 to support underwriting at Lloyd\u2019s through the syndicates in which it participates, being 2623, 3622, 3623, 5623 and 4321.
This is based on the Group\u2019s own individual capital assessment. It may be provided in the form of either the Group\u2019s cash,
investments, debt facilities, or letter of credit;
\u2022 to support underwriting in Beazley Insurance Company, Inc., Beazley America Insurance Company, Inc., and Beazley NewCo
Captive Company, Inc. in the US;
\u2022 to support underwriting in Beazley Insurance dac in Europe; and
\u2022 to support strategic acquisitions and investments.
All entities within the Group have been in compliance with externally imposed capital requirements during the year. The Group
uses letters of credit (\"LOC\") available under a syndicated short term banking facility led by Lloyds Banking Group plc to support
Funds at Lloyd\u2019s (\"FAL\") requirements. Lloyd\u2019s of London apply certain criteria to banks issuing LOCs as FAL, including minimum
credit rating requirements and counterparty limits. Should any of the banks on the existing LOC facility breach Lloyd\u2019s of London
requirements, the Group might be asked to replace the LOC provided with alternative eligible issuer(s) and/or assets meeting
Lloyd\u2019s requirements. The creditworthiness of the counterparties on the facility is monitored by the Group on an ongoing basis.
The Group considers Shareholders' Funds, Tier 2 subordinated debt and letters of credit to be the primary sources of capital for
the Group. For more detail on the value of capital managed and how its value has changed in the year, please see pages 67 to
68.
The Internal Model Solvency Capital Requirement is a dedicated quantitative review of syndicate models and it sets outs to be a
key input to the Lloyd\u2019s Internal Model.
The Board operates a progressive dividend strategy, intending to grow the dividend each year but recognising that some
earnings fluctuations are to be expected. When determining the level of the dividend, the Board considers the Group's capital
position, future investment and growth opportunities and its ability to generate cash flows. Dividends are typically paid on an
annual basis to align with the Group's capital planning cycle. The Group's capital management strategy is to carry some surplus
capital which makes it possible to take advantage of growth opportunities which may arise. Where surplus capital cannot be
profitably deployed it will be returned to shareholders.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-394": { "value": "0b Market risk
Market risk is referred to as \u2018asset risk\u2019 in the Group\u2019s risk management framework. This risk arises from adverse financial
market movements in addition to other external market forces. The four key components of asset risk are investments, foreign
exchange, interest rate, and prices of assets and derivatives. Each element is considered in further detail below.
i. Investments
Efficient management of market risk is key to the investment of Group assets for matching to future liabilities. Beazley uses an
Economic Scenario Generator to create multiple simulations of financial conditions in order to support stochastic analysis of
asset risk. Beazley uses these outputs to assess the value at risk of its investments, at different confidence levels, including \u20181
in 200\u2019, which reflects Solvency II modelling requirements, and \u20181 in 10\u2019, reflecting scenarios which are more likely to occur in
practice. It is assessed for investments in isolation and also in conjunction with the present value of our liabilities, to assist in
the monitoring and management of asset risk for solvency and capital purposes. By its nature, stochastic modelling does not
provide a precise measure of risk, and Economic Scenario Generator outputs are regularly validated against actual market
conditions. Beazley also uses a number of other qualitative measures to support the monitoring and management of investment
risk, including stress testing and scenario analysis.
The Group\u2019s investment strategy is developed with reference to an investment risk appetite, approved annually by the Board.
The asset risk element of our Solvency II internal model is used to monitor actual investment risk against this appetite, which
specifies how far investment return may deviate from target, at 90% confidence. The investment risk appetite was set at
$260m for 2023. From 2024, the investment risk appetite additionally incorporates interest rate risks to the present value of
our underwriting liabilities.
ii. Foreign exchange risk
The functional currency and presentational currency of Beazley plc and its main trading entities is US dollars. As a result, the
Group is mainly exposed to fluctuations in exchange rates for non-dollar denominated transactions and to net asset translation
risk on non-dollar functional currency entities.
The Group operates in four main currencies: US dollars, sterling, Canadian dollars and euros. Transactions in all currencies are
converted to US dollars on initial recognition, with any resulting monetary items being translated to the US dollar spot rate at
the reporting date. If any foreign exchange risk arises it is actively managed as described below.
In 2023, the Group managed its foreign exchange risk by periodically assessing its non-dollar exposures and hedging these to a
tolerable level while targeting to have net assets that are predominantly denominated in US dollars. As part of this hedging
strategy, exchange rate derivatives were used to rebalance currency exposure across the Group. Details of foreign currency
derivative contracts entered into with external parties are disclosed in Note 19. On a forward looking basis, an assessment is
made of expected future exposure development and appropriate currency trades are put in place to reduce risk. The Group\u2019s
underwriting capital is matched by currency to the principal underlying currencies of its insurance transactions. This helps to
mitigate the risk that the Group\u2019s capital required to underwrite business is materially affected by any future movements in
exchange rates.
The Group also has foreign operations with functional currencies that are different from the Group\u2019s presentational currency.
The effect of this on foreign exchange risk is that the Group is exposed to fluctuations in exchange rates for US dollar
denominated transactions and net assets arising in those foreign currency operations. It also gives rise to a currency
translation exposure for the Group to sterling, euro, Canadian dollars, Singapore dollars and Australian dollars on translation to
the Group\u2019s presentational currency. These exposures are minimal and are not hedged.
30 Risk and sensitivity analysis continued
Exposure and risk concentrations by currency
The following tables summarise the carrying values of the insurance/reinsurance contract assets and liabilities and overall net
assets held by the Group, categorised by its main currencies. For a breakdown of financial assets by currency, refer to Note
18(h).\u00a0 \u00a0
UK \u00a3
CAD $
EUR \u20ac
Subtotal
US $
Total $
2023
$m
$m
$m
$m
$m
$m
Insurance contract assets
2.4
13.6
(3.6)
12.4
89.1
101.5
Reinsurance contract assets
243.1
37.0
166.4
446.5
1,980.2
2,426.7
Other
574.8
257.8
69.2
901.8
10,235.4
11,137.2
Total assets
820.3
308.4
232.0
1,360.7
12,304.7
13,665.4
Insurance contract liabilities
(804.4)
(229.0)
(782.3)
(1,815.7)
(6,176.5)
(7,992.2)
Reinsurance contract liabilities
(31.2)
(0.6)
(7.7)
(39.5)
(294.0)
(333.5)
Other
(69.1)
20.7
441.0
392.6
(1,850.2)
(1,457.6)
Total liabilities
(904.7)
(208.9)
(349.0)
(1,462.6)
(8,320.7)
(9,783.3)
Net assets
(84.4)
99.5
(117.0)
(101.9)
3,984.0
3,882.1
UK \u00a3
CAD $
EUR \u20ac
Subtotal
US $
Total $
2022
$m
$m
$m
$m
$m
$m
Insurance contract assets
6.6
2.0
(18.2)
(9.6)
93.7
84.1
Reinsurance contract assets
236.7
78.3
35.0
350.0
1,825.3
2,175.3
Other
267.9
278.8
(352.4)
194.3
9,259.3
9,453.6
Total assets
511.2
359.1
(335.6)
534.7
11,178.3
11,713.0
Insurance contract liabilities
(470.5)
(363.7)
(42.4)
(876.6)
(6,473.2)
(7,349.8)
Reinsurance contract liabilities
(60.2)
(15.8)
(35.1)
(111.1)
(50.1)
(161.2)
Other
5.7
40.5
397.4
443.6
(1,690.6)
(1,247.0)
Total liabilities
(525.0)
(339.0)
319.9
(544.1)
(8,213.9)
(8,758.0)
Net assets
(13.8)
20.1
(15.7)
(9.4)
2,964.4
2,955.0
Sensitivity analysis
Fluctuations in the Group\u2019s trading currencies against the US dollar would result in a change in profit after tax and equity. The
table below gives an indication of this impact for reasonably possible percentage changes in the relative strength of the US
dollar against the value of sterling, the Canadian dollar and the euro, simultaneously. The analysis is prepared based on the net
assets held by the Group at the balance sheet date.
Profit after tax
Equity
2023
2022
2023
2022
Change in exchange rate of sterling, Canadian dollar and euro relative to
US dollar
$m
$m
$m
$m
Dollar weakens (30%)
(25.0)
(2.4)
45.2
39.9
Dollar weakens (20%)
(16.7)
(1.6)
30.1
26.6
Dollar weakens (10%)
(8.3)
(0.8)
15.1
13.3
Dollar strengthens (10%)
8.3
0.8
(15.1)
(13.3)
Dollar strengthens (20%)
16.7
1.6
(30.1)
(26.6)
Dollar strengthens (30%)
25.0
2.4
(45.2)
(39.9)
30 Risk and sensitivity analysis continued
iii. Interest rate risk
The Group\u2019s financial instruments (e.g. cash and cash equivalents, certain financial assets at fair value, and subordinated
debt), in addition to its insurance and reinsurance contracts, are exposed to movements in market interest rates. The Group
manages interest rate risk by primarily investing in short duration financial assets along with cash and cash equivalents. The
investment committee monitors the duration of these assets on a regular basis. The Group also entered into bond futures
contracts to manage the interest rate risk on bond portfolios.
Exposure and risk concentrations by duration
The following table shows the modified duration at the reporting date of the financial instruments that are exposed to
movements in market interest rates. Modified duration is a commonly used measure of volatility which represents the
percentage change of the price of a security to yield. The Group believes this gives a better indication than maturity of the likely
sensitivity of the portfolio to changes in interest rates.
<1 yr
1-2 yrs
2-3 yrs
3-4 yrs
4-5 yrs
5-10 yrs
Total
2023
$m
$m
$m
$m
$m
$m
$m
Financial assets at FVTPL:
- Fixed and floating rate debt securities
2,499.9
3,123.8
1,214.6
1,419.5
229.1
49.5
8,536.4
- Syndicate loans
7.6
26.5
\u2014
\u2014
\u2014
\u2014
34.1
Cash and cash equivalents
812.3
\u2014
\u2014
\u2014
\u2014
\u2014
812.3
Subordinated debt
\u2014
\u2014
(249.5)
\u2014
\u2014
(298.8)
(548.3)
Total financial instruments
3,319.8
3,150.3
965.1
1,419.5
229.1
(249.3)
8,834.5
<1 yr
1-2 yrs
2-3 yrs
3-4 yrs
4-5 yrs
5-10 yrs
Total
2022
$m
$m
$m
$m
$m
$m
$m
Financial assets at FVTPL:
- Fixed and floating rate debt securities
1,962.9
3,094.1
1,430.9
441.2
434.9
1.5
7,365.5
- Syndicate loans
\u2014
6.9
25.6
\u2014
\u2014
\u2014
32.5
Cash and cash equivalents
652.5
\u2014
\u2014
\u2014
\u2014
\u2014
652.5
Subordinated debt
\u2014
\u2014
\u2014
(249.4)
\u2014
(298.6)
(548.0)
Total financial instruments
2,615.4
3,101.0
1,456.5
191.8
434.9
(297.1)
7,502.5
30 Risk and sensitivity analysis continued
Sensitivity analysis
All elements of the carrying values of the Group's insurance and reinsurance contracts are exposed to interest rate risk. The
following analysis is performed for reasonably possible movements in key variables with all other variables held constant,
showing the impact on profit after tax and equity. The correlation of variables will have a significant effect in determining the
ultimate impact of interest rate risk, but to demonstrate the impact due to changes in variables, variables had to be changed on
an individual basis. It should be noted that movements in these variables are non\u2013linear.
Profit after tax / Equity\u00b9
2023
2022
Insurance and reinsurance contracts
$m
$m
Interest rate increases (150 bps)
114.3
95.8
Interest rate increases (100 bps)
77.1
64.5
Interest rate increases (50 bps)
39.1
32.6
Interest rate decreases (50 bps)
(40.0)
(33.5)
Interest rate decreases (100 bps)
(81.0)
(67.8)
Interest rate decreases (150 bps)
(123.0)
(102.8)
1 Impact of changes in risk variables is consistent across profit after tax and equity.
Profit after tax / Equity\u00b9
2023
2022
Financial assets
$m
$m
Interest rate increases (150 bps)
(190.6)
(179.0)
Interest rate increases (100 bps)
(127.1)
(119.3)
Interest rate increases (50 bps)
(63.5)
(59.7)
Interest rate decreases (50 bps)
63.5
59.7
Interest rate decreases (100 bps)
127.1
119.3
Interest rate decreases (150 bps)
190.6
179.0
1 Impact of changes in risk variables is consistent across profit after tax and equity.
iv. Price risk
Listed investments that are quoted in an active market are recognised in the statement of financial position at quoted bid price,
which is deemed to be approximate exit price. If the market for the investment is not considered to be active, then the Group
establishes fair value using valuation techniques (refer to Note 18). This includes comparison of orderly transactions between
market participants, reference to the current fair value of other investments that are substantially the same, discounted cash
flow models and other valuation techniques that are commonly used by market participants.
Price risk applies to financial assets that are susceptible to losses due to adverse changes in prices. At the reporting date, the
Group\u2019s exposure to price risk was $1,085.0m (2022: $912.9m). This is comprised of hedge funds, equity investments and
illiquid assets, with no significant concentrations in one area. Note that the price of debt securities is affected by interest rate
risk and credit risk, both of which have been described above. In addition, the Group does not have any insurance or
reinsurance contracts which are exposed to price risk.
30 Risk and sensitivity analysis continued
Sensitivity analysis
Included below is a sensitivity analysis of the Group's financial assets against price risk. With all other variables remaining
constant, changes in fair values of the Group's hedge funds, equity investments and illiquid assets would affect reported profit
after tax and equity as indicated in the following table.
Profit after tax / Equity\u00b9
2023
2022
$m
$m
Fair value increases (30%)
266.6
230.6
Fair value increases (20%)
177.7
153.7
Fair value increases (10%)
88.9
76.9
Fair value decreases (10%)
(88.9)
(76.9)
Fair value decreases (20%)
(177.7)
(153.7)
Fair value decreases (30%)
(266.6)
(230.6)
1 Impact of changes in risk variables is consistent across profit after tax and equity.
A 10% decrease in the fair value of the Group's level 3 financial assets would have an impact of ($20.8m) on profit after tax/
equity (2022: ($21.5m)).
", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-395": { "value": "
30c Credit risk
This risk arises due to the failure of another party to perform its financial or contractual obligations to the Group in a timely
manner. The Group accepts credit risk overall and recognises credit risk is aligned to its appetite for insurance risk. The primary
sources of credit risk for the Group are:
\u2022 reinsurers \u2013 reinsurers may fail to pay valid claims against a reinsurance contract held by the Group;
\u2022 brokers and coverholders \u2013 counterparties may fail to pass on premiums or claims collected/paid on behalf of the Group; and
\u2022 investments \u2013 issuer may default, resulting in the Group losing all or part of the value of a financial instrument or a derivative
financial instrument.
An approval system exists for brokers with their credit and performance monitored. The investment committee has established
parameters for investment managers regarding the type, duration and quality of investments including credit ratings acceptable
to the Group. The performance of investment managers is regularly reviewed to confirm adherence to these guidelines. The
Group has developed processes to examine all reinsurers before entering into new business arrangements, and ongoing
relationships with Beazley are continually assessed. In addition, reinsurance recoverables are reviewed regularly to assess their
collectability.
2023
A.M. Best
Moody\u2019s
S&P
Tier 1
A++ to A-
Aaa to A3
AAA to A-
Tier 2
B++ to B-
Baa1 to Ba3
BBB+ to BB-
Tier 3
C++ to C-
B1 to Caa
B+ to CCC
Tier 4
D, E, F, S
Ca to C
R, (U,S) 3
30 Risk and sensitivity analysis continued
Maximum exposure
The following tables summarise the Group\u2019s maximum exposure to credit risk by reinsurance contract assets and financial
assets.
Tier 1
Tier 2
Tier 3
Tier 4
Unrated
Total
2023
$m
$m
$m
$m
$m
$m
Reinsurance contracts assets
2,387.5
\u2014
\u2014
\u2014
39.2
2,426.7
Financial assets at FVTPL:
- Fixed and floating rate debt securities
7,101.7
1,434.7
\u2014
\u2014
\u2014
8,536.4
- Syndicate loans
34.1
\u2014
\u2014
\u2014
\u2014
34.1
- Equity funds
\u2014
\u2014
\u2014
\u2014
282.7
282.7
- Hedge funds
\u2014
\u2014
\u2014
\u2014
582.2
582.2
- Illiquid assets
\u2014
\u2014
\u2014
\u2014
220.1
220.1
- Derivative financial assets
\u2014
\u2014
\u2014
\u2014
10.0
10.0
Cash and cash equivalents
812.3
\u2014
\u2014
\u2014
\u2014
812.3
Amounts due from managed syndicates and other
receivables
\u2014
\u2014
\u2014
\u2014
297.5
297.5
Total
10,335.6
1,434.7
\u2014
\u2014
1,431.7
13,202.0
Tier 1
Tier 2
Tier 3
Tier 4
Unrated
Total
2022
$m
$m
$m
$m
$m
$m
Reinsurance contracts assets
2,139.4
\u2014
\u2014
\u2014
35.9
2,175.3
Financial assets at FVTPL:
- Fixed and floating rate debt securities
6,767.1
598.4
\u2014
\u2014
\u2014
7,365.5
- Syndicate loans
32.5
\u2014
\u2014
\u2014
\u2014
32.5
- Equity funds
\u2014
\u2014
\u2014
\u2014
159.4
159.4
- Hedge funds
\u2014
\u2014
\u2014
\u2014
530.6
530.6
- Illiquid assets
\u2014
\u2014
\u2014
\u2014
222.9
222.9
- Derivative financial assets
\u2014
\u2014
\u2014
\u2014
34.7
34.7
Cash and cash equivalents
652.5
\u2014
\u2014
\u2014
\u2014
652.5
Amounts due from managed syndicates and other
receivables
\u2014
\u2014
\u2014
\u2014
181.8
181.8
Total
9,591.5
598.4
\u2014
\u2014
1,165.3
11,355.2
The Group's maximum exposure to credit risk from insurance contract assets is $101.5m (2022: $84.1m). Overall exposure to
credit risk is concentrated within Tier 1, with the largest counterparty being $3,258.7m of US treasuries (2022: $3,715.8m).
Financial investments falling within the unrated category are those for which there is no readily available market data to allow
classification within the respective tiers.
30 Risk and sensitivity analysis continued
Credit quality of reinsurance contract assets
Reinsurance recoveries are specifically referenced in IFRS 17 and explicitly de-scoped from IFRS 9 (refer to Note 2). IFRS 17
requires the effect of any risk of non-performance by the reinsurer, including the effects of collateral and losses from disputes,
to be considered when determining the estimates of the present value of future cash flows for the group of reinsurance
contracts held. The Group has developed an internal policy, which involves calculating and re-evaluating expected credit losses
for reinsurance assets and actively following up on disputes with reinsurers for recoveries. Reinsurance recoveries are
assessed for Non-Performance Risk Provision using a % of the reinsurance programme/year of account level under IFRS 17.
The Group has reinsurance recoveries that are past due at the reporting date. An aged analysis of these (on an undiscounted
basis) is presented below.
Up to 30 days
past due
30-60 days
past due
60-90 days
past due
Greater than 90
days past due
Total
2023
$m
$m
$m
$m
$m
Reinsurance recoveries
61.3
57.5
4.1
54.9
177.8
Up to 30 days
past due
30-60 days
past due
60-90 days
past due
Greater than 90
days past due
Total
2022
$m
$m
$m
$m
$m
Reinsurance recoveries
24.7
29.2
8.9
82.6
145.4
", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-396": { "value": "
30d Liquidity risk
Liquidity risk arises where cash may not be available to pay obligations. The Group is exposed to daily calls on its available
cash resources, principally from claims arising from its insurance business which is an industry norm. In the majority of the
cases, these claims are settled from the premiums received held as assets. Beazley avoids the risk of having insufficient liquid
assets to meet expected cash flow requirements.
The Group\u2019s approach is to manage its liquidity position so that it can reasonably survive a significant individual or market loss
event (details of the Group\u2019s exposure to RDS are provided on pages 228 to 230). This means that the Group maintains
sufficient liquid assets, or assets that can be converted into liquid assets at short notice and without any significant capital
loss, to meet expected cash flow requirements. These liquid funds are regularly monitored using cash flow forecasting to
ensure that surplus funds are invested to achieve a higher rate of return. The Group also makes use of loan facilities and
subordinated liabilities, details of which can be found in Note 26. Further information on the Group\u2019s capital resources is
contained on pages 67 to 68.
Maturity analysis \u2013 Insurance and reinsurance contracts
Included below is a maturity analysis of the present value of future cash flows of the Group's net insurance contract liabilities
(per Note 28a). The tables also include the weighted average term to settlement, calculated based on undiscounted future cash
flows for total ultimate claims, excluding the risk adjustment and premium-related claims cash flows.
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
Total
Weighted
average
term to
claims
settlement
2023
$m
$m
$m
$m
$m
$m
$m
Years
Cyber Risks
503.0
372.8
214.5
116.0
56.7
64.8
1,327.8
1.9
Digital
65.6
44.5
21.7
10.8
5.2
6.6
154.4
1.5
MAP Risks
344.5
232.3
130.4
71.0
37.9
50.0
866.1
1.7
Property Risks
510.3
247.5
93.9
39.6
18.8
21.0
931.1
1.2
Specialty Risks
796.9
884.1
677.1
453.2
280.1
399.9
3,491.3
2.6
Net insurance contract liabilities
2,220.3
1,781.2
1,137.6
690.6
398.7
542.3
6,770.7
2.1
30 Risk and sensitivity analysis continued
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
Total
Weighted
average
term to
claims
settlement
2022
$m
$m
$m
$m
$m
$m
$m
Years
Cyber Risks
348.9
300.9
188.2
90.4
33.9
25.4
987.7
1.7
Digital
72.9
44.9
21.0
9.2
4.4
3.5
155.9
1.4
MAP Risks
399.0
266.5
141.5
79.0
42.0
54.8
982.8
1.7
Property Risks
550.2
236.8
88.4
35.4
15.7
14.9
941.4
1.2
Specialty Risks
734.5
776.2
605.7
412.0
250.1
354.2
3,132.7
2.6
Net insurance contract liabilities
2,105.5
1,625.3
1,044.8
626.0
346.1
452.8
6,200.5
2.1
No insurance contract liabilities held by the Group as at 31 December are payable on demand.
Included below is a maturity analysis of the present value of future cash flows of the Group's net reinsurance contract assets
(per Note 28a). The tables also include the weighted average term to settlement for claims recoveries, calculated based on
undiscounted future cash flows for total ultimate claims, excluding the risk adjustment and premium-related cash flows.
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
Total
Weighted
average
term to
settlement
of claims
recoveries
2023
$m
$m
$m
$m
$m
$m
$m
Years
Cyber Risks
(51.4)
169.3
94.6
51.4
24.3
26.5
314.7
1.7
Digital
(11.4)
9.3
4.5
1.9
0.9
0.9
6.1
1.5
MAP Risks
(70.4)
61.7
52.3
30.7
18.2
25.6
118.1
1.5
Property Risks
104.4
59.2
27.0
15.6
3.4
5.3
214.9
1.1
Specialty Risks
75.8
336.5
249.7
167.7
105.9
149.6
1,085.2
2.8
Net reinsurance contract assets
47.0
636.0
428.1
267.3
152.7
207.9
1,739.0
2.0
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
Total
Weighted
average
term to
settlement
of claims
recoveries
2022
$m
$m
$m
$m
$m
$m
$m
Years
Cyber Risks
(149.1)
153.3
105.8
51.2
17.8
12.6
191.6
1.7
Digital
(14.3)
13.6
6.4
2.5
1.2
0.8
10.2
1.4
MAP Risks
(168.7)
154.9
88.5
57.3
32.9
41.2
206.1
1.7
Property Risks
219.0
92.3
32.1
10.5
4.3
6.6
364.8
1.0
Specialty Risks
(108.7)
278.4
260.5
182.6
115.5
158.5
886.8
2.9
Net reinsurance contract assets
(221.8)
692.5
493.3
304.1
171.7
219.7
1,659.5
2.0
30 Risk and sensitivity analysis continued
Maturity analysis \u2013 Total liabilities
The following is a maturity analysis of the net contractual cash flows of the Group\u2019s liabilities as at 31 December. This excludes
current tax and deferred tax liabilities, and reinsurance contracts which are in a net asset position at 31 December.
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
Total
2023
$m
$m
$m
$m
$m
$m
$m
Net insurance contract liabilities
2,220.3
1,781.2
1,137.6
690.6
398.7
542.3
6,770.7
Financial liabilities:
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
- Derivative financial liabilities
6.3
\u2014
\u2014
\u2014
\u2014
\u2014
6.3
- Subordinated debt
31.2
31.2
278.9
16.5
16.5
311.4
685.7
Lease liabilities
13.5
10.3
9.2
8.2
7.7
32.6
81.5
Other liabilities
610.5
\u2014
\u2014
\u2014
\u2014
\u2014
610.5
Total liabilities
2,881.8
1,822.7
1,425.7
715.3
422.9
886.3
8,154.7
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
Total
2022
$m
$m
$m
$m
$m
$m
$m
Net insurance contract liabilities
2,105.5
1,625.3
1,044.8
626.0
346.1
452.8
6,200.5
Financial liabilities:
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
- Derivative financial liabilities
14.5
\u2014
\u2014
\u2014
\u2014
\u2014
14.5
- Subordinated debt
31.2
31.2
31.2
278.9
16.5
327.9
716.9
Lease liabilities
9.6
11.8
8.9
7.7
\u2014
37.3
75.3
Other liabilities
524.0
\u2014
\u2014
\u2014
\u2014
\u2014
524.0
Total liabilities
2,684.8
1,668.3
1,084.9
912.6
362.6
818.0
7,531.2
Maturity analysis \u2013 Financial assets
Included below is a maturity analysis of the Group\u2019s financial assets as at 31 December, based on their carrying values per the
balance sheet.
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
Total
2023
$m
$m
$m
$m
$m
$m
$m
Financial assets at FVTPL:
- Fixed and floating rate debt securities
2,014.6
3,061.5
1,336.2
929.6
1,045.3
149.2
8,536.4
- Syndicate loans
7.6
26.5
\u2014
\u2014
\u2014
\u2014
34.1
- Derivative financial assets
10.0
\u2014
\u2014
\u2014
\u2014
\u2014
10.0
Cash and cash equivalents
812.3
\u2014
\u2014
\u2014
\u2014
\u2014
812.3
Amounts due from managed syndicates
and other receivables
297.5
\u2014
\u2014
\u2014
\u2014
\u2014
297.5
Total financial assets
3,142.0
3,088.0
1,336.2
929.6
1,045.3
149.2
9,690.3
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
Total
2022
$m
$m
$m
$m
$m
$m
$m
Financial assets at FVTPL:
- Fixed and floating rate debt securities
1,854.9
2,651.4
1,676.5
431.0
652.8
98.9
7,365.5
- Syndicate loans
\u2014
6.9
25.6
\u2014
\u2014
\u2014
32.5
- Derivative financial assets
34.7
\u2014
\u2014
\u2014
\u2014
\u2014
34.7
Cash and cash equivalents
652.5
\u2014
\u2014
\u2014
\u2014
\u2014
652.5
Amounts due from managed syndicates
and other receivables
181.8
\u2014
\u2014
\u2014
\u2014
\u2014
181.8
Total financial assets
2,723.9
2,658.3
1,702.1
431.0
652.8
98.9
8,267.0
30 Risk and sensitivity analysis continued
Our capital growth assets have no defined maturity dates and have thus been excluded from the above maturity table. However,
all $282.7m (2022: $159.4m) of equity funds could be liquidated within two weeks, $440.2m (2022: $416.8m) of hedge fund
assets within six months and the remaining $142.0m (2022: $113.8m) of hedge fund assets within 18 months, in normal
market conditions. Illiquid assets are not readily realisable and principal will be returned over the life of these assets, which
may be up to 12 years. The Group makes regular interest payments for its subordinated debt. Further details are provided in
Notes 12 and 26.", "dimensions": { "concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-397": { "value": "
30e Capital management
The Group follows a risk-based approach to determine the amount of capital required to support its activities. Recognised
stochastic modelling techniques are used to measure risk exposures, and capital to support business activities is allocated
according to risk profile. Stress and scenario analysis is regularly performed and the results are documented and reconciled to
the Board\u2019s risk appetite where necessary.
The Group has several requirements for capital, including:
\u2022 to support underwriting at Lloyd\u2019s through the syndicates in which it participates, being 2623, 3622, 3623, 5623 and 4321.
This is based on the Group\u2019s own individual capital assessment. It may be provided in the form of either the Group\u2019s cash,
investments, debt facilities, or letter of credit;
\u2022 to support underwriting in Beazley Insurance Company, Inc., Beazley America Insurance Company, Inc., and Beazley NewCo
Captive Company, Inc. in the US;
\u2022 to support underwriting in Beazley Insurance dac in Europe; and
\u2022 to support strategic acquisitions and investments.
All entities within the Group have been in compliance with externally imposed capital requirements during the year. The Group
uses letters of credit (\"LOC\") available under a syndicated short term banking facility led by Lloyds Banking Group plc to support
Funds at Lloyd\u2019s (\"FAL\") requirements. Lloyd\u2019s of London apply certain criteria to banks issuing LOCs as FAL, including minimum
credit rating requirements and counterparty limits. Should any of the banks on the existing LOC facility breach Lloyd\u2019s of London
requirements, the Group might be asked to replace the LOC provided with alternative eligible issuer(s) and/or assets meeting
Lloyd\u2019s requirements. The creditworthiness of the counterparties on the facility is monitored by the Group on an ongoing basis.
The Group considers Shareholders' Funds, Tier 2 subordinated debt and letters of credit to be the primary sources of capital for
the Group. For more detail on the value of capital managed and how its value has changed in the year, please see pages 67 to
68.
The Internal Model Solvency Capital Requirement is a dedicated quantitative review of syndicate models and it sets outs to be a
key input to the Lloyd\u2019s Internal Model.
The Board operates a progressive dividend strategy, intending to grow the dividend each year but recognising that some
earnings fluctuations are to be expected. When determining the level of the dividend, the Board considers the Group's capital
position, future investment and growth opportunities and its ability to generate cash flows. Dividends are typically paid on an
annual basis to align with the Group's capital planning cycle. The Group's capital management strategy is to carry some surplus
capital which makes it possible to take advantage of growth opportunities which may arise. Where surplus capital cannot be
profitably deployed it will be returned to shareholders.
", "dimensions": { "concept": "ifrs-full:DisclosureOfObjectivesPoliciesAndProcessesForManagingCapitalExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-398": { "value": "
31 Subsidiary undertakings
Beazley plc, a company incorporated in England and Wales and resident for tax purposes in the United Kingdom, is the ultimate
parent and the ultimate controlling party within the Group.
The following is a list of all the subsidiaries in the Group as at 31\u00a0December 2023, all of which are wholly owned.
Country/region
of incorporation
Beazley Underwriting Pty Limited
Australia
Beazley Canada Limited
Canada
Beazley Corporate Member (No.2) Limited
England
Beazley Corporate Member (No.3) Limited
England
Beazley Corporate Member (No.6) Limited
England
Beazley Furlonge Holdings Limited
England
Beazley Furlonge Limited
England
Beazley Group Limited
England
Beazley Investments Limited
England
Beazley Management Limited
England
Beazley Staff Underwriting Limited
England
Beazley Solutions Limited
England
Beazley Underwriting Limited
England
Beazley Underwriting Services Limited
England
Lodestone Security Limited
England
Beazley Corporate Governance Services Limited
England
BHI Digital UK Limited
England
Beazley Insurance dac
Ireland
Beazley Solutions International Limited
Ireland
Beazley Ireland Holdings plc
Jersey
Beazley Labuan Limited
Malaysia
Beazley America Insurance Company, Inc.***
USA
Beazley Group (USA) General Partnership**
USA
Beazley Holdings, Inc.*
USA
Beazley Insurance Company, Inc.***
USA
Beazley Newco Captive Company, Inc.***
USA
Beazley USA Services, Inc.*
USA
Beazley Excess and Surplus Insurance, Inc.***
USA
BHI Digital, LLC.*****
USA
Beazley RI Manager, Inc.*
USA
Lodestone Securities LLC****
USA
Beazley Pte. Limited
Singapore
Please see page 243 for registered addresses.
31 Subsidiary undertakings continued
The following is a list of the Group's registered office locations:
Address
City
Postcode
Country/region
United Kingdom and Continental Europe
22 Bishopsgate
London
EC2N 4AJ
England
2 Northwood Avenue
Dublin
D09 X5N9
Ireland
22 Grenville Street
Saint Helier
JE4 8PX
Jersey
North America
1209 Orange Street*
Wilmington, Delaware
19801
USA
2711 Centerville Road Suite 400 **
Wilmington, Delaware
19808
USA
30 Batterson Park Road ***
Farmington, Connecticut
06032
USA
160 Greentree Drive, Suite 101 ****
Dover, Delaware
19904
USA
55 University Avenue, Suite 550
Toronto, Ontario
M5J 2HJ
Canada
251 Little Falls Drive*****
Wilmington, Delaware
19808
USA
Asia
138 Market Street, 03-04 Capita Green
Singapore
048946
Singapore
Kensington Gardens, No. I1317, Lot 7616, Jalan
Jumidar Buyong
Labuan
87000
Malaysia
Australia
Level 15, 1 O\u2019Connell Street
Sydney
NSW 2000
Australia
", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInSubsidiariesExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-399": { "value": "Beazley plc", "dimensions": { "concept": "ifrs-full:NameOfUltimateParentOfGroup", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-400": { "value": "Beazley plc", "dimensions": { "concept": "ifrs-full:NameOfParentEntity", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-401": { "value": "
32 Related party transactions
The Group has related party relationships with syndicates 623, 4321, 5623, 6107, in addition to its subsidiaries, associates
and Directors.
32a Syndicates 623, 4321, 5623 and 6107
The Group received management fees and profit commissions for providing a range of management services to syndicates 623,
4321, 5623 and 6107 which are all managed by the Group. In addition, the Group ceded portions of a group of insurance
policies to syndicates 6107 and historically ceded certain business to 5623. The participants on syndicates 623 and 6107 are
solely third party capital while the Group provides 10% of the capital for syndicate 4321 and approximately 18% of capital to
5623 for the 2023 year of account.
Details of transactions entered into and the balances with these syndicates are as follows:
2023
2022
$m
$m
Written premium ceded to syndicates
425.8
318.7
Other income received from syndicates
74.1
20.7
Services provided
83.2
58.9
Balances due:
- Due from / (to) syndicate 623
19.1
(7.2)
- Due from syndicate 4321
6.3
1.9
- Due to syndicate 5623
(217.7)
(208.4)
- Due to syndicate 6107
(86.6)
(77.8)
32b Key management compensation
2023
2022
$m
$m
Salaries and other short term benefits
38.4
18.9
Pension costs
0.6
0.5
Share based remuneration
11.9
8.0
50.9
27.4
Key management include Executive and Non-Executive Directors and other senior management.
The total number of Beazley plc ordinary shares held by key management is 2.5m. Apart from the transactions listed in the
table above, there were no further related party transactions involving key management or a close member of their family.
Further details of Directors\u2019 shareholdings and remuneration can be found in the Directors\u2019 remuneration report on pages 124
to 145.
32c Other related party transactions
At 31\u00a0December 2023 , the Group had purchased services from Falcon Money Management Holdings Limited of $3.1m (2022:
$2.9m) throughout the year. All transactions with the associates and subsidiaries are priced on an arm\u2019s length basis.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-402": { "value": "
32b Key management compensation
2023
2022
$m
$m
Salaries and other short term benefits
38.4
18.9
Pension costs
0.6
0.5
Share based remuneration
11.9
8.0
50.9
27.4
Key management include Executive and Non-Executive Directors and other senior management.
The total number of Beazley plc ordinary shares held by key management is 2.5m. Apart from the transactions listed in the
table above, there were no further related party transactions involving key management or a close member of their family.
Further details of Directors\u2019 shareholdings and remuneration can be found in the Directors\u2019 remuneration report on pages 124
to 145.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-403": { "value": "
33 Contingencies
Funds at Lloyd\u2019s (\"FAL\")
The following amounts are held in trust by Lloyd\u2019s to secure underwriting commitments:
2023
2022
$m
$m
Financial assets at fair value and cash\u00b9
1,277.8
1,307.6
Letters of credit (\"LOC\")
225.0
225.0
Total Funds at Lloyd\u2019s
1,502.8
1,532.6
1 Included within 'financial assets at fair value' and 'cash and cash equivalents' on the statement of financial position.
The funds are held in trust and can be used to meet claims liabilities should syndicates fail to meet their claim liabilities. The
funds can be only used to meet claim liabilities of the relevant member.
Letters of credit (FAL)
The Group has a syndicated short term banking facility which was renewed on 25 May 2023, under which $450.0m may be
utilised as LOC placed as FAL to provide capital support for the Group\u2019s underwriting at Lloyd\u2019s. The cost of the facility is based
on a commitment fee of 0.4725% per annum and any amounts drawn are charged at a margin of 1.35% per annum. As at 31
December 2023, $225.0m (2022: $225.0m) has been issued as LOC and is being utilised to support FAL requirements. LOC
issued under the facility are uncollateralised. No liability is recognised in these financial statements for the LOC (2022: $nil), as
amounts would only become due if called upon to fund liabilities. These borrowings are subject to covenants, with which the
Group has complied throughout the year. The Group considers the risk of covenants being breached to be remote.
Letters of credit (US)
During the year, the Group has also placed LOC totalling $47.0m (2022: $35.0m) with the State of Connecticut Insurance
Department to collateralise reinsurance arrangements between the Group\u2019s US admitted carrier, Beazley Insurance Company
Inc. (\u201cBICI\u201d) and Beazley NewCo Captive Company Inc. These amounts are guaranteed by Beazley plc. In addition, BICI has a
standby letter of credit of $7.5 m (2022: $5.3m) in place to secure certain reinsurance transactions settled through Lloyd\u2019s. No
amounts relating to these letters of credit are recognised in the Group's statement of financial position (2022: $nil).
", "dimensions": { "concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-404": { "value": "
34 Subsequent events
On 6 March 2024, the Board of Beazley plc approved a share buyback of its ordinary shares for up to a maximum aggregate
consideration of $325m which is expected to commence on 8 March 2024. The buyback will reduce the Group's net asset
value by approximately $325m.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:213800VTOMUWD41GIT12", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } } } }