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The consolidated financial statements were approved by the Board of Directors on 4 March 2026 and signed on its behalf by:
\"Philip
\"Natalie
Philip BroadleyNatalie Kershaw
Director/ChairDirector/CFO", "dimensions": { "concept": "ifrs-full:DisclosureOfAuthorisationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-94": { "value": "122000000.0", "decimals": -5, "dimensions": { "concept": "ifrs-full:Equity", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2024-01-01T00:00:00", "ifrs-full:ComponentsOfEquityAxis": "ifrs-full:IssuedCapitalMember", "unit": "iso4217:USD" } }, "f-95": { "value": "-29700000.0", "decimals": -5, "dimensions": { "concept": "ifrs-full:Equity", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2024-01-01T00:00:00", "ifrs-full:ComponentsOfEquityAxis": "lancashire:OwnSharesMember", "unit": "iso4217:USD" } }, "f-96": { "value": "1233200000.0", "decimals": -5, "dimensions": { "concept": "ifrs-full:Equity", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2024-01-01T00:00:00", "ifrs-full:ComponentsOfEquityAxis": 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Summary of material accounting policies
The basis of preparation, use of judgements, estimates and assumptions, consolidation
principles, and material accounting policies adopted in the preparation of these consolidated
financial statements are set out below.
Basis of preparation
The consolidated financial statements have been prepared in accordance with IFRS (as issued
by the International Accounting Standards Board), as adopted by the UK.
The Group transitioned to IFRS, as adopted by the UK within its consolidated financial
statements effective from 1 January 2025. This transition, from IFRS as adopted by the EU,
constitutes a change in accounting framework, however there has been no impact on
recognition, measurement or disclosure during the period of these financial statements
as\u00a0a\u00a0result of this change in accounting framework.
Going concern basis of accounting
The consolidated financial statements have been prepared on a going concern basis.
In\u00a0assessing the Group's going concern position as at 31 December 2025, the Directors
have\u00a0considered a number of factors. These include:
\u2022 the current balance sheet and liquidity position;
\u2022 the level and composition of the Group's capital and solvency ratios;
\u2022 the Group's ability to service its long-term debt financing arrangements;
\u2022 the current performance against the Group's strategic and financial business plan;
\u2022 the Group's dividend distribution policy; and
\u2022 the current market environment, including consideration of climate change.
In addition, the ORSA report is a key document informing the Group's going concern
assessment that is submitted to the Board.
The Group's financial forecasts reflect the outcomes that the Directors consider most likely,
based on the information available at the date of signing these consolidated financial
statements. To assess the Group's going concern, the financial stability of the Group was
modelled for a period of at least 12 months, and a number of sensitivity, stress, and scenario
tests were applied. This included a best estimate forecast, and incorporated different
magnitudes of reserve releases and attritional, large and catastrophe loss events, plus optimistic
and pessimistic investment return scenarios.
To further stress the financial stability of the Group, additional stress testing was performed.
This included modelling the breakeven capital requirements of our regulators and rating
agencies, the impact of potential management actions to reduce the Group's exposure to
climate change-related risks, and a combination of large losses and catastrophe losses, which
would result in a net loss for the Group, and finally a reverse stress test scenario designed to
render the business model unviable. The testing identified that even under the more severe but
plausible stress scenarios, the Group had more than adequate liquidity and solvency headroom.
Based on the going concern assessment performed, the Directors consider there to be no
material uncertainties that may cast significant doubt over the Group's ability to continue to
operate as a going concern. The Directors have formed a judgement that there is a reasonable
expectation that the Group\u00a0has adequate resources to continue in operational existence in the
foreseeable future, being a period of at least 12 months from the date of signing these
consolidated financial statements.
Currency and liquidity
All amounts presented, excluding share data, or where otherwise stated, are in millions of US
dollars ($m), with amounts rounded to the nearest $0.1 million where appropriate.
The\u00a0consolidated statement of financial position is presented in order of decreasing liquidity.
Use of judgements, estimates and assumptions
The preparation of the Group's consolidated financial statements requires management to
make judgements, estimates and assumptions that affect the application of the Group's
accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual
amounts may differ from these estimates.
Assumptions and estimates are based on information, knowledge and data available when the
consolidated financial statements are prepared. However, existing circumstances and
assumptions about future developments may change, or circumstances may arise that are
beyond the control of the Group. Such changes are reflected in the assumptions when they
occur, and are recognised prospectively. It is considered impracticable to determine the effect
that changes in these assumptions and estimates are expected to have on future periods.
Key assumptions concerning the future, and sources of estimation
uncertainty
The Group has considered both key assumptions concerning the future, and sources of
estimation uncertainty, that may be expected to have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities in a subsequent financial year.
Insurance contracts issued and reinsurance contracts held
The Group has determined that its most significant area of estimation uncertainty is in relation
to the measurement of insurance contracts issued and reinsurance contracts held. Changes in
assumptions may materially change the FCF that make up these balances. The FCF are the
current estimates of the future cash flows within the contract boundary of a group of insurance
or reinsurance contracts that we expect to collect premiums from, and pay out for claims,
benefits and expenses, adjusted to reflect the timing and uncertainty of those amounts.
Changes in the following key assumptions may change the FCF materially:
\u2022 assumptions about the amount and timing of future cash flows;
\u2022 assumptions about claims development;
\u2022 assumptions about discount rates, including any illiquidity premiums; and
\u2022 assumptions about the risk adjustment for non-financial risk.
The estimation of the FCF is a complex actuarial process which incorporates a significant
amount of judgement, in particular, in relation to the estimation of the LIC and AIC. Delays in
reporting losses to the Group, together with unforeseen loss development, increase uncertainty
over the accuracy of loss reserves. A significant portion of the Group's business is in classes with
high attachment points of coverage, and therefore a low frequency but high severity of claims.
This adds further complexity to the reserving process due to the limited volume of industry data
available from which to reliably predict ultimate losses following a loss event. Volatility for the
majority of losses is limited on a net basis by the reinsurance protection purchased by the
Group.
Information about these key assumptions and estimates are included in our risk disclosures and
in note 13.
Management judgements, other than those involving estimations
Lancashire is an insurance group whose primary focus is on underwriting and proactively
balancing risk and return throughout the underwriting and claims cycles. In doing so, the Group
focuses on ensuring premium revenue and investment return exceeds the cost of claims,
outwards reinsurance and operating expenses. The main areas in which judgement is applied
are therefore the measurement and recognition of insurance contracts and financial assets.
Simplified premium allocation measurement model
Management applies judgement to determine if the Group is eligible to apply the simplified PAA
measurement model under IFRS 17.
The Group considers that it is eligible to apply the PAA measurement model to its portfolios and
groups of insurance contracts on the basis that the measurement of the LRC is not reasonably
expected to differ materially from that calculated under the GMM. The Group applies the PAA to
simplify the measurement of all its insurance contracts issued and reinsurance contracts held.
In the years prior to IFRS 17 adoption, and in the initial year of adoption, this assessment was
made through detailed quantitative modelling of all portfolios and groups of insurance
contracts. Given consistency in the Group\u2019s business mix, together with relatively stable
economic factors, the PAA eligibility assessment has been undertaken through a combination of
qualitative and quantitative analysis for the year ended 31 December 2025. This testing
confirmed that the PAA measurement model remained appropriate.
Level of aggregation
Judgement is required to determine the level of aggregation under IFRS 17. Insurance contracts
issued that are subject to similar risks and that are managed together, are classified into a
portfolio of insurance contracts.
The following considerations have been given most weight in the definition of similar risks:
\u2022 risk aggregations used for other business purposes such as reserving;
\u2022 segmentations used for underwriting; and
\u2022 perils covered and incidence of risk over time.
Each portfolio of insurance contracts is then further disaggregated into annual cohorts, and
each annual cohort is classified into a maximum of three groups of contracts for recognition
and measurement purposes based on their expected profitability. See accounting policies and
note 13.
Onerous contract assessment
Management applies judgement to assess whether facts and circumstances indicate that a
group of insurance contracts is onerous at initial recognition, and subsequently assesses
whether facts and circumstances indicate any changes in the onerous group's profitability, and
whether any loss component remeasurement is required. See accounting policies and note 13.
Classification of investment portfolio
The classification of the Group's investment portfolio requires judgement in assessing the
business model within which assets are held. The Group has established that all investment
classes are managed, and their performance evaluated, on a fair value basis, and they are
therefore classified at FVTPL. See risk disclosures and note 11.
Level (iii) investments
The Group holds a relatively straightforward investment portfolio consisting mainly of standard
fixed maturity products. Level (iii) investments are securities for which valuation techniques are
not based on observable market data, and therefore require management judgement to
determine an appropriate fair value. The Group determines securities classified as Level (iii) to
include private investment funds and hedge funds. The estimation of fair value, specifically for
Level (iii) investments, is discussed within the risk disclosures and note 11.
Annual impairment assessments
The syndicate participation rights and goodwill are intangible assets with an indefinite life and
subject to an annual impairment assessment. The Group applies judgement when determining
the input assumptions for the value in use calculation. The input assumptions and their
sensitivity are disclosed in note 17.
For the Group's internally generated intangible assets, an impairment review is performed when
it is concluded there are sufficient indicators of impairment as disclosed within note 17 .
Current and deferred tax
The Group is exposed to changes in tax legislation which are complex to interpret and evolve
over time. The Group applies management expertise and judgement to interpret and assess the
impact of these changes in tax legislation. Third-party specialists provide tax guidance and tax
opinions at the request of management where considered appropriate. Recent changes in tax
legislation are disclosed in note 14.
Changes in accounting policies
IFRS 18, Presentation and Disclosure in Financial Statements
On 9 April 2024, the IASB published IFRS 18, Presentation and Disclosure in Financial
Statements. The standard will be effective from 1 January 2027, replacing IAS 1, Presentation of
Financial Statements. The Group has been monitoring the UK endorsement process, which
formally adopted IFRS 18 in December 2025, and is also undertaking an assessment into the
impact of implementing IFRS 18.
The key changes to the Group's financial statements are expected to include:
\u2022 the classification of the consolidated statement of comprehensive income into IFRS 18
operating, investing, financing and income tax categories alongside the inclusion of
mandatory sub-totals to aid comparability;
\u2022 disclosure of management-defined performance measures; and
\u2022 enhanced disclosures relating to the aggregation and disaggregation of financial information.
IFRS 18 will be adopted on a fully retrospective basis. The focus of IFRS 18 is on presentation
and disclosure. The Group does not anticipate any valuation adjustments to arise on adoption
of IFRS 18.
There are also amendments to other existing standards and interpretations that are mandatory
for the first time for financial periods beginning 1 January 2025, specifically Amendments to IAS
21, Lack of Exchangeability. These are not currently relevant for the Group and do not impact
the consolidated financial statements of the Group.
Amendments to IFRS 9 and IFRS 7, Amendments to the Classification and Measurement of
Financial Instruments, which is effective from 1 January 2026, is not expected to impact the
Group.
Consolidation principles
The Group's consolidated financial statements comprise the financial statements of the
Company and its subsidiaries as at, and for the year ended, 31 December 2025. Subsidiaries
are\u00a0fully consolidated from the date of acquisition or incorporation, being the date on which
the Group obtains control, and continue to be consolidated until the date when such control
ceases. Intercompany balances, profits and transactions are eliminated. Control is achieved
when the Group is exposed, or has rights, to variable returns from its involvement with the
subsidiary, and has the ability to affect those returns through its power over the subsidiary.
The Group participates in two syndicates at Lloyd's, which are managed by the Group's Lloyd's
managing agent subsidiary. In view of the several liability of underwriting members at Lloyd's,
the Group recognises its proportion of all the transactions undertaken by the syndicates in
which it participates within its consolidated statement of comprehensive income. Similarly,
the\u00a0Group's proportion of the syndicates' assets and liabilities has been reflected in its
consolidated statement of financial position. This proportion is calculated by reference to the
Group\u2019s participation as a percentage of each syndicate's total capacity for each underwriting
year of account.
Subsidiaries' accounting policies are generally consistent with the Group's accounting policies.
Where they differ, adjustments are made on consolidation to bring the subsidiaries' accounting
policies in line with that of the Group.
Associates
Investments in which the Group has significant influence over the operational and financial
policies of the investee, are recognised at cost and thereafter accounted for using the equity
method. Under this method, the Group records its proportionate share of income or loss from
such investments in its consolidated statement of comprehensive income for the period.
Adjustments are made to the associate's accounting policies, where necessary, so there is
consistency with the Group\u2019s accounting policies.
Foreign currency
Functional currency
Items included in the financial statements of each of the Group's entities are measured using
the currency of the primary economic environment in which the entities' operations are
conducted (the 'functional currency'). The functional currency is US dollars for all of the
Group's\u00a0entities, other than the Group's Australian entities, which have a functional currency of
Australian dollars. The Group's consolidated financial statements are presented in US dollars
(the 'presentation currency').
Transactions and balances
Foreign currency transactions are recorded in the functional currency for each entity using the
exchange rates prevailing at the dates of the transactions, or at the average rate for the period
when this is a reasonable approximation. Monetary assets and liabilities denominated in foreign
currencies are revalued at period end exchange rates. The resulting exchange differences on
revaluation are recorded in profit or loss within net foreign exchange gains (losses) in the
consolidated statement of comprehensive income. Non-monetary assets and liabilities
denominated in a foreign currency are carried at historic rates. Non-monetary assets and
liabilities carried at estimated fair value and denominated in a foreign currency are translated
at\u00a0the exchange rate on the date that the estimated fair value was determined.
Foreign operations
The results and financial position of the Group's entities that have a functional currency different
from the presentation currency are translated into the presentation currency as follows:
\u2022 assets and liabilities are translated at the closing rate on the period end date;
\u2022 income and expenses are translated at the average exchange rates for the period; and
\u2022 all resulting foreign exchange differences are recognised in other comprehensive income,
and as a separate component of shareholders\u2019 equity.
On disposal of foreign operations, cumulative exchange differences previously recognised in
other comprehensive income are recognised in the consolidated statement of comprehensive
income as part of the gain or loss on disposal.
Insurance contracts issued and reinsurance contracts held
Classification
Insurance contracts issued under IFRS 17 are those contracts that transfer significant insurance
risk at the inception of the contract. Insurance risk is transferred when an insurer agrees to
compensate a policyholder if a specified uncertain future event adversely affects the
policyholder. Contracts that have a legal form of insurance risk but do not transfer significant
insurance risk are classified as investment contracts and follow financial instrument accounting
under IFRS 9. The Group does not issue any contracts with direct participation features.
In the normal course of business, the Group uses reinsurance to mitigate its risk exposures.
A\u00a0reinsurance contract held transfers significant insurance risk if it transfers substantially all
the\u00a0insurance risk resulting from the insured or reinsured portion of the underlying insurance
contracts, even if it does not expose the reinsurer to the possibility of a significant loss.
All references to insurance contracts in these consolidated financial statements apply to
insurance contracts issued and reinsurance contracts held, unless specifically stated otherwise.
Level of aggregation of insurance contracts issued and reinsurance contracts held
Insurance contracts issued and reinsurance contracts held that are subject to similar risks and
managed together are classified into portfolios of contracts. These are disaggregated into
annual cohorts and then further classified into three groups based on their expected
profitability. The groups are:
\u2022 insurance contracts issued that are onerous at initial recognition, or reinsurance contracts
held for which there is a net gain at initial recognition;
\u2022 insurance contracts issued that at initial recognition have no significant possibility of
becoming onerous, or reinsurance contracts held where there is no significant possibility of a
net gain arising subsequently; or
\u2022 a group of the remaining insurance contracts issued, or reinsurance contracts held.
These groups represent the level of aggregation at which insurance contracts issued are initially
recognised and measured, and they are not subsequently reconsidered.
Initial recognition of insurance contracts issued and reinsurance contracts held
An insurance contract issued by the Group is recognised at the earliest of:
\u2022 the beginning of the coverage period;
\u2022 when the first payment from the policyholder is due, or actually received if there is no
due\u00a0date; or
\u2022 the date when facts and circumstances indicate that the group of contracts is onerous.
Groups of reinsurance contracts held are initially recognised at the beginning of the coverage
period. In the case of proportional reinsurance contracts held, this may be delayed until the
initial recognition date of any underlying insurance contract. Reinsurance contracts held which
cover an underlying onerous group of insurance contracts issued, are recognised on the same
date as the related onerous group of contracts.
Insurance contracts issued are initially added to the relevant groups of insurance contracts in
the reporting period in which they meet the recognition criteria, subject to the annual cohorts'
restriction. Composition of the groups is not reassessed in subsequent periods.
Measurement applying the PAA measurement model - PAA eligibility
The Group considers that it is eligible to apply the PAA to simplify the measurement of groups
of insurance contracts issued and reinsurance contracts held, as the measurement of the LRC
and ARC is not reasonably expected to differ materially from that calculated under the GMM.
The PAA has been applied to all groups of contracts.
Contract boundary
The measurement of a group of insurance contracts issued or reinsurance contracts held
includes all of the cash flows within the boundary of each contract in the group.
Cash flows are within the boundary of each contract if they arise from substantive rights and
obligations that exist during the period. In the case of insurance contracts issued, this is
where\u00a0the Group can compel the policyholder to pay premiums, or the Group has substantive
obligations to provide the policyholder with insurance coverage or other services. In the case
of\u00a0reinsurance contracts held, this is where the Group is compelled to pay amounts to the
reinsurer, or has a substantive right to receive insurance coverage, or other services, from
the\u00a0reinsurer.
A substantive obligation to provide services ends when:
\u2022 the Group has the practical ability to reassess the risks of the particular policyholder, and as
a\u00a0result can set a price or level of benefits that fully reflects those risks; or
\u2022 the Group has the practical ability to reassess the risks of the portfolio of insurance contracts
that contains the contract, and as a result can set a price or level of benefits that fully reflects
the risks of the portfolio; and
\u2022 the pricing of premiums up to the date when risks are reassessed does not reflect the risks
related to periods beyond the reassessment date.
A substantive right to receive services from the reinsurer ceases when the reinsurer:
\u2022 has the practical ability to reassess the risks transferred to it, and as a result can set a price or
level of benefits that fully reflects those reassessed risks; or
\u2022 has a substantive right to terminate the coverage.
The contract boundary is reassessed at each reporting period to include the effect of change in
circumstances on the Group's rights and obligations, and may change over time.
Cash flows not directly attributable to a portfolio of insurance contracts are recognised in other
operating expenses as incurred.
Fulfilment cash flows within the contract boundary
The FCF are the current estimates of the future cash flows within the contract boundary of a
group of insurance contracts. These include premiums, claims, acquisition costs and
administrative expenses, adjusted to reflect the timing and the uncertainty of those amounts.
The estimates of future cash flows are based on an unbiased probability weighted mean of
the\u00a0full range of possible outcomes. They reflect current estimates, factoring in expected
credit\u00a0losses or non-performance risk of reinsurers, and are determined from the perspective
of\u00a0the Group.
The Group uses assumptions to measure the estimates of the future cash flows for a group of
reinsurance contracts held that are consistent with the underlying group of insurance contracts
issued. Reinsurance cash flows that are contingent on claims incurred by the underlying
insurance contracts issued are therefore included as part of the cash flows that are expected
to\u00a0be reimbursed under the relevant reinsurance contracts held.
Discounting
The FCF within the LIC and the AIC are discounted using current discount rates to reflect the
time value of money and the financial risks related to those cash flows. The discount rates
reflect the characteristics of the cash flows arising from each group of insurance contracts,
including the timing, currency, and liquidity of the cash flows. The Group does not discount
the\u00a0LRC or the ARC. This would be required if the LRC or the ARC included a significant
financing component.
Risk adjustment for non-financial risk
The measurement of the LIC and the AIC includes an explicit risk adjustment for non-financial
risk. This is estimated separately from the discounted FCF and is applied to the present value of
the estimated future cash flows. It reflects the compensation the Group requires, or transfers to
a reinsurer, for bearing uncertainty in respect of the amount and timing of the cash flows from
non-financial risk as the Group fulfils its insurance contracts issued.
Insurance acquisition cash flows
Insurance acquisition cash flows arise from the cost of selling, underwriting, and initiating a
group of insurance contracts that are directly attributable to the portfolio of insurance contracts
to which the group belongs. These include:
\u2022 contract specific costs, such as brokerage; and
\u2022 a systematic and rational allocation of fixed and variable overheads to groups of contracts
based on insurance revenue.
Initial measurement of insurance contracts issued applying the PAA
The carrying amount of the LRC is measured with reference to the premiums received on initial
recognition from either policyholders or intermediaries, minus any insurance acquisition cash
flows allocated to the relevant group at that date, less the derecognition of any assets or
liabilities previously recognised for cash flows related to the group.
The Group assumes that no contracts are onerous at initial recognition, unless facts and
circumstances indicate otherwise. If such evidence exists, the Group determines if the contract
will result in a net cash outflow. The Group recognises an insurance service expense for the net
cash outflow, and an onerous loss component is added to the LRC.
Subsequent measurement of insurance contracts issued applying the PAA
The carrying amount of a group of insurance contracts issued is the sum of the LRC and the LIC,
and is measured at the end of each reporting period. The measurement of the LRC includes:
\u2022 any premiums received, less amounts recognised as insurance revenue;
\u2022 less insurance acquisition cash flows paid, plus amortisation of any insurance acquisition cash
flows recognised as insurance service expense in the period; and
\u2022 less any non-distinct investment components either paid, or transferred to the LIC.
Groups of insurance contracts that were not onerous at initial recognition can subsequently
become onerous if facts and circumstances change during the coverage period. Onerous
groups of contracts are assessed at the end of each reporting period with changes in the
expected net cash outflow recognised in the carrying amount of the LRC and insurance service
expenses. The Group amortises the onerous loss component within the LRC based on the
passage of time over the remaining coverage period within insurance service expenses. The
equivalent basis is also applied to any relevant reinsurance recovery component.
The Group recognises the LIC for a group of insurance contracts as the amount of FCF relating
to the incurred claims that have not yet been paid, including claims that have been incurred but
not yet reported, together with the associated expenses, including all claims handling expenses
that relate to incurred claims which have not yet been paid. The FCF are measured at the
reporting date using current estimates of future cash flows, current discount rates, and current
estimates of the risk adjustment for non-financial risk.
Initial and subsequent measurement of reinsurance contracts held applying the PAA
The carrying amount of a group of reinsurance contracts held is the sum of the ARC and the
AIC, and is measured at the end of each reporting period. The Group measures a group of
reinsurance contracts held on the same basis as a group of insurance contracts issued, with
adaptations to reflect the features of reinsurance contracts held that differ from the insurance
contracts issued.
Derecognition and modification under the PAA
The Group derecognises an insurance contract issued, or a reinsurance contract held, when it is
extinguished (that is, when the specified obligations in the contract expire, are discharged, or
cancelled), or the contract is modified.
Modifications to a contract are accounted for as a change in the estimate of the FCF. A contract
is derecognised and treated as a new contract if the modification to the contract either:
\u2022 changes the measurement model;
\u2022 brings the contract, or separable component parts of the contract, outside the scope of
IFRS\u00a017;
\u2022 substantially changes the contract boundary; or
\u2022 results in the contract being allocated to a different group.
When an insurance contract is extinguished, transferred to a third-party, or modified in such a
way that results in derecognition, any adjustments made to the FCF are recorded within the
consolidated statement of comprehensive income.
Presentation within the financial statements
Portfolios of insurance contracts issued, and portfolios of reinsurance contracts held, that are
assets, and those that are liabilities, are presented separately in the consolidated statement of
financial position.
The Group disaggregates amounts recognised in the consolidated statement of comprehensive
income into an insurance service result, and insurance finance income and expense.
The Group disaggregates changes in the risk adjustment for non-financial risk between the
insurance services result (which represents the change related to non-financial risk), and
insurance finance income or expenses (which represents the effect of the time value of
money\u00a0and changes in the time value of money).
Income and expenses from reinsurance contracts held are presented separately from the
income and expenses on insurance contracts issued.
Insurance revenue and insurance service expenses exclude any non-distinct
investment\u00a0components.
Insurance revenue from insurance contracts issued
Insurance revenue from groups of insurance contracts issued is the amount of expected
premiums net of ceding commission payable. Expected premiums exclude any
investment\u00a0components.
Insurance revenue is recognised based on the passage of time over the coverage period.
The amount of insurance revenue recognised in the period reflects the provision of insurance
services and the corresponding consideration the Group expects to be entitled to in exchange
for those services.
Insurance service expenses from insurance contracts issued
Insurance service expenses are recognised as they are incurred, and comprise the
following\u00a0items:
\u2022 incurred claims, net of inwards reinstatement premiums, and net of the initial discount on
incurred claims;
\u2022 adjustments to the LIC (including the risk adjustment) that do not arise from the effects of the
time value of money, financial risk and changes therein;
\u2022 amortisation of insurance acquisition cash flows based on the passage of time over the
relevant coverage period;
\u2022 other directly attributable insurance service expenses, including an allocation of fixed and
variable overhead costs; and
\u2022 losses on onerous contracts and the reversal of such losses.
Expenses not meeting the above criteria are included within other operating expenses in the
consolidated statement of comprehensive income.
Allocation of reinsurance premium and amounts recoverable from reinsurers
The allocation of reinsurance premiums is the amount of expected reinsurance premium
payments net of commission income receivable for a group of reinsurance contracts held,
and\u00a0is recognised based on the passage of time over the relevant coverage period of the
reinsurance contract.
Amounts recoverable from reinsurers are recognised as they are incurred and include
reinsurance recovery cash flow assumptions that are consistent with underlying insurance
contracts issued, recognition of movements in onerous loss recovery components, and the
effect of any risk of non-performance by the issuer of the reinsurance contract.
Finance income or expenses from insurance contracts issued and reinsurance
contracts held
Insurance finance income or expenses comprise the change in the carrying amount of the
group of insurance contracts issued, or reinsurance contracts held, arising from the effect of
the time value of money, financial risk and changes therein. These include:
\u2022 the unwind of the initial discount (that is, the effective interest accreted on the LIC or AIC); and
\u2022 the effect of changes in interest rate assumptions.
The Group has elected to include insurance finance income and expenses within the
consolidated statement of comprehensive income and does not disaggregate these between
profit and loss and other comprehensive income.
Non-distinct investment components
The non-distinct investment component of an insurance contract is the amount that the Group
would be required to repay to a policyholder in all circumstances, regardless of whether an
insured event occurs. The receipt of this investment component and the subsequent repayment
do not relate to insurance services. Non-distinct investment components are therefore
excluded from insurance revenue and insurance service expenses, and are considered as a
settlement of an insurance contract liability.
Financial instruments
Financial assets
On initial recognition, a financial asset is classified as either measured at amortised cost,
FVTPL\u00a0or FVOCI. The classification is dependent on the Group's business model for managing
the financial asset, and the contractual terms of the cash flows.
Financial assets are classified as measured at amortised cost if they are held to collect
contractual cash flows, and where those cash flows represent solely payments of principal
and\u00a0interest.
Financial assets are classified as measured at FVOCI if they are held to both collect contractual
cash flows and sell, and where those cash flows represent solely payments of principal
and\u00a0interest.
All financial assets not classified as measured at amortised cost or FVOCI are classified as
measured at FVTPL. Financial assets in this FVTPL category are those that are managed in a
fair\u00a0value business model, or that have been designated as FVTPL by management upon
initial\u00a0recognition.
Financial assets are not reclassified subsequent to their initial recognition, unless the Group
changes its business model for managing those financial assets, in which case the affected
financial assets are reclassified on the first day of the first reporting period following the
change\u00a0in the business model.
Cash and cash equivalents
Cash and cash equivalents are carried in the consolidated statement of financial position at
amortised cost and include cash in hand, deposits held on call with banks, and other short-term
highly liquid investments with a maturity of three months or less at the date of purchase.
Carrying amounts approximate fair value due to the short-term nature and high liquidity of
the\u00a0instruments.
Interest income earned on cash and cash equivalents is recognised by applying the effective
interest rate method. The carrying value of accrued interest income approximates estimated fair
value due to its short-term nature and high liquidity.
Investments
Investments are recognised when the Group becomes a party to the contractual provisions of
the instrument. Regular-way purchases and sales of investments are recognised on the trade
date, being the date on which the Group commits to purchase or sell the asset.
At initial recognition, the Group measures financial assets held at FVTPL at their fair value on
acquisition. Transaction costs in respect of financial assets carried at FVTPL are expensed within
the consolidated statement of comprehensive income as they are incurred. Financial assets
held at FVTPL are subsequently measured at their fair value.
The Group's investment portfolio, comprising fixed maturity securities, private investment funds
and hedge funds, is managed in a fair value business model and is therefore mandatorily
classified as FVTPL.
The Group's investment portfolio includes quoted and unquoted investments. The fair values of the
investments are determined based on bid prices from recognised exchanges, broker-dealers,
recognised indices or pricing vendors. Unrealised gains or losses from changes in the fair value of
investments are presented in the consolidated statement of comprehensive income, within net
investment return. Interest income is recognised by applying the effective interest rate method and is
presented in the consolidated statement of comprehensive income within net investment return. The
carrying value of accrued interest receivable approximates fair value due to its short-term nature and
high liquidity.
Investments are derecognised when the Group has transferred substantially all of the risks and
rewards of ownership, or when the right to receive cash flows from the asset has expired, with
any realised gains or losses recognised in the consolidated statement of comprehensive income
within net investment return.
Derivatives
Derivatives are classified as financial assets or liabilities at FVTPL. They are initially recognised at
fair value on the date a contract is entered into, the trade date, and are subsequently carried at
fair value. Derivative instruments with a positive fair value are recorded as derivative financial
assets, and those with a negative fair value are recorded as derivative financial liabilities.
They derive their value from the underlying instrument and are subject to the same risks as that
underlying instrument, including liquidity risk, credit risk, and market risk. Estimated fair values are
based on exchange or broker-dealer quotations, where available, or discounted cash flow models,
which incorporate the pricing of the underlying instrument, yield curves and other factors. Changes
in the estimated fair value of derivative instruments are recognised in the consolidated statement of
comprehensive income within net investment return. The Group does not currently hold any
derivatives classified as hedging instruments. For discounted cash flow techniques, estimated future
cash flows are based on management\u2019s best estimates, and the discount rate used is an appropriate
market rate.
Derivative financial assets and liabilities are offset and the net amount is reported in the
consolidated statement of financial position only to the extent there is a legally enforceable
right of offset, and there is an intention to settle on a net basis, or to realise the assets and
liabilities simultaneously. Derivative financial assets and liabilities are derecognised when the
Group has transferred substantially all of the risks and rewards of ownership, or the liability is
discharged, cancelled or expired, with any realised gains or losses recognised in the
consolidated statement of comprehensive income within net investment return.
Other receivables
Other receivables includes trade receivables and contract assets. Trade receivables that do not
have a significant financing component are measured on initial recognition at their fair value,
which is typically their transaction price, and are subsequently measured at amortised cost
using the effective interest rate method, less an expected credit loss allowance where
applicable. The other receivables held by the Group are short term in nature.
Impairment
The Group applies the simplified approach to measuring ECL, which uses a lifetime ECL for all
receivables and contract assets (other than those recognised under IFRS 17). The lifetime ECL is
measured from the date of the initial recognition of trade receivables and contract assets.
The\u00a0Group calculates the lifetime ECL using three main components: a probability of default,
a\u00a0loss given default and the exposure at default (collectively the expected loss rates).
To measure the lifetime ECL, receivables and contract assets are grouped based on shared
credit risk characteristics. The expected loss rates are based on the payment profiles over the
three years prior to the period end and the corresponding credit losses experienced within this
three-year period. The historical loss rates are adjusted to reflect current and forward-looking
information based on macroeconomic factors affecting the ability to collect receivables.
Financial liabilities
Other payables
Other payables represent goods and services provided to the Group prior to the financial year
end which are unpaid. These amounts are unsecured and are usually paid within 30 to 60 days
of recognition. Other payables are recognised initially at their fair value and are subsequently
measured at amortised cost using the effective interest method. Other payables are
derecognised on the settlement date, which is typically the date on which the contractual
obligation to pay cash is extinguished.
Long-term debt
Long-term debt is recognised initially at fair value, net of transaction costs incurred.
Thereafter\u00a0it is measured at amortised cost using the effective interest method. Derecognition
occurs when the obligation has been extinguished. The difference between the carrying
amount that has been extinguished and the consideration paid is recognised within the
consolidated statement of comprehensive income. Liabilities related to long-term debt are
derecognised on the settlement date, which is typically the date on which the contractual
obligation to pay cash is extinguished.
Intangible assets
The Group's intangible assets comprise indefinite life intangible assets and internally generated
intangible assets.
The Group's indefinite life intangible assets comprise syndicate participation rights and
goodwill. The cost of syndicate participation rights and goodwill acquired in a business
combination is their fair value as at the date of acquisition. Additional syndicate participation
rights may be purchased from time to time and are recorded at the cost on the date of the
relevant syndicate capacity auction. As a result of their anticipated ability to continue to
generate cash flows for the Group on a long-term basis, goodwill and syndicate participation
rights are considered to have an indefinite useful life, and are not amortised. They are carried at
cost less any accumulated impairment losses. Intangible assets with an indefinite useful life are
tested annually for impairment at the CGU level by comparing the net present value of the
future cash flow stream of the CGU to the carrying value of the net assets of the CGU,
including\u00a0the related intangible assets. The useful life of an indefinite life intangible asset is
reviewed annually, to determine if the assessment that it has an indefinite life continues to
be\u00a0supportable.
Internally generated intangible assets represent directly attributable costs incurred in the
development phase of implementing cloud-based software to support the Group's target
operating model. An internally generated intangible asset is recognised if it can be
demonstrated that there is an intent, available resources, and technical feasibility to complete
the intangible asset so that it is available for use, and that it will generate probable future
economic benefits. The costs must be capable of being measured reliably. Such intangible
assets are carried at cost less any accumulated impairment losses. Intangible assets not yet
available for use are tested annually for impairment at the CGU level by comparing the net
present value of the future cash flow stream of the CGU to the carrying value of the net assets
of the CGU, including the related intangible assets.
Internally generated intangible assets available for use are considered to have a finite life.
Applying the cost model, intangible assets with finite lives are amortised over their estimated
useful economic life, and assessed for impairment whenever there are indicators of impairment.
The useful lives and amortisation period of the internally generated intangibles are estimated to
be between five to seven years, and will be amortised using the straight-line method with no
residual value. The amortisation, and where applicable any impairment, of these internally
generated intangibles is recognised within other operating expenses.
Other income
Other income is measured based on the consideration specified in a contract and excludes
amounts collected on behalf of third parties.
Nature of services
The table below details the type of services from which the Group derives its other income.
Services
Nature, timing of satisfaction of performance obligation, and significant payment terms
LCM underwriting fees
The Group recognises underwriting fees over the underwriting cycle
based on the underlying exposure of the covered contracts.
Underwriting fees are received on or before the collateral funding
date, which is prior to commencement of the underwriting cycle.
LCM profit commission
The Group recognises profit commission following the end of the
underwriting cycle based on the underlying performance of the
covered contracts and as collateral is released. Profit commissions
may only be received once the profit commission hurdle has
been\u00a0met.
LSL consortium
management fees
The Group recognises consortium fees over the risk period based on
the underlying exposure of the covered contracts. Consortium fees
are received quarterly.
LSL consortium
profit\u00a0commission
The Group recognises profit commission in line with the underlying
performance of covered contracts once the year of account closes,
which is also when the profit commissions are received.
LSL managing
agency\u00a0fees
The Group recognises managing agency fees in line with the
services\u00a0provided in respect of each underwriting year of account.
Managing agency fees are received quarterly.
LSL managing agency
profit commission
The Group recognises profit commission on open years of account
when measurement is highly probable. Profit commissions are
received once the underwriting year of account closes.
LSL coverholder
fee\u00a0income
The Group recognises coverholder fee income in line with services
provided. Coverholder fee income is received quarterly.
Property, plant and equipment
Property, plant and equipment is carried at historical cost, less accumulated depreciation,
and\u00a0any impairment in value. Depreciation is calculated to write off the cost over the estimated
useful economic life on a straight-line basis as follows:
IT equipment
33% per annum
Office furniture and equipment
20% to 33% per annum
Leasehold improvements
20% per annum
Indicators of impairment, together with the assets\u2019 residual values, useful lives, and depreciation
methods are reviewed, and adjusted if appropriate, at each reporting date.
An item of property, plant or equipment is derecognised on disposal, or when no future
economic benefits are expected to arise from the continued use of the asset.
Gains and losses on the disposal of property, plant and equipment are determined by
comparing proceeds with the carrying amount of the asset, and are included in the
consolidated statement of comprehensive income. Costs for repairs and maintenance are
charged to the statement of comprehensive income as incurred.
Leases
The Group assesses whether a contract is, or contains, a lease, at the inception of the contract.
A contract is, or contains, a lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration.
The lease liability is initially measured at the present value of the lease payments that are not
paid at the lease commencement date. Lease payments are discounted using the rate implicit in
the lease, if readily determinable, or otherwise at the Group\u2019s incremental borrowing rate.
Lease\u00a0payments included in the measurement of the lease liability comprise:
\u2022 fixed lease payments;
\u2022 variable lease payments that depend on an index or rate, initially measured using the index or
rate at the commencement date of the lease; or
\u2022 payments in respect of purchase options, lease termination options, or lease extension
options that the Group is reasonably certain to exercise.
The lease liability is subsequently measured by increasing the lease carrying amount to reflect
the interest on the lease liability using the effective interest rate method, and by reducing the
carrying amount to reflect the lease payments made.
The Group remeasures the lease liability and the related right-of-use asset whenever:
\u2022 the lease term changes as a result of the Group changing its assessment of whether it will
exercise a purchase, extension, or termination option, in which case the lease liability is
remeasured by discounting the revised lease payments using a revised discount rate;
\u2022 the lease payments change due to changes in an index or rate, or a change in expected
payment under a guaranteed residual value, in which case the lease liability is remeasured
by\u00a0discounting the revised lease payments using the initial discount rate; or
\u2022 a lease contract is modified and the lease modification is not accounted for as a separate
lease, in which case the lease liability is remeasured by discounting the revised lease
payments using a revised discount rate.
The right-of-use asset is initially measured at cost, which comprises the initial measurement
of\u00a0the corresponding lease liability adjusted for any lease payments made at, or before,
the\u00a0commencement date, plus any initial direct costs incurred, and an estimate of any costs
to\u00a0be incurred at expiration of the lease agreement.
Right-of-use assets are subsequently measured at cost less accumulated depreciation and any
impairment losses. Straight-line depreciation is calculated from the commencement date of the
lease to the earlier of the end date of the lease term, or the useful life of the underlying asset.
The Group applies IAS 36, Impairment of Assets, to determine whether a right-of-use asset is
impaired and recognises any identified impairment loss within the consolidated statement of
comprehensive income.
Employee benefits
Equity compensation plans
The Group currently operates an RSS under which nil-cost options have been granted. The fair
value of the equity instruments granted is estimated on the date of grant. The estimated fair
value is recognised as an expense pro-rata over the vesting period of the instrument, adjusted
for the impact of any non-market vesting conditions. No adjustment to vesting assumptions is
made in respect of market vesting conditions.
At each reporting date, the Group revises its estimate of the number of RSS nil-cost options that
are expected to become exercisable. It recognises the impact of the revision of original
estimates, if any, as an equity-based compensation expense in the consolidated statement of
comprehensive income over the remaining vesting period, and a corresponding adjustment is
made to other reserves within shareholders\u2019 equity.
Upon exercise, the differences between the expense charged to the consolidated statement of
comprehensive income and the actual cost to the Group, if any, are transferred to other
reserves within shareholders\u2019 equity.
Pensions
The Group operates a defined contribution plan. On payment of contributions to the plan there
is no further obligation for the Group. Contributions are recognised as employee benefits in the
consolidated statement of comprehensive income in the period when the employee's services
are rendered.
Tax
The tax charge or credit represents the sum of the tax currently payable and any deferred tax.
The tax payable is calculated based on taxable profit for the period using tax rates and tax laws
enacted, or substantively enacted, at the year-end reporting date, and any adjustments to tax
payable in respect of prior periods. Taxable profit for the period can differ from that reported in
the consolidated statement of comprehensive income due to non-taxable income, and certain
items which are not tax deductible, or which are deferred to subsequent periods.
Deferred tax is recognised on all temporary differences between the assets and liabilities in the
consolidated statement of financial position and their tax base, except when the deferred tax
liability arises from the initial recognition of goodwill. Deferred tax assets or liabilities are
accounted for using the balance sheet liability method. Deferred tax assets are recognised to
the extent that realising the related tax benefit through future taxable profits is probable,
and\u00a0are reassessed in each period for recognition.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset
current tax assets against current tax liabilities, and when the deferred income taxes relate to
the same fiscal authority.
At the date equity-based compensation awards are exercised, and where the current
estimated\u00a0fair value of an award exceeds the estimated fair value at the date they were granted,
corporation tax on this excess amount is recognised within equity. At the period end date,
equity-based compensation awards that have not been exercised, and for which the current
estimated fair value of an award exceeds the estimated fair value at the date they were granted,
have deferred tax on this excess amount recognised within shareholders' equity.
The Corporate Income Tax Amendment (No.\u202f2) Act 2025 and the Tax Credits Act 2025 was
effective in Bermuda from 11 December 2025 and is designed to incentivise and support an
enhanced on-island presence. Job-based and expense-based tax credits have been recognised
in total expenses for the year ending 31 December 2025 under the new legislation.
Own shares
Own shares include shares repurchased under share repurchase authorisations and held as
treasury shares, plus shares repurchased and held in trust, for the purposes of employee
equity-based compensation schemes. Own shares are deducted from shareholders\u2019 equity.
No\u00a0gain or loss is recognised on the purchase, sale, cancellation, or issue of own shares,
and\u00a0any consideration paid or received is recognised directly in shareholders' equity.
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Basis of preparation
The consolidated financial statements have been prepared in accordance with IFRS (as issued
by the International Accounting Standards Board), as adopted by the UK.
The Group transitioned to IFRS, as adopted by the UK within its consolidated financial
statements effective from 1 January 2025. This transition, from IFRS as adopted by the EU,
constitutes a change in accounting framework, however there has been no impact on
recognition, measurement or disclosure during the period of these financial statements
as\u00a0a\u00a0result of this change in accounting framework.
Going concern basis of accounting
The consolidated financial statements have been prepared on a going concern basis.
In\u00a0assessing the Group's going concern position as at 31 December 2025, the Directors
have\u00a0considered a number of factors. These include:
\u2022 the current balance sheet and liquidity position;
\u2022 the level and composition of the Group's capital and solvency ratios;
\u2022 the Group's ability to service its long-term debt financing arrangements;
\u2022 the current performance against the Group's strategic and financial business plan;
\u2022 the Group's dividend distribution policy; and
\u2022 the current market environment, including consideration of climate change.
In addition, the ORSA report is a key document informing the Group's going concern
assessment that is submitted to the Board.
The Group's financial forecasts reflect the outcomes that the Directors consider most likely,
based on the information available at the date of signing these consolidated financial
statements. To assess the Group's going concern, the financial stability of the Group was
modelled for a period of at least 12 months, and a number of sensitivity, stress, and scenario
tests were applied. This included a best estimate forecast, and incorporated different
magnitudes of reserve releases and attritional, large and catastrophe loss events, plus optimistic
and pessimistic investment return scenarios.
To further stress the financial stability of the Group, additional stress testing was performed.
This included modelling the breakeven capital requirements of our regulators and rating
agencies, the impact of potential management actions to reduce the Group's exposure to
climate change-related risks, and a combination of large losses and catastrophe losses, which
would result in a net loss for the Group, and finally a reverse stress test scenario designed to
render the business model unviable. The testing identified that even under the more severe but
plausible stress scenarios, the Group had more than adequate liquidity and solvency headroom.
Based on the going concern assessment performed, the Directors consider there to be no
material uncertainties that may cast significant doubt over the Group's ability to continue to
operate as a going concern. The Directors have formed a judgement that there is a reasonable
expectation that the Group\u00a0has adequate resources to continue in operational existence in the
foreseeable future, being a period of at least 12 months from the date of signing these
consolidated financial statements.
Currency and liquidity
All amounts presented, excluding share data, or where otherwise stated, are in millions of US
dollars ($m), with amounts rounded to the nearest $0.1 million where appropriate.
The\u00a0consolidated statement of financial position is presented in order of decreasing liquidity.
Use of judgements, estimates and assumptions
The preparation of the Group's consolidated financial statements requires management to
make judgements, estimates and assumptions that affect the application of the Group's
accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual
amounts may differ from these estimates.
Assumptions and estimates are based on information, knowledge and data available when the
consolidated financial statements are prepared. However, existing circumstances and
assumptions about future developments may change, or circumstances may arise that are
beyond the control of the Group. Such changes are reflected in the assumptions when they
occur, and are recognised prospectively. It is considered impracticable to determine the effect
that changes in these assumptions and estimates are expected to have on future periods.
Key assumptions concerning the future, and sources of estimation
uncertainty
The Group has considered both key assumptions concerning the future, and sources of
estimation uncertainty, that may be expected to have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities in a subsequent financial year.
Insurance contracts issued and reinsurance contracts held
The Group has determined that its most significant area of estimation uncertainty is in relation
to the measurement of insurance contracts issued and reinsurance contracts held. Changes in
assumptions may materially change the FCF that make up these balances. The FCF are the
current estimates of the future cash flows within the contract boundary of a group of insurance
or reinsurance contracts that we expect to collect premiums from, and pay out for claims,
benefits and expenses, adjusted to reflect the timing and uncertainty of those amounts.
Changes in the following key assumptions may change the FCF materially:
\u2022 assumptions about the amount and timing of future cash flows;
\u2022 assumptions about claims development;
\u2022 assumptions about discount rates, including any illiquidity premiums; and
\u2022 assumptions about the risk adjustment for non-financial risk.
The estimation of the FCF is a complex actuarial process which incorporates a significant
amount of judgement, in particular, in relation to the estimation of the LIC and AIC. Delays in
reporting losses to the Group, together with unforeseen loss development, increase uncertainty
over the accuracy of loss reserves. A significant portion of the Group's business is in classes with
high attachment points of coverage, and therefore a low frequency but high severity of claims.
This adds further complexity to the reserving process due to the limited volume of industry data
available from which to reliably predict ultimate losses following a loss event. Volatility for the
majority of losses is limited on a net basis by the reinsurance protection purchased by the
Group.
Information about these key assumptions and estimates are included in our risk disclosures and
in note 13.
Management judgements, other than those involving estimations
Lancashire is an insurance group whose primary focus is on underwriting and proactively
balancing risk and return throughout the underwriting and claims cycles. In doing so, the Group
focuses on ensuring premium revenue and investment return exceeds the cost of claims,
outwards reinsurance and operating expenses. The main areas in which judgement is applied
are therefore the measurement and recognition of insurance contracts and financial assets.
Simplified premium allocation measurement model
Management applies judgement to determine if the Group is eligible to apply the simplified PAA
measurement model under IFRS 17.
The Group considers that it is eligible to apply the PAA measurement model to its portfolios and
groups of insurance contracts on the basis that the measurement of the LRC is not reasonably
expected to differ materially from that calculated under the GMM. The Group applies the PAA to
simplify the measurement of all its insurance contracts issued and reinsurance contracts held.
In the years prior to IFRS 17 adoption, and in the initial year of adoption, this assessment was
made through detailed quantitative modelling of all portfolios and groups of insurance
contracts. Given consistency in the Group\u2019s business mix, together with relatively stable
economic factors, the PAA eligibility assessment has been undertaken through a combination of
qualitative and quantitative analysis for the year ended 31 December 2025. This testing
confirmed that the PAA measurement model remained appropriate.
Level of aggregation
Judgement is required to determine the level of aggregation under IFRS 17. Insurance contracts
issued that are subject to similar risks and that are managed together, are classified into a
portfolio of insurance contracts.
The following considerations have been given most weight in the definition of similar risks:
\u2022 risk aggregations used for other business purposes such as reserving;
\u2022 segmentations used for underwriting; and
\u2022 perils covered and incidence of risk over time.
Each portfolio of insurance contracts is then further disaggregated into annual cohorts, and
each annual cohort is classified into a maximum of three groups of contracts for recognition
and measurement purposes based on their expected profitability. See accounting policies and
note 13.
Onerous contract assessment
Management applies judgement to assess whether facts and circumstances indicate that a
group of insurance contracts is onerous at initial recognition, and subsequently assesses
whether facts and circumstances indicate any changes in the onerous group's profitability, and
whether any loss component remeasurement is required. See accounting policies and note 13.
Classification of investment portfolio
The classification of the Group's investment portfolio requires judgement in assessing the
business model within which assets are held. The Group has established that all investment
classes are managed, and their performance evaluated, on a fair value basis, and they are
therefore classified at FVTPL. See risk disclosures and note 11.
Level (iii) investments
The Group holds a relatively straightforward investment portfolio consisting mainly of standard
fixed maturity products. Level (iii) investments are securities for which valuation techniques are
not based on observable market data, and therefore require management judgement to
determine an appropriate fair value. The Group determines securities classified as Level (iii) to
include private investment funds and hedge funds. The estimation of fair value, specifically for
Level (iii) investments, is discussed within the risk disclosures and note 11.
Annual impairment assessments
The syndicate participation rights and goodwill are intangible assets with an indefinite life and
subject to an annual impairment assessment. The Group applies judgement when determining
the input assumptions for the value in use calculation. The input assumptions and their
sensitivity are disclosed in note 17.
For the Group's internally generated intangible assets, an impairment review is performed when
it is concluded there are sufficient indicators of impairment as disclosed within note 17 .
Current and deferred tax
The Group is exposed to changes in tax legislation which are complex to interpret and evolve
over time. The Group applies management expertise and judgement to interpret and assess the
impact of these changes in tax legislation. Third-party specialists provide tax guidance and tax
opinions at the request of management where considered appropriate. Recent changes in tax
legislation are disclosed in note 14.
Changes in accounting policies
IFRS 18, Presentation and Disclosure in Financial Statements
On 9 April 2024, the IASB published IFRS 18, Presentation and Disclosure in Financial
Statements. The standard will be effective from 1 January 2027, replacing IAS 1, Presentation of
Financial Statements. The Group has been monitoring the UK endorsement process, which
formally adopted IFRS 18 in December 2025, and is also undertaking an assessment into the
impact of implementing IFRS 18.
The key changes to the Group's financial statements are expected to include:
\u2022 the classification of the consolidated statement of comprehensive income into IFRS 18
operating, investing, financing and income tax categories alongside the inclusion of
mandatory sub-totals to aid comparability;
\u2022 disclosure of management-defined performance measures; and
\u2022 enhanced disclosures relating to the aggregation and disaggregation of financial information.
IFRS 18 will be adopted on a fully retrospective basis. The focus of IFRS 18 is on presentation
and disclosure. The Group does not anticipate any valuation adjustments to arise on adoption
of IFRS 18.
There are also amendments to other existing standards and interpretations that are mandatory
for the first time for financial periods beginning 1 January 2025, specifically Amendments to IAS
21, Lack of Exchangeability. These are not currently relevant for the Group and do not impact
the consolidated financial statements of the Group.
Amendments to IFRS 9 and IFRS 7, Amendments to the Classification and Measurement of
Financial Instruments, which is effective from 1 January 2026, is not expected to impact the
Group.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-235": { "value": "
Going concern basis of accounting
The consolidated financial statements have been prepared on a going concern basis.
In\u00a0assessing the Group's going concern position as at 31 December 2025, the Directors
have\u00a0considered a number of factors. These include:
\u2022 the current balance sheet and liquidity position;
\u2022 the level and composition of the Group's capital and solvency ratios;
\u2022 the Group's ability to service its long-term debt financing arrangements;
\u2022 the current performance against the Group's strategic and financial business plan;
\u2022 the Group's dividend distribution policy; and
\u2022 the current market environment, including consideration of climate change.
In addition, the ORSA report is a key document informing the Group's going concern
assessment that is submitted to the Board.
The Group's financial forecasts reflect the outcomes that the Directors consider most likely,
based on the information available at the date of signing these consolidated financial
statements. To assess the Group's going concern, the financial stability of the Group was
modelled for a period of at least 12 months, and a number of sensitivity, stress, and scenario
tests were applied. This included a best estimate forecast, and incorporated different
magnitudes of reserve releases and attritional, large and catastrophe loss events, plus optimistic
and pessimistic investment return scenarios.
To further stress the financial stability of the Group, additional stress testing was performed.
This included modelling the breakeven capital requirements of our regulators and rating
agencies, the impact of potential management actions to reduce the Group's exposure to
climate change-related risks, and a combination of large losses and catastrophe losses, which
would result in a net loss for the Group, and finally a reverse stress test scenario designed to
render the business model unviable. The testing identified that even under the more severe but
plausible stress scenarios, the Group had more than adequate liquidity and solvency headroom.
Based on the going concern assessment performed, the Directors consider there to be no
material uncertainties that may cast significant doubt over the Group's ability to continue to
operate as a going concern. The Directors have formed a judgement that there is a reasonable
expectation that the Group\u00a0has adequate resources to continue in operational existence in the
foreseeable future, being a period of at least 12 months from the date of signing these
consolidated financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGoingConcernExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-236": { "value": "
Use of judgements, estimates and assumptions
The preparation of the Group's consolidated financial statements requires management to
make judgements, estimates and assumptions that affect the application of the Group's
accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual
amounts may differ from these estimates.
Assumptions and estimates are based on information, knowledge and data available when the
consolidated financial statements are prepared. However, existing circumstances and
assumptions about future developments may change, or circumstances may arise that are
beyond the control of the Group. Such changes are reflected in the assumptions when they
occur, and are recognised prospectively. It is considered impracticable to determine the effect
that changes in these assumptions and estimates are expected to have on future periods.
Key assumptions concerning the future, and sources of estimation
uncertainty
The Group has considered both key assumptions concerning the future, and sources of
estimation uncertainty, that may be expected to have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities in a subsequent financial year.
Insurance contracts issued and reinsurance contracts held
The Group has determined that its most significant area of estimation uncertainty is in relation
to the measurement of insurance contracts issued and reinsurance contracts held. Changes in
assumptions may materially change the FCF that make up these balances. The FCF are the
current estimates of the future cash flows within the contract boundary of a group of insurance
or reinsurance contracts that we expect to collect premiums from, and pay out for claims,
benefits and expenses, adjusted to reflect the timing and uncertainty of those amounts.
Changes in the following key assumptions may change the FCF materially:
\u2022 assumptions about the amount and timing of future cash flows;
\u2022 assumptions about claims development;
\u2022 assumptions about discount rates, including any illiquidity premiums; and
\u2022 assumptions about the risk adjustment for non-financial risk.
The estimation of the FCF is a complex actuarial process which incorporates a significant
amount of judgement, in particular, in relation to the estimation of the LIC and AIC. Delays in
reporting losses to the Group, together with unforeseen loss development, increase uncertainty
over the accuracy of loss reserves. A significant portion of the Group's business is in classes with
high attachment points of coverage, and therefore a low frequency but high severity of claims.
This adds further complexity to the reserving process due to the limited volume of industry data
available from which to reliably predict ultimate losses following a loss event. Volatility for the
majority of losses is limited on a net basis by the reinsurance protection purchased by the
Group.
Information about these key assumptions and estimates are included in our risk disclosures and
in note 13.
Management judgements, other than those involving estimations
Lancashire is an insurance group whose primary focus is on underwriting and proactively
balancing risk and return throughout the underwriting and claims cycles. In doing so, the Group
focuses on ensuring premium revenue and investment return exceeds the cost of claims,
outwards reinsurance and operating expenses. The main areas in which judgement is applied
are therefore the measurement and recognition of insurance contracts and financial assets.
Simplified premium allocation measurement model
Management applies judgement to determine if the Group is eligible to apply the simplified PAA
measurement model under IFRS 17.
The Group considers that it is eligible to apply the PAA measurement model to its portfolios and
groups of insurance contracts on the basis that the measurement of the LRC is not reasonably
expected to differ materially from that calculated under the GMM. The Group applies the PAA to
simplify the measurement of all its insurance contracts issued and reinsurance contracts held.
In the years prior to IFRS 17 adoption, and in the initial year of adoption, this assessment was
made through detailed quantitative modelling of all portfolios and groups of insurance
contracts. Given consistency in the Group\u2019s business mix, together with relatively stable
economic factors, the PAA eligibility assessment has been undertaken through a combination of
qualitative and quantitative analysis for the year ended 31 December 2025. This testing
confirmed that the PAA measurement model remained appropriate.
Level of aggregation
Judgement is required to determine the level of aggregation under IFRS 17. Insurance contracts
issued that are subject to similar risks and that are managed together, are classified into a
portfolio of insurance contracts.
The following considerations have been given most weight in the definition of similar risks:
\u2022 risk aggregations used for other business purposes such as reserving;
\u2022 segmentations used for underwriting; and
\u2022 perils covered and incidence of risk over time.
Each portfolio of insurance contracts is then further disaggregated into annual cohorts, and
each annual cohort is classified into a maximum of three groups of contracts for recognition
and measurement purposes based on their expected profitability. See accounting policies and
note 13.
Onerous contract assessment
Management applies judgement to assess whether facts and circumstances indicate that a
group of insurance contracts is onerous at initial recognition, and subsequently assesses
whether facts and circumstances indicate any changes in the onerous group's profitability, and
whether any loss component remeasurement is required. See accounting policies and note 13.
Classification of investment portfolio
The classification of the Group's investment portfolio requires judgement in assessing the
business model within which assets are held. The Group has established that all investment
classes are managed, and their performance evaluated, on a fair value basis, and they are
therefore classified at FVTPL. See risk disclosures and note 11.
Level (iii) investments
The Group holds a relatively straightforward investment portfolio consisting mainly of standard
fixed maturity products. Level (iii) investments are securities for which valuation techniques are
not based on observable market data, and therefore require management judgement to
determine an appropriate fair value. The Group determines securities classified as Level (iii) to
include private investment funds and hedge funds. The estimation of fair value, specifically for
Level (iii) investments, is discussed within the risk disclosures and note 11.
Annual impairment assessments
The syndicate participation rights and goodwill are intangible assets with an indefinite life and
subject to an annual impairment assessment. The Group applies judgement when determining
the input assumptions for the value in use calculation. The input assumptions and their
sensitivity are disclosed in note 17.
For the Group's internally generated intangible assets, an impairment review is performed when
it is concluded there are sufficient indicators of impairment as disclosed within note 17 .
Current and deferred tax
The Group is exposed to changes in tax legislation which are complex to interpret and evolve
over time. The Group applies management expertise and judgement to interpret and assess the
impact of these changes in tax legislation. Third-party specialists provide tax guidance and tax
opinions at the request of management where considered appropriate. Recent changes in tax
legislation are disclosed in note 14.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-237": { "value": "Use of judgements, estimates and assumptionsThe preparation of the Group's consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of the Group's accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual amounts may differ from these estimates.Assumptions and estimates are based on information, knowledge and data available when the consolidated financial statements are prepared. However, existing circumstances and assumptions about future developments may change, or circumstances may arise that are beyond the control of the Group. Such changes are reflected in the assumptions when they occur, and are recognised prospectively. It is considered impracticable to determine the effect that changes in these assumptions and estimates are expected to have on future periods. Key assumptions concerning the future, and sources of estimation uncertainty The Group has considered both key assumptions concerning the future, and sources of estimation uncertainty, that may be expected to have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities in a subsequent financial year.Insurance contracts issued and reinsurance contracts heldThe Group has determined that its most significant area of estimation uncertainty is in relation to the measurement of insurance contracts issued and reinsurance contracts held. Changes in assumptions may materially change the FCF that make up these balances. The FCF are the current estimates of the future cash flows within the contract boundary of a group of insurance or reinsurance contracts that we expect to collect premiums from, and pay out for claims, benefits and expenses, adjusted to reflect the timing and uncertainty of those amounts. Changes in the following key assumptions may change the FCF materially:\u2022 assumptions about the amount and timing of future cash flows;\u2022 assumptions about claims development;\u2022 assumptions about discount rates, including any illiquidity premiums; and\u2022 assumptions about the risk adjustment for non-financial risk.The estimation of the FCF is a complex actuarial process which incorporates a significant amount of judgement, in particular, in relation to the estimation of the LIC and AIC. Delays in reporting losses to the Group, together with unforeseen loss development, increase uncertainty over the accuracy of loss reserves. A significant portion of the Group's business is in classes with high attachment points of coverage, and therefore a low frequency but high severity of claims. This adds further complexity to the reserving process due to the limited volume of industry data available from which to reliably predict ultimate losses following a loss event. Volatility for the majority of losses is limited on a net basis by the reinsurance protection purchased by the Group.Information about these key assumptions and estimates are included in our risk disclosures and in note 13.Management judgements, other than those involving estimations Lancashire is an insurance group whose primary focus is on underwriting and proactively balancing risk and return throughout the underwriting and claims cycles. In doing so, the Group focuses on ensuring premium revenue and investment return exceeds the cost of claims, outwards reinsurance and operating expenses. The main areas in which judgement is applied are therefore the measurement and recognition of insurance contracts and financial assets.Simplified premium allocation measurement modelManagement applies judgement to determine if the Group is eligible to apply the simplified PAA measurement model under IFRS 17. The Group considers that it is eligible to apply the PAA measurement model to its portfolios and groups of insurance contracts on the basis that the measurement of the LRC is not reasonably expected to differ materially from that calculated under the GMM. The Group applies the PAA to simplify the measurement of all its insurance contracts issued and reinsurance contracts held.In the years prior to IFRS 17 adoption, and in the initial year of adoption, this assessment was made through detailed quantitative modelling of all portfolios and groups of insurance contracts. Given consistency in the Group\u2019s business mix, together with relatively stable economic factors, the PAA eligibility assessment has been undertaken through a combination of qualitative and quantitative analysis for the year ended 31 December 2025. This testing confirmed that the PAA measurement model remained appropriate. Level of aggregationJudgement is required to determine the level of aggregation under IFRS 17. Insurance contracts issued that are subject to similar risks and that are managed together, are classified into a portfolio of insurance contracts. The following considerations have been given most weight in the definition of similar risks:\u2022 risk aggregations used for other business purposes such as reserving;\u2022 segmentations used for underwriting; and\u2022 perils covered and incidence of risk over time.Each portfolio of insurance contracts is then further disaggregated into annual cohorts, and each annual cohort is classified into a maximum of three groups of contracts for recognition and measurement purposes based on their expected profitability. See accounting policies and note 13.Onerous contract assessmentManagement applies judgement to assess whether facts and circumstances indicate that a group of insurance contracts is onerous at initial recognition, and subsequently assesses whether facts and circumstances indicate any changes in the onerous group's profitability, and whether any loss component remeasurement is required. See accounting policies and note 13.Classification of investment portfolioThe classification of the Group's investment portfolio requires judgement in assessing the business model within which assets are held. The Group has established that all investment classes are managed, and their performance evaluated, on a fair value basis, and they are therefore classified at FVTPL. See risk disclosures and note 11.Level (iii) investmentsThe Group holds a relatively straightforward investment portfolio consisting mainly of standard fixed maturity products. Level (iii) investments are securities for which valuation techniques are not based on observable market data, and therefore require management judgement to determine an appropriate fair value. The Group determines securities classified as Level (iii) to include private investment funds and hedge funds. The estimation of fair value, specifically for Level (iii) investments, is discussed within the risk disclosures and note 11.Annual impairment assessmentsThe syndicate participation rights and goodwill are intangible assets with an indefinite life and subject to an annual impairment assessment. The Group applies judgement when determining the input assumptions for the value in use calculation. The input assumptions and their sensitivity are disclosed in note 17. For the Group's internally generated intangible assets, an impairment review is performed when it is concluded there are sufficient indicators of impairment as disclosed within note 17 .Current and deferred taxThe Group is exposed to changes in tax legislation which are complex to interpret and evolve over time. The Group applies management expertise and judgement to interpret and assess the impact of these changes in tax legislation. Third-party specialists provide tax guidance and tax opinions at the request of management where considered appropriate. Recent changes in tax legislation are disclosed in note 14.", "dimensions": { "concept": "ifrs-full:ExplanationOfAssumptionAboutFutureWithSignificantRiskOfResultingInMaterialAdjustments", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-238": { "value": "
Changes in accounting policies
IFRS 18, Presentation and Disclosure in Financial Statements
On 9 April 2024, the IASB published IFRS 18, Presentation and Disclosure in Financial
Statements. The standard will be effective from 1 January 2027, replacing IAS 1, Presentation of
Financial Statements. The Group has been monitoring the UK endorsement process, which
formally adopted IFRS 18 in December 2025, and is also undertaking an assessment into the
impact of implementing IFRS 18.
The key changes to the Group's financial statements are expected to include:
\u2022 the classification of the consolidated statement of comprehensive income into IFRS 18
operating, investing, financing and income tax categories alongside the inclusion of
mandatory sub-totals to aid comparability;
\u2022 disclosure of management-defined performance measures; and
\u2022 enhanced disclosures relating to the aggregation and disaggregation of financial information.
IFRS 18 will be adopted on a fully retrospective basis. The focus of IFRS 18 is on presentation
and disclosure. The Group does not anticipate any valuation adjustments to arise on adoption
of IFRS 18.
There are also amendments to other existing standards and interpretations that are mandatory
for the first time for financial periods beginning 1 January 2025, specifically Amendments to IAS
21, Lack of Exchangeability. These are not currently relevant for the Group and do not impact
the consolidated financial statements of the Group.
Amendments to IFRS 9 and IFRS 7, Amendments to the Classification and Measurement of
Financial Instruments, which is effective from 1 January 2026, is not expected to impact the
Group.
", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-239": { "value": "
Consolidation principles
The Group's consolidated financial statements comprise the financial statements of the
Company and its subsidiaries as at, and for the year ended, 31 December 2025. Subsidiaries
are\u00a0fully consolidated from the date of acquisition or incorporation, being the date on which
the Group obtains control, and continue to be consolidated until the date when such control
ceases. Intercompany balances, profits and transactions are eliminated. Control is achieved
when the Group is exposed, or has rights, to variable returns from its involvement with the
subsidiary, and has the ability to affect those returns through its power over the subsidiary.
The Group participates in two syndicates at Lloyd's, which are managed by the Group's Lloyd's
managing agent subsidiary. In view of the several liability of underwriting members at Lloyd's,
the Group recognises its proportion of all the transactions undertaken by the syndicates in
which it participates within its consolidated statement of comprehensive income. Similarly,
the\u00a0Group's proportion of the syndicates' assets and liabilities has been reflected in its
consolidated statement of financial position. This proportion is calculated by reference to the
Group\u2019s participation as a percentage of each syndicate's total capacity for each underwriting
year of account.
Subsidiaries' accounting policies are generally consistent with the Group's accounting policies.
Where they differ, adjustments are made on consolidation to bring the subsidiaries' accounting
policies in line with that of the Group.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-240": { "value": "
Associates
Investments in which the Group has significant influence over the operational and financial
policies of the investee, are recognised at cost and thereafter accounted for using the equity
method. Under this method, the Group records its proportionate share of income or loss from
such investments in its consolidated statement of comprehensive income for the period.
Adjustments are made to the associate's accounting policies, where necessary, so there is
consistency with the Group\u2019s accounting policies.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociates", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-241": { "value": "
Foreign currency
Functional currency
Items included in the financial statements of each of the Group's entities are measured using
the currency of the primary economic environment in which the entities' operations are
conducted (the 'functional currency'). The functional currency is US dollars for all of the
Group's\u00a0entities, other than the Group's Australian entities, which have a functional currency of
Australian dollars. The Group's consolidated financial statements are presented in US dollars
(the 'presentation currency').
Transactions and balances
Foreign currency transactions are recorded in the functional currency for each entity using the
exchange rates prevailing at the dates of the transactions, or at the average rate for the period
when this is a reasonable approximation. Monetary assets and liabilities denominated in foreign
currencies are revalued at period end exchange rates. The resulting exchange differences on
revaluation are recorded in profit or loss within net foreign exchange gains (losses) in the
consolidated statement of comprehensive income. Non-monetary assets and liabilities
denominated in a foreign currency are carried at historic rates. Non-monetary assets and
liabilities carried at estimated fair value and denominated in a foreign currency are translated
at\u00a0the exchange rate on the date that the estimated fair value was determined.
Foreign operations
The results and financial position of the Group's entities that have a functional currency different
from the presentation currency are translated into the presentation currency as follows:
\u2022 assets and liabilities are translated at the closing rate on the period end date;
\u2022 income and expenses are translated at the average exchange rates for the period; and
\u2022 all resulting foreign exchange differences are recognised in other comprehensive income,
and as a separate component of shareholders\u2019 equity.
On disposal of foreign operations, cumulative exchange differences previously recognised in
other comprehensive income are recognised in the consolidated statement of comprehensive
income as part of the gain or loss on disposal.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-242": { "value": "
Functional currency
Items included in the financial statements of each of the Group's entities are measured using
the currency of the primary economic environment in which the entities' operations are
conducted (the 'functional currency'). The functional currency is US dollars for all of the
Group's\u00a0entities, other than the Group's Australian entities, which have a functional currency of
Australian dollars. The Group's consolidated financial statements are presented in US dollars
(the 'presentation currency').
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-244": { "value": "
Insurance contracts issued and reinsurance contracts held
Classification
Insurance contracts issued under IFRS 17 are those contracts that transfer significant insurance
risk at the inception of the contract. Insurance risk is transferred when an insurer agrees to
compensate a policyholder if a specified uncertain future event adversely affects the
policyholder. Contracts that have a legal form of insurance risk but do not transfer significant
insurance risk are classified as investment contracts and follow financial instrument accounting
under IFRS 9. The Group does not issue any contracts with direct participation features.
In the normal course of business, the Group uses reinsurance to mitigate its risk exposures.
A\u00a0reinsurance contract held transfers significant insurance risk if it transfers substantially all
the\u00a0insurance risk resulting from the insured or reinsured portion of the underlying insurance
contracts, even if it does not expose the reinsurer to the possibility of a significant loss.
All references to insurance contracts in these consolidated financial statements apply to
insurance contracts issued and reinsurance contracts held, unless specifically stated otherwise.
Level of aggregation of insurance contracts issued and reinsurance contracts held
Insurance contracts issued and reinsurance contracts held that are subject to similar risks and
managed together are classified into portfolios of contracts. These are disaggregated into
annual cohorts and then further classified into three groups based on their expected
profitability. The groups are:
\u2022 insurance contracts issued that are onerous at initial recognition, or reinsurance contracts
held for which there is a net gain at initial recognition;
\u2022 insurance contracts issued that at initial recognition have no significant possibility of
becoming onerous, or reinsurance contracts held where there is no significant possibility of a
net gain arising subsequently; or
\u2022 a group of the remaining insurance contracts issued, or reinsurance contracts held.
These groups represent the level of aggregation at which insurance contracts issued are initially
recognised and measured, and they are not subsequently reconsidered.
Initial recognition of insurance contracts issued and reinsurance contracts held
An insurance contract issued by the Group is recognised at the earliest of:
\u2022 the beginning of the coverage period;
\u2022 when the first payment from the policyholder is due, or actually received if there is no
due\u00a0date; or
\u2022 the date when facts and circumstances indicate that the group of contracts is onerous.
Groups of reinsurance contracts held are initially recognised at the beginning of the coverage
period. In the case of proportional reinsurance contracts held, this may be delayed until the
initial recognition date of any underlying insurance contract. Reinsurance contracts held which
cover an underlying onerous group of insurance contracts issued, are recognised on the same
date as the related onerous group of contracts.
Insurance contracts issued are initially added to the relevant groups of insurance contracts in
the reporting period in which they meet the recognition criteria, subject to the annual cohorts'
restriction. Composition of the groups is not reassessed in subsequent periods.
Measurement applying the PAA measurement model - PAA eligibility
The Group considers that it is eligible to apply the PAA to simplify the measurement of groups
of insurance contracts issued and reinsurance contracts held, as the measurement of the LRC
and ARC is not reasonably expected to differ materially from that calculated under the GMM.
The PAA has been applied to all groups of contracts.
Contract boundary
The measurement of a group of insurance contracts issued or reinsurance contracts held
includes all of the cash flows within the boundary of each contract in the group.
Cash flows are within the boundary of each contract if they arise from substantive rights and
obligations that exist during the period. In the case of insurance contracts issued, this is
where\u00a0the Group can compel the policyholder to pay premiums, or the Group has substantive
obligations to provide the policyholder with insurance coverage or other services. In the case
of\u00a0reinsurance contracts held, this is where the Group is compelled to pay amounts to the
reinsurer, or has a substantive right to receive insurance coverage, or other services, from
the\u00a0reinsurer.
A substantive obligation to provide services ends when:
\u2022 the Group has the practical ability to reassess the risks of the particular policyholder, and as
a\u00a0result can set a price or level of benefits that fully reflects those risks; or
\u2022 the Group has the practical ability to reassess the risks of the portfolio of insurance contracts
that contains the contract, and as a result can set a price or level of benefits that fully reflects
the risks of the portfolio; and
\u2022 the pricing of premiums up to the date when risks are reassessed does not reflect the risks
related to periods beyond the reassessment date.
A substantive right to receive services from the reinsurer ceases when the reinsurer:
\u2022 has the practical ability to reassess the risks transferred to it, and as a result can set a price or
level of benefits that fully reflects those reassessed risks; or
\u2022 has a substantive right to terminate the coverage.
The contract boundary is reassessed at each reporting period to include the effect of change in
circumstances on the Group's rights and obligations, and may change over time.
Cash flows not directly attributable to a portfolio of insurance contracts are recognised in other
operating expenses as incurred.
Fulfilment cash flows within the contract boundary
The FCF are the current estimates of the future cash flows within the contract boundary of a
group of insurance contracts. These include premiums, claims, acquisition costs and
administrative expenses, adjusted to reflect the timing and the uncertainty of those amounts.
The estimates of future cash flows are based on an unbiased probability weighted mean of
the\u00a0full range of possible outcomes. They reflect current estimates, factoring in expected
credit\u00a0losses or non-performance risk of reinsurers, and are determined from the perspective
of\u00a0the Group.
The Group uses assumptions to measure the estimates of the future cash flows for a group of
reinsurance contracts held that are consistent with the underlying group of insurance contracts
issued. Reinsurance cash flows that are contingent on claims incurred by the underlying
insurance contracts issued are therefore included as part of the cash flows that are expected
to\u00a0be reimbursed under the relevant reinsurance contracts held.
Discounting
The FCF within the LIC and the AIC are discounted using current discount rates to reflect the
time value of money and the financial risks related to those cash flows. The discount rates
reflect the characteristics of the cash flows arising from each group of insurance contracts,
including the timing, currency, and liquidity of the cash flows. The Group does not discount
the\u00a0LRC or the ARC. This would be required if the LRC or the ARC included a significant
financing component.
Risk adjustment for non-financial risk
The measurement of the LIC and the AIC includes an explicit risk adjustment for non-financial
risk. This is estimated separately from the discounted FCF and is applied to the present value of
the estimated future cash flows. It reflects the compensation the Group requires, or transfers to
a reinsurer, for bearing uncertainty in respect of the amount and timing of the cash flows from
non-financial risk as the Group fulfils its insurance contracts issued.
Insurance acquisition cash flows
Insurance acquisition cash flows arise from the cost of selling, underwriting, and initiating a
group of insurance contracts that are directly attributable to the portfolio of insurance contracts
to which the group belongs. These include:
\u2022 contract specific costs, such as brokerage; and
\u2022 a systematic and rational allocation of fixed and variable overheads to groups of contracts
based on insurance revenue.
Initial measurement of insurance contracts issued applying the PAA
The carrying amount of the LRC is measured with reference to the premiums received on initial
recognition from either policyholders or intermediaries, minus any insurance acquisition cash
flows allocated to the relevant group at that date, less the derecognition of any assets or
liabilities previously recognised for cash flows related to the group.
The Group assumes that no contracts are onerous at initial recognition, unless facts and
circumstances indicate otherwise. If such evidence exists, the Group determines if the contract
will result in a net cash outflow. The Group recognises an insurance service expense for the net
cash outflow, and an onerous loss component is added to the LRC.
Subsequent measurement of insurance contracts issued applying the PAA
The carrying amount of a group of insurance contracts issued is the sum of the LRC and the LIC,
and is measured at the end of each reporting period. The measurement of the LRC includes:
\u2022 any premiums received, less amounts recognised as insurance revenue;
\u2022 less insurance acquisition cash flows paid, plus amortisation of any insurance acquisition cash
flows recognised as insurance service expense in the period; and
\u2022 less any non-distinct investment components either paid, or transferred to the LIC.
Groups of insurance contracts that were not onerous at initial recognition can subsequently
become onerous if facts and circumstances change during the coverage period. Onerous
groups of contracts are assessed at the end of each reporting period with changes in the
expected net cash outflow recognised in the carrying amount of the LRC and insurance service
expenses. The Group amortises the onerous loss component within the LRC based on the
passage of time over the remaining coverage period within insurance service expenses. The
equivalent basis is also applied to any relevant reinsurance recovery component.
The Group recognises the LIC for a group of insurance contracts as the amount of FCF relating
to the incurred claims that have not yet been paid, including claims that have been incurred but
not yet reported, together with the associated expenses, including all claims handling expenses
that relate to incurred claims which have not yet been paid. The FCF are measured at the
reporting date using current estimates of future cash flows, current discount rates, and current
estimates of the risk adjustment for non-financial risk.
Initial and subsequent measurement of reinsurance contracts held applying the PAA
The carrying amount of a group of reinsurance contracts held is the sum of the ARC and the
AIC, and is measured at the end of each reporting period. The Group measures a group of
reinsurance contracts held on the same basis as a group of insurance contracts issued, with
adaptations to reflect the features of reinsurance contracts held that differ from the insurance
contracts issued.
Derecognition and modification under the PAA
The Group derecognises an insurance contract issued, or a reinsurance contract held, when it is
extinguished (that is, when the specified obligations in the contract expire, are discharged, or
cancelled), or the contract is modified.
Modifications to a contract are accounted for as a change in the estimate of the FCF. A contract
is derecognised and treated as a new contract if the modification to the contract either:
\u2022 changes the measurement model;
\u2022 brings the contract, or separable component parts of the contract, outside the scope of
IFRS\u00a017;
\u2022 substantially changes the contract boundary; or
\u2022 results in the contract being allocated to a different group.
When an insurance contract is extinguished, transferred to a third-party, or modified in such a
way that results in derecognition, any adjustments made to the FCF are recorded within the
consolidated statement of comprehensive income.
Presentation within the financial statements
Portfolios of insurance contracts issued, and portfolios of reinsurance contracts held, that are
assets, and those that are liabilities, are presented separately in the consolidated statement of
financial position.
The Group disaggregates amounts recognised in the consolidated statement of comprehensive
income into an insurance service result, and insurance finance income and expense.
The Group disaggregates changes in the risk adjustment for non-financial risk between the
insurance services result (which represents the change related to non-financial risk), and
insurance finance income or expenses (which represents the effect of the time value of
money\u00a0and changes in the time value of money).
Income and expenses from reinsurance contracts held are presented separately from the
income and expenses on insurance contracts issued.
Insurance revenue and insurance service expenses exclude any non-distinct
investment\u00a0components.
Insurance revenue from insurance contracts issued
Insurance revenue from groups of insurance contracts issued is the amount of expected
premiums net of ceding commission payable. Expected premiums exclude any
investment\u00a0components.
Insurance revenue is recognised based on the passage of time over the coverage period.
The amount of insurance revenue recognised in the period reflects the provision of insurance
services and the corresponding consideration the Group expects to be entitled to in exchange
for those services.
Insurance service expenses from insurance contracts issued
Insurance service expenses are recognised as they are incurred, and comprise the
following\u00a0items:
\u2022 incurred claims, net of inwards reinstatement premiums, and net of the initial discount on
incurred claims;
\u2022 adjustments to the LIC (including the risk adjustment) that do not arise from the effects of the
time value of money, financial risk and changes therein;
\u2022 amortisation of insurance acquisition cash flows based on the passage of time over the
relevant coverage period;
\u2022 other directly attributable insurance service expenses, including an allocation of fixed and
variable overhead costs; and
\u2022 losses on onerous contracts and the reversal of such losses.
Expenses not meeting the above criteria are included within other operating expenses in the
consolidated statement of comprehensive income.
Allocation of reinsurance premium and amounts recoverable from reinsurers
The allocation of reinsurance premiums is the amount of expected reinsurance premium
payments net of commission income receivable for a group of reinsurance contracts held,
and\u00a0is recognised based on the passage of time over the relevant coverage period of the
reinsurance contract.
Amounts recoverable from reinsurers are recognised as they are incurred and include
reinsurance recovery cash flow assumptions that are consistent with underlying insurance
contracts issued, recognition of movements in onerous loss recovery components, and the
effect of any risk of non-performance by the issuer of the reinsurance contract.
Finance income or expenses from insurance contracts issued and reinsurance
contracts held
Insurance finance income or expenses comprise the change in the carrying amount of the
group of insurance contracts issued, or reinsurance contracts held, arising from the effect of
the time value of money, financial risk and changes therein. These include:
\u2022 the unwind of the initial discount (that is, the effective interest accreted on the LIC or AIC); and
\u2022 the effect of changes in interest rate assumptions.
The Group has elected to include insurance finance income and expenses within the
consolidated statement of comprehensive income and does not disaggregate these between
profit and loss and other comprehensive income.
Non-distinct investment components
The non-distinct investment component of an insurance contract is the amount that the Group
would be required to repay to a policyholder in all circumstances, regardless of whether an
insured event occurs. The receipt of this investment component and the subsequent repayment
do not relate to insurance services. Non-distinct investment components are therefore
excluded from insurance revenue and insurance service expenses, and are considered as a
settlement of an insurance contract liability.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInsuranceContracts", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-243": { "value": "
Insurance contracts issued and reinsurance contracts held
Classification
Insurance contracts issued under IFRS 17 are those contracts that transfer significant insurance
risk at the inception of the contract. Insurance risk is transferred when an insurer agrees to
compensate a policyholder if a specified uncertain future event adversely affects the
policyholder. Contracts that have a legal form of insurance risk but do not transfer significant
insurance risk are classified as investment contracts and follow financial instrument accounting
under IFRS 9. The Group does not issue any contracts with direct participation features.
In the normal course of business, the Group uses reinsurance to mitigate its risk exposures.
A\u00a0reinsurance contract held transfers significant insurance risk if it transfers substantially all
the\u00a0insurance risk resulting from the insured or reinsured portion of the underlying insurance
contracts, even if it does not expose the reinsurer to the possibility of a significant loss.
All references to insurance contracts in these consolidated financial statements apply to
insurance contracts issued and reinsurance contracts held, unless specifically stated otherwise.
Level of aggregation of insurance contracts issued and reinsurance contracts held
Insurance contracts issued and reinsurance contracts held that are subject to similar risks and
managed together are classified into portfolios of contracts. These are disaggregated into
annual cohorts and then further classified into three groups based on their expected
profitability. The groups are:
\u2022 insurance contracts issued that are onerous at initial recognition, or reinsurance contracts
held for which there is a net gain at initial recognition;
\u2022 insurance contracts issued that at initial recognition have no significant possibility of
becoming onerous, or reinsurance contracts held where there is no significant possibility of a
net gain arising subsequently; or
\u2022 a group of the remaining insurance contracts issued, or reinsurance contracts held.
These groups represent the level of aggregation at which insurance contracts issued are initially
recognised and measured, and they are not subsequently reconsidered.
Initial recognition of insurance contracts issued and reinsurance contracts held
An insurance contract issued by the Group is recognised at the earliest of:
\u2022 the beginning of the coverage period;
\u2022 when the first payment from the policyholder is due, or actually received if there is no
due\u00a0date; or
\u2022 the date when facts and circumstances indicate that the group of contracts is onerous.
Groups of reinsurance contracts held are initially recognised at the beginning of the coverage
period. In the case of proportional reinsurance contracts held, this may be delayed until the
initial recognition date of any underlying insurance contract. Reinsurance contracts held which
cover an underlying onerous group of insurance contracts issued, are recognised on the same
date as the related onerous group of contracts.
Insurance contracts issued are initially added to the relevant groups of insurance contracts in
the reporting period in which they meet the recognition criteria, subject to the annual cohorts'
restriction. Composition of the groups is not reassessed in subsequent periods.
Measurement applying the PAA measurement model - PAA eligibility
The Group considers that it is eligible to apply the PAA to simplify the measurement of groups
of insurance contracts issued and reinsurance contracts held, as the measurement of the LRC
and ARC is not reasonably expected to differ materially from that calculated under the GMM.
The PAA has been applied to all groups of contracts.
Contract boundary
The measurement of a group of insurance contracts issued or reinsurance contracts held
includes all of the cash flows within the boundary of each contract in the group.
Cash flows are within the boundary of each contract if they arise from substantive rights and
obligations that exist during the period. In the case of insurance contracts issued, this is
where\u00a0the Group can compel the policyholder to pay premiums, or the Group has substantive
obligations to provide the policyholder with insurance coverage or other services. In the case
of\u00a0reinsurance contracts held, this is where the Group is compelled to pay amounts to the
reinsurer, or has a substantive right to receive insurance coverage, or other services, from
the\u00a0reinsurer.
A substantive obligation to provide services ends when:
\u2022 the Group has the practical ability to reassess the risks of the particular policyholder, and as
a\u00a0result can set a price or level of benefits that fully reflects those risks; or
\u2022 the Group has the practical ability to reassess the risks of the portfolio of insurance contracts
that contains the contract, and as a result can set a price or level of benefits that fully reflects
the risks of the portfolio; and
\u2022 the pricing of premiums up to the date when risks are reassessed does not reflect the risks
related to periods beyond the reassessment date.
A substantive right to receive services from the reinsurer ceases when the reinsurer:
\u2022 has the practical ability to reassess the risks transferred to it, and as a result can set a price or
level of benefits that fully reflects those reassessed risks; or
\u2022 has a substantive right to terminate the coverage.
The contract boundary is reassessed at each reporting period to include the effect of change in
circumstances on the Group's rights and obligations, and may change over time.
Cash flows not directly attributable to a portfolio of insurance contracts are recognised in other
operating expenses as incurred.
Fulfilment cash flows within the contract boundary
The FCF are the current estimates of the future cash flows within the contract boundary of a
group of insurance contracts. These include premiums, claims, acquisition costs and
administrative expenses, adjusted to reflect the timing and the uncertainty of those amounts.
The estimates of future cash flows are based on an unbiased probability weighted mean of
the\u00a0full range of possible outcomes. They reflect current estimates, factoring in expected
credit\u00a0losses or non-performance risk of reinsurers, and are determined from the perspective
of\u00a0the Group.
The Group uses assumptions to measure the estimates of the future cash flows for a group of
reinsurance contracts held that are consistent with the underlying group of insurance contracts
issued. Reinsurance cash flows that are contingent on claims incurred by the underlying
insurance contracts issued are therefore included as part of the cash flows that are expected
to\u00a0be reimbursed under the relevant reinsurance contracts held.
Discounting
The FCF within the LIC and the AIC are discounted using current discount rates to reflect the
time value of money and the financial risks related to those cash flows. The discount rates
reflect the characteristics of the cash flows arising from each group of insurance contracts,
including the timing, currency, and liquidity of the cash flows. The Group does not discount
the\u00a0LRC or the ARC. This would be required if the LRC or the ARC included a significant
financing component.
Risk adjustment for non-financial risk
The measurement of the LIC and the AIC includes an explicit risk adjustment for non-financial
risk. This is estimated separately from the discounted FCF and is applied to the present value of
the estimated future cash flows. It reflects the compensation the Group requires, or transfers to
a reinsurer, for bearing uncertainty in respect of the amount and timing of the cash flows from
non-financial risk as the Group fulfils its insurance contracts issued.
Insurance acquisition cash flows
Insurance acquisition cash flows arise from the cost of selling, underwriting, and initiating a
group of insurance contracts that are directly attributable to the portfolio of insurance contracts
to which the group belongs. These include:
\u2022 contract specific costs, such as brokerage; and
\u2022 a systematic and rational allocation of fixed and variable overheads to groups of contracts
based on insurance revenue.
Initial measurement of insurance contracts issued applying the PAA
The carrying amount of the LRC is measured with reference to the premiums received on initial
recognition from either policyholders or intermediaries, minus any insurance acquisition cash
flows allocated to the relevant group at that date, less the derecognition of any assets or
liabilities previously recognised for cash flows related to the group.
The Group assumes that no contracts are onerous at initial recognition, unless facts and
circumstances indicate otherwise. If such evidence exists, the Group determines if the contract
will result in a net cash outflow. The Group recognises an insurance service expense for the net
cash outflow, and an onerous loss component is added to the LRC.
Subsequent measurement of insurance contracts issued applying the PAA
The carrying amount of a group of insurance contracts issued is the sum of the LRC and the LIC,
and is measured at the end of each reporting period. The measurement of the LRC includes:
\u2022 any premiums received, less amounts recognised as insurance revenue;
\u2022 less insurance acquisition cash flows paid, plus amortisation of any insurance acquisition cash
flows recognised as insurance service expense in the period; and
\u2022 less any non-distinct investment components either paid, or transferred to the LIC.
Groups of insurance contracts that were not onerous at initial recognition can subsequently
become onerous if facts and circumstances change during the coverage period. Onerous
groups of contracts are assessed at the end of each reporting period with changes in the
expected net cash outflow recognised in the carrying amount of the LRC and insurance service
expenses. The Group amortises the onerous loss component within the LRC based on the
passage of time over the remaining coverage period within insurance service expenses. The
equivalent basis is also applied to any relevant reinsurance recovery component.
The Group recognises the LIC for a group of insurance contracts as the amount of FCF relating
to the incurred claims that have not yet been paid, including claims that have been incurred but
not yet reported, together with the associated expenses, including all claims handling expenses
that relate to incurred claims which have not yet been paid. The FCF are measured at the
reporting date using current estimates of future cash flows, current discount rates, and current
estimates of the risk adjustment for non-financial risk.
Initial and subsequent measurement of reinsurance contracts held applying the PAA
The carrying amount of a group of reinsurance contracts held is the sum of the ARC and the
AIC, and is measured at the end of each reporting period. The Group measures a group of
reinsurance contracts held on the same basis as a group of insurance contracts issued, with
adaptations to reflect the features of reinsurance contracts held that differ from the insurance
contracts issued.
Derecognition and modification under the PAA
The Group derecognises an insurance contract issued, or a reinsurance contract held, when it is
extinguished (that is, when the specified obligations in the contract expire, are discharged, or
cancelled), or the contract is modified.
Modifications to a contract are accounted for as a change in the estimate of the FCF. A contract
is derecognised and treated as a new contract if the modification to the contract either:
\u2022 changes the measurement model;
\u2022 brings the contract, or separable component parts of the contract, outside the scope of
IFRS\u00a017;
\u2022 substantially changes the contract boundary; or
\u2022 results in the contract being allocated to a different group.
When an insurance contract is extinguished, transferred to a third-party, or modified in such a
way that results in derecognition, any adjustments made to the FCF are recorded within the
consolidated statement of comprehensive income.
Presentation within the financial statements
Portfolios of insurance contracts issued, and portfolios of reinsurance contracts held, that are
assets, and those that are liabilities, are presented separately in the consolidated statement of
financial position.
The Group disaggregates amounts recognised in the consolidated statement of comprehensive
income into an insurance service result, and insurance finance income and expense.
The Group disaggregates changes in the risk adjustment for non-financial risk between the
insurance services result (which represents the change related to non-financial risk), and
insurance finance income or expenses (which represents the effect of the time value of
money\u00a0and changes in the time value of money).
Income and expenses from reinsurance contracts held are presented separately from the
income and expenses on insurance contracts issued.
Insurance revenue and insurance service expenses exclude any non-distinct
investment\u00a0components.
Insurance revenue from insurance contracts issued
Insurance revenue from groups of insurance contracts issued is the amount of expected
premiums net of ceding commission payable. Expected premiums exclude any
investment\u00a0components.
Insurance revenue is recognised based on the passage of time over the coverage period.
The amount of insurance revenue recognised in the period reflects the provision of insurance
services and the corresponding consideration the Group expects to be entitled to in exchange
for those services.
Insurance service expenses from insurance contracts issued
Insurance service expenses are recognised as they are incurred, and comprise the
following\u00a0items:
\u2022 incurred claims, net of inwards reinstatement premiums, and net of the initial discount on
incurred claims;
\u2022 adjustments to the LIC (including the risk adjustment) that do not arise from the effects of the
time value of money, financial risk and changes therein;
\u2022 amortisation of insurance acquisition cash flows based on the passage of time over the
relevant coverage period;
\u2022 other directly attributable insurance service expenses, including an allocation of fixed and
variable overhead costs; and
\u2022 losses on onerous contracts and the reversal of such losses.
Expenses not meeting the above criteria are included within other operating expenses in the
consolidated statement of comprehensive income.
Allocation of reinsurance premium and amounts recoverable from reinsurers
The allocation of reinsurance premiums is the amount of expected reinsurance premium
payments net of commission income receivable for a group of reinsurance contracts held,
and\u00a0is recognised based on the passage of time over the relevant coverage period of the
reinsurance contract.
Amounts recoverable from reinsurers are recognised as they are incurred and include
reinsurance recovery cash flow assumptions that are consistent with underlying insurance
contracts issued, recognition of movements in onerous loss recovery components, and the
effect of any risk of non-performance by the issuer of the reinsurance contract.
Finance income or expenses from insurance contracts issued and reinsurance
contracts held
Insurance finance income or expenses comprise the change in the carrying amount of the
group of insurance contracts issued, or reinsurance contracts held, arising from the effect of
the time value of money, financial risk and changes therein. These include:
\u2022 the unwind of the initial discount (that is, the effective interest accreted on the LIC or AIC); and
\u2022 the effect of changes in interest rate assumptions.
The Group has elected to include insurance finance income and expenses within the
consolidated statement of comprehensive income and does not disaggregate these between
profit and loss and other comprehensive income.
Non-distinct investment components
The non-distinct investment component of an insurance contract is the amount that the Group
would be required to repay to a policyholder in all circumstances, regardless of whether an
insured event occurs. The receipt of this investment component and the subsequent repayment
do not relate to insurance services. Non-distinct investment components are therefore
excluded from insurance revenue and insurance service expenses, and are considered as a
settlement of an insurance contract liability.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForReinsuranceExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-245": { "value": "
Financial instruments
Financial assets
On initial recognition, a financial asset is classified as either measured at amortised cost,
FVTPL\u00a0or FVOCI. The classification is dependent on the Group's business model for managing
the financial asset, and the contractual terms of the cash flows.
Financial assets are classified as measured at amortised cost if they are held to collect
contractual cash flows, and where those cash flows represent solely payments of principal
and\u00a0interest.
Financial assets are classified as measured at FVOCI if they are held to both collect contractual
cash flows and sell, and where those cash flows represent solely payments of principal
and\u00a0interest.
All financial assets not classified as measured at amortised cost or FVOCI are classified as
measured at FVTPL. Financial assets in this FVTPL category are those that are managed in a
fair\u00a0value business model, or that have been designated as FVTPL by management upon
initial\u00a0recognition.
Financial assets are not reclassified subsequent to their initial recognition, unless the Group
changes its business model for managing those financial assets, in which case the affected
financial assets are reclassified on the first day of the first reporting period following the
change\u00a0in the business model.
Cash and cash equivalents
Cash and cash equivalents are carried in the consolidated statement of financial position at
amortised cost and include cash in hand, deposits held on call with banks, and other short-term
highly liquid investments with a maturity of three months or less at the date of purchase.
Carrying amounts approximate fair value due to the short-term nature and high liquidity of
the\u00a0instruments.
Interest income earned on cash and cash equivalents is recognised by applying the effective
interest rate method. The carrying value of accrued interest income approximates estimated fair
value due to its short-term nature and high liquidity.
Investments
Investments are recognised when the Group becomes a party to the contractual provisions of
the instrument. Regular-way purchases and sales of investments are recognised on the trade
date, being the date on which the Group commits to purchase or sell the asset.
At initial recognition, the Group measures financial assets held at FVTPL at their fair value on
acquisition. Transaction costs in respect of financial assets carried at FVTPL are expensed within
the consolidated statement of comprehensive income as they are incurred. Financial assets
held at FVTPL are subsequently measured at their fair value.
The Group's investment portfolio, comprising fixed maturity securities, private investment funds
and hedge funds, is managed in a fair value business model and is therefore mandatorily
classified as FVTPL.
The Group's investment portfolio includes quoted and unquoted investments. The fair values of the
investments are determined based on bid prices from recognised exchanges, broker-dealers,
recognised indices or pricing vendors. Unrealised gains or losses from changes in the fair value of
investments are presented in the consolidated statement of comprehensive income, within net
investment return. Interest income is recognised by applying the effective interest rate method and is
presented in the consolidated statement of comprehensive income within net investment return. The
carrying value of accrued interest receivable approximates fair value due to its short-term nature and
high liquidity.
Investments are derecognised when the Group has transferred substantially all of the risks and
rewards of ownership, or when the right to receive cash flows from the asset has expired, with
any realised gains or losses recognised in the consolidated statement of comprehensive income
within net investment return.
Derivatives
Derivatives are classified as financial assets or liabilities at FVTPL. They are initially recognised at
fair value on the date a contract is entered into, the trade date, and are subsequently carried at
fair value. Derivative instruments with a positive fair value are recorded as derivative financial
assets, and those with a negative fair value are recorded as derivative financial liabilities.
They derive their value from the underlying instrument and are subject to the same risks as that
underlying instrument, including liquidity risk, credit risk, and market risk. Estimated fair values are
based on exchange or broker-dealer quotations, where available, or discounted cash flow models,
which incorporate the pricing of the underlying instrument, yield curves and other factors. Changes
in the estimated fair value of derivative instruments are recognised in the consolidated statement of
comprehensive income within net investment return. The Group does not currently hold any
derivatives classified as hedging instruments. For discounted cash flow techniques, estimated future
cash flows are based on management\u2019s best estimates, and the discount rate used is an appropriate
market rate.
Derivative financial assets and liabilities are offset and the net amount is reported in the
consolidated statement of financial position only to the extent there is a legally enforceable
right of offset, and there is an intention to settle on a net basis, or to realise the assets and
liabilities simultaneously. Derivative financial assets and liabilities are derecognised when the
Group has transferred substantially all of the risks and rewards of ownership, or the liability is
discharged, cancelled or expired, with any realised gains or losses recognised in the
consolidated statement of comprehensive income within net investment return.
Other receivables
Other receivables includes trade receivables and contract assets. Trade receivables that do not
have a significant financing component are measured on initial recognition at their fair value,
which is typically their transaction price, and are subsequently measured at amortised cost
using the effective interest rate method, less an expected credit loss allowance where
applicable. The other receivables held by the Group are short term in nature.
Impairment
The Group applies the simplified approach to measuring ECL, which uses a lifetime ECL for all
receivables and contract assets (other than those recognised under IFRS 17). The lifetime ECL is
measured from the date of the initial recognition of trade receivables and contract assets.
The\u00a0Group calculates the lifetime ECL using three main components: a probability of default,
a\u00a0loss given default and the exposure at default (collectively the expected loss rates).
To measure the lifetime ECL, receivables and contract assets are grouped based on shared
credit risk characteristics. The expected loss rates are based on the payment profiles over the
three years prior to the period end and the corresponding credit losses experienced within this
three-year period. The historical loss rates are adjusted to reflect current and forward-looking
information based on macroeconomic factors affecting the ability to collect receivables.
Financial liabilities
Other payables
Other payables represent goods and services provided to the Group prior to the financial year
end which are unpaid. These amounts are unsecured and are usually paid within 30 to 60 days
of recognition. Other payables are recognised initially at their fair value and are subsequently
measured at amortised cost using the effective interest method. Other payables are
derecognised on the settlement date, which is typically the date on which the contractual
obligation to pay cash is extinguished.
Long-term debt
Long-term debt is recognised initially at fair value, net of transaction costs incurred.
Thereafter\u00a0it is measured at amortised cost using the effective interest method. Derecognition
occurs when the obligation has been extinguished. The difference between the carrying
amount that has been extinguished and the consideration paid is recognised within the
consolidated statement of comprehensive income. Liabilities related to long-term debt are
derecognised on the settlement date, which is typically the date on which the contractual
obligation to pay cash is extinguished.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-246": { "value": "
Financial assets
On initial recognition, a financial asset is classified as either measured at amortised cost,
FVTPL\u00a0or FVOCI. The classification is dependent on the Group's business model for managing
the financial asset, and the contractual terms of the cash flows.
Financial assets are classified as measured at amortised cost if they are held to collect
contractual cash flows, and where those cash flows represent solely payments of principal
and\u00a0interest.
Financial assets are classified as measured at FVOCI if they are held to both collect contractual
cash flows and sell, and where those cash flows represent solely payments of principal
and\u00a0interest.
All financial assets not classified as measured at amortised cost or FVOCI are classified as
measured at FVTPL. Financial assets in this FVTPL category are those that are managed in a
fair\u00a0value business model, or that have been designated as FVTPL by management upon
initial\u00a0recognition.
Financial assets are not reclassified subsequent to their initial recognition, unless the Group
changes its business model for managing those financial assets, in which case the affected
financial assets are reclassified on the first day of the first reporting period following the
change\u00a0in the business model.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-247": { "value": "
Cash and cash equivalents
Cash and cash equivalents are carried in the consolidated statement of financial position at
amortised cost and include cash in hand, deposits held on call with banks, and other short-term
highly liquid investments with a maturity of three months or less at the date of purchase.
Carrying amounts approximate fair value due to the short-term nature and high liquidity of
the\u00a0instruments.
Interest income earned on cash and cash equivalents is recognised by applying the effective
interest rate method. The carrying value of accrued interest income approximates estimated fair
value due to its short-term nature and high liquidity.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-248": { "value": "
Investments
Investments are recognised when the Group becomes a party to the contractual provisions of
the instrument. Regular-way purchases and sales of investments are recognised on the trade
date, being the date on which the Group commits to purchase or sell the asset.
At initial recognition, the Group measures financial assets held at FVTPL at their fair value on
acquisition. Transaction costs in respect of financial assets carried at FVTPL are expensed within
the consolidated statement of comprehensive income as they are incurred. Financial assets
held at FVTPL are subsequently measured at their fair value.
The Group's investment portfolio, comprising fixed maturity securities, private investment funds
and hedge funds, is managed in a fair value business model and is therefore mandatorily
classified as FVTPL.
The Group's investment portfolio includes quoted and unquoted investments. The fair values of the
investments are determined based on bid prices from recognised exchanges, broker-dealers,
recognised indices or pricing vendors. Unrealised gains or losses from changes in the fair value of
investments are presented in the consolidated statement of comprehensive income, within net
investment return. Interest income is recognised by applying the effective interest rate method and is
presented in the consolidated statement of comprehensive income within net investment return. The
carrying value of accrued interest receivable approximates fair value due to its short-term nature and
high liquidity.
Investments are derecognised when the Group has transferred substantially all of the risks and
rewards of ownership, or when the right to receive cash flows from the asset has expired, with
any realised gains or losses recognised in the consolidated statement of comprehensive income
within net investment return.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsOtherThanInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-249": { "value": "
Derivatives
Derivatives are classified as financial assets or liabilities at FVTPL. They are initially recognised at
fair value on the date a contract is entered into, the trade date, and are subsequently carried at
fair value. Derivative instruments with a positive fair value are recorded as derivative financial
assets, and those with a negative fair value are recorded as derivative financial liabilities.
They derive their value from the underlying instrument and are subject to the same risks as that
underlying instrument, including liquidity risk, credit risk, and market risk. Estimated fair values are
based on exchange or broker-dealer quotations, where available, or discounted cash flow models,
which incorporate the pricing of the underlying instrument, yield curves and other factors. Changes
in the estimated fair value of derivative instruments are recognised in the consolidated statement of
comprehensive income within net investment return. The Group does not currently hold any
derivatives classified as hedging instruments. For discounted cash flow techniques, estimated future
cash flows are based on management\u2019s best estimates, and the discount rate used is an appropriate
market rate.
Derivative financial assets and liabilities are offset and the net amount is reported in the
consolidated statement of financial position only to the extent there is a legally enforceable
right of offset, and there is an intention to settle on a net basis, or to realise the assets and
liabilities simultaneously. Derivative financial assets and liabilities are derecognised when the
Group has transferred substantially all of the risks and rewards of ownership, or the liability is
discharged, cancelled or expired, with any realised gains or losses recognised in the
consolidated statement of comprehensive income within net investment return.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-250": { "value": "
Other receivables
Other receivables includes trade receivables and contract assets. Trade receivables that do not
have a significant financing component are measured on initial recognition at their fair value,
which is typically their transaction price, and are subsequently measured at amortised cost
using the effective interest rate method, less an expected credit loss allowance where
applicable. The other receivables held by the Group are short term in nature.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-251": { "value": "
Impairment
The Group applies the simplified approach to measuring ECL, which uses a lifetime ECL for all
receivables and contract assets (other than those recognised under IFRS 17). The lifetime ECL is
measured from the date of the initial recognition of trade receivables and contract assets.
The\u00a0Group calculates the lifetime ECL using three main components: a probability of default,
a\u00a0loss given default and the exposure at default (collectively the expected loss rates).
To measure the lifetime ECL, receivables and contract assets are grouped based on shared
credit risk characteristics. The expected loss rates are based on the payment profiles over the
three years prior to the period end and the corresponding credit losses experienced within this
three-year period. The historical loss rates are adjusted to reflect current and forward-looking
information based on macroeconomic factors affecting the ability to collect receivables.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-252": { "value": "
Financial liabilities
Other payables
Other payables represent goods and services provided to the Group prior to the financial year
end which are unpaid. These amounts are unsecured and are usually paid within 30 to 60 days
of recognition. Other payables are recognised initially at their fair value and are subsequently
measured at amortised cost using the effective interest method. Other payables are
derecognised on the settlement date, which is typically the date on which the contractual
obligation to pay cash is extinguished.
Long-term debt
Long-term debt is recognised initially at fair value, net of transaction costs incurred.
Thereafter\u00a0it is measured at amortised cost using the effective interest method. Derecognition
occurs when the obligation has been extinguished. The difference between the carrying
amount that has been extinguished and the consideration paid is recognised within the
consolidated statement of comprehensive income. Liabilities related to long-term debt are
derecognised on the settlement date, which is typically the date on which the contractual
obligation to pay cash is extinguished.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-253": { "value": "
Other payables
Other payables represent goods and services provided to the Group prior to the financial year
end which are unpaid. These amounts are unsecured and are usually paid within 30 to 60 days
of recognition. Other payables are recognised initially at their fair value and are subsequently
measured at amortised cost using the effective interest method. Other payables are
derecognised on the settlement date, which is typically the date on which the contractual
obligation to pay cash is extinguished.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-254": { "value": "
Long-term debt
Long-term debt is recognised initially at fair value, net of transaction costs incurred.
Thereafter\u00a0it is measured at amortised cost using the effective interest method. Derecognition
occurs when the obligation has been extinguished. The difference between the carrying
amount that has been extinguished and the consideration paid is recognised within the
consolidated statement of comprehensive income. Liabilities related to long-term debt are
derecognised on the settlement date, which is typically the date on which the contractual
obligation to pay cash is extinguished.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingsExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-255": { "value": "
Intangible assets
The Group's intangible assets comprise indefinite life intangible assets and internally generated
intangible assets.
The Group's indefinite life intangible assets comprise syndicate participation rights and
goodwill. The cost of syndicate participation rights and goodwill acquired in a business
combination is their fair value as at the date of acquisition. Additional syndicate participation
rights may be purchased from time to time and are recorded at the cost on the date of the
relevant syndicate capacity auction. As a result of their anticipated ability to continue to
generate cash flows for the Group on a long-term basis, goodwill and syndicate participation
rights are considered to have an indefinite useful life, and are not amortised. They are carried at
cost less any accumulated impairment losses. Intangible assets with an indefinite useful life are
tested annually for impairment at the CGU level by comparing the net present value of the
future cash flow stream of the CGU to the carrying value of the net assets of the CGU,
including\u00a0the related intangible assets. The useful life of an indefinite life intangible asset is
reviewed annually, to determine if the assessment that it has an indefinite life continues to
be\u00a0supportable.
Internally generated intangible assets represent directly attributable costs incurred in the
development phase of implementing cloud-based software to support the Group's target
operating model. An internally generated intangible asset is recognised if it can be
demonstrated that there is an intent, available resources, and technical feasibility to complete
the intangible asset so that it is available for use, and that it will generate probable future
economic benefits. The costs must be capable of being measured reliably. Such intangible
assets are carried at cost less any accumulated impairment losses. Intangible assets not yet
available for use are tested annually for impairment at the CGU level by comparing the net
present value of the future cash flow stream of the CGU to the carrying value of the net assets
of the CGU, including the related intangible assets.
Internally generated intangible assets available for use are considered to have a finite life.
Applying the cost model, intangible assets with finite lives are amortised over their estimated
useful economic life, and assessed for impairment whenever there are indicators of impairment.
The useful lives and amortisation period of the internally generated intangibles are estimated to
be between five to seven years, and will be amortised using the straight-line method with no
residual value. The amortisation, and where applicable any impairment, of these internally
generated intangibles is recognised within other operating expenses.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-257": { "value": "
The Group's indefinite life intangible assets comprise syndicate participation rights and
goodwill. The cost of syndicate participation rights and goodwill acquired in a business
combination is their fair value as at the date of acquisition. Additional syndicate participation
rights may be purchased from time to time and are recorded at the cost on the date of the
relevant syndicate capacity auction. As a result of their anticipated ability to continue to
generate cash flows for the Group on a long-term basis, goodwill and syndicate participation
rights are considered to have an indefinite useful life, and are not amortised. They are carried at
cost less any accumulated impairment losses. Intangible assets with an indefinite useful life are
tested annually for impairment at the CGU level by comparing the net present value of the
future cash flow stream of the CGU to the carrying value of the net assets of the CGU,
including\u00a0the related intangible assets. The useful life of an indefinite life intangible asset is
reviewed annually, to determine if the assessment that it has an indefinite life continues to
be\u00a0supportable.
Internally generated intangible assets represent directly attributable costs incurred in the
development phase of implementing cloud-based software to support the Group's target
operating model. An internally generated intangible asset is recognised if it can be
demonstrated that there is an intent, available resources, and technical feasibility to complete
the intangible asset so that it is available for use, and that it will generate probable future
economic benefits. The costs must be capable of being measured reliably. Such intangible
assets are carried at cost less any accumulated impairment losses. Intangible assets not yet
available for use are tested annually for impairment at the CGU level by comparing the net
present value of the future cash flow stream of the CGU to the carrying value of the net assets
of the CGU, including the related intangible assets.
Internally generated intangible assets available for use are considered to have a finite life.
Applying the cost model, intangible assets with finite lives are amortised over their estimated
useful economic life, and assessed for impairment whenever there are indicators of impairment.
The useful lives and amortisation period of the internally generated intangibles are estimated to
be between five to seven years, and will be amortised using the straight-line method with no
residual value. The amortisation, and where applicable any impairment, of these internally
generated intangibles is recognised within other operating expenses.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-256": { "value": "
The Group's indefinite life intangible assets comprise syndicate participation rights and
goodwill. The cost of syndicate participation rights and goodwill acquired in a business
combination is their fair value as at the date of acquisition. Additional syndicate participation
rights may be purchased from time to time and are recorded at the cost on the date of the
relevant syndicate capacity auction. As a result of their anticipated ability to continue to
generate cash flows for the Group on a long-term basis, goodwill and syndicate participation
rights are considered to have an indefinite useful life, and are not amortised. They are carried at
cost less any accumulated impairment losses. Intangible assets with an indefinite useful life are
tested annually for impairment at the CGU level by comparing the net present value of the
future cash flow stream of the CGU to the carrying value of the net assets of the CGU,
including\u00a0the related intangible assets. The useful life of an indefinite life intangible asset is
reviewed annually, to determine if the assessment that it has an indefinite life continues to
be\u00a0supportable.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-258": { "value": "
Other income
Other income is measured based on the consideration specified in a contract and excludes
amounts collected on behalf of third parties.
Nature of services
The table below details the type of services from which the Group derives its other income.
Services
Nature, timing of satisfaction of performance obligation, and significant payment terms
LCM underwriting fees
The Group recognises underwriting fees over the underwriting cycle
based on the underlying exposure of the covered contracts.
Underwriting fees are received on or before the collateral funding
date, which is prior to commencement of the underwriting cycle.
LCM profit commission
The Group recognises profit commission following the end of the
underwriting cycle based on the underlying performance of the
covered contracts and as collateral is released. Profit commissions
may only be received once the profit commission hurdle has
been\u00a0met.
LSL consortium
management fees
The Group recognises consortium fees over the risk period based on
the underlying exposure of the covered contracts. Consortium fees
are received quarterly.
LSL consortium
profit\u00a0commission
The Group recognises profit commission in line with the underlying
performance of covered contracts once the year of account closes,
which is also when the profit commissions are received.
LSL managing
agency\u00a0fees
The Group recognises managing agency fees in line with the
services\u00a0provided in respect of each underwriting year of account.
Managing agency fees are received quarterly.
LSL managing agency
profit commission
The Group recognises profit commission on open years of account
when measurement is highly probable. Profit commissions are
received once the underwriting year of account closes.
LSL coverholder
fee\u00a0income
The Group recognises coverholder fee income in line with services
provided. Coverholder fee income is received quarterly.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-260": { "value": "
Property, plant and equipment
Property, plant and equipment is carried at historical cost, less accumulated depreciation,
and\u00a0any impairment in value. Depreciation is calculated to write off the cost over the estimated
useful economic life on a straight-line basis as follows:
IT equipment
33% per annum
Office furniture and equipment
20% to 33% per annum
Leasehold improvements
20% per annum
Indicators of impairment, together with the assets\u2019 residual values, useful lives, and depreciation
methods are reviewed, and adjusted if appropriate, at each reporting date.
An item of property, plant or equipment is derecognised on disposal, or when no future
economic benefits are expected to arise from the continued use of the asset.
Gains and losses on the disposal of property, plant and equipment are determined by
comparing proceeds with the carrying amount of the asset, and are included in the
consolidated statement of comprehensive income. Costs for repairs and maintenance are
charged to the statement of comprehensive income as incurred.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-259": { "value": "
Property, plant and equipment
Property, plant and equipment is carried at historical cost, less accumulated depreciation,
and\u00a0any impairment in value. Depreciation is calculated to write off the cost over the estimated
useful economic life on a straight-line basis as follows:
IT equipment
33% per annum
Office furniture and equipment
20% to 33% per annum
Leasehold improvements
20% per annum
Indicators of impairment, together with the assets\u2019 residual values, useful lives, and depreciation
methods are reviewed, and adjusted if appropriate, at each reporting date.
An item of property, plant or equipment is derecognised on disposal, or when no future
economic benefits are expected to arise from the continued use of the asset.
Gains and losses on the disposal of property, plant and equipment are determined by
comparing proceeds with the carrying amount of the asset, and are included in the
consolidated statement of comprehensive income. Costs for repairs and maintenance are
charged to the statement of comprehensive income as incurred.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDepreciationExpenseExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-261": { "value": "
Leases
The Group assesses whether a contract is, or contains, a lease, at the inception of the contract.
A contract is, or contains, a lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration.
The lease liability is initially measured at the present value of the lease payments that are not
paid at the lease commencement date. Lease payments are discounted using the rate implicit in
the lease, if readily determinable, or otherwise at the Group\u2019s incremental borrowing rate.
Lease\u00a0payments included in the measurement of the lease liability comprise:
\u2022 fixed lease payments;
\u2022 variable lease payments that depend on an index or rate, initially measured using the index or
rate at the commencement date of the lease; or
\u2022 payments in respect of purchase options, lease termination options, or lease extension
options that the Group is reasonably certain to exercise.
The lease liability is subsequently measured by increasing the lease carrying amount to reflect
the interest on the lease liability using the effective interest rate method, and by reducing the
carrying amount to reflect the lease payments made.
The Group remeasures the lease liability and the related right-of-use asset whenever:
\u2022 the lease term changes as a result of the Group changing its assessment of whether it will
exercise a purchase, extension, or termination option, in which case the lease liability is
remeasured by discounting the revised lease payments using a revised discount rate;
\u2022 the lease payments change due to changes in an index or rate, or a change in expected
payment under a guaranteed residual value, in which case the lease liability is remeasured
by\u00a0discounting the revised lease payments using the initial discount rate; or
\u2022 a lease contract is modified and the lease modification is not accounted for as a separate
lease, in which case the lease liability is remeasured by discounting the revised lease
payments using a revised discount rate.
The right-of-use asset is initially measured at cost, which comprises the initial measurement
of\u00a0the corresponding lease liability adjusted for any lease payments made at, or before,
the\u00a0commencement date, plus any initial direct costs incurred, and an estimate of any costs
to\u00a0be incurred at expiration of the lease agreement.
Right-of-use assets are subsequently measured at cost less accumulated depreciation and any
impairment losses. Straight-line depreciation is calculated from the commencement date of the
lease to the earlier of the end date of the lease term, or the useful life of the underlying asset.
The Group applies IAS 36, Impairment of Assets, to determine whether a right-of-use asset is
impaired and recognises any identified impairment loss within the consolidated statement of
comprehensive income.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-262": { "value": "
Employee benefits
Equity compensation plans
The Group currently operates an RSS under which nil-cost options have been granted. The fair
value of the equity instruments granted is estimated on the date of grant. The estimated fair
value is recognised as an expense pro-rata over the vesting period of the instrument, adjusted
for the impact of any non-market vesting conditions. No adjustment to vesting assumptions is
made in respect of market vesting conditions.
At each reporting date, the Group revises its estimate of the number of RSS nil-cost options that
are expected to become exercisable. It recognises the impact of the revision of original
estimates, if any, as an equity-based compensation expense in the consolidated statement of
comprehensive income over the remaining vesting period, and a corresponding adjustment is
made to other reserves within shareholders\u2019 equity.
Upon exercise, the differences between the expense charged to the consolidated statement of
comprehensive income and the actual cost to the Group, if any, are transferred to other
reserves within shareholders\u2019 equity.
Pensions
The Group operates a defined contribution plan. On payment of contributions to the plan there
is no further obligation for the Group. Contributions are recognised as employee benefits in the
consolidated statement of comprehensive income in the period when the employee's services
are rendered.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-263": { "value": "
Equity compensation plans
The Group currently operates an RSS under which nil-cost options have been granted. The fair
value of the equity instruments granted is estimated on the date of grant. The estimated fair
value is recognised as an expense pro-rata over the vesting period of the instrument, adjusted
for the impact of any non-market vesting conditions. No adjustment to vesting assumptions is
made in respect of market vesting conditions.
At each reporting date, the Group revises its estimate of the number of RSS nil-cost options that
are expected to become exercisable. It recognises the impact of the revision of original
estimates, if any, as an equity-based compensation expense in the consolidated statement of
comprehensive income over the remaining vesting period, and a corresponding adjustment is
made to other reserves within shareholders\u2019 equity.
Upon exercise, the differences between the expense charged to the consolidated statement of
comprehensive income and the actual cost to the Group, if any, are transferred to other
reserves within shareholders\u2019 equity.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-265": { "value": "
Tax
The tax charge or credit represents the sum of the tax currently payable and any deferred tax.
The tax payable is calculated based on taxable profit for the period using tax rates and tax laws
enacted, or substantively enacted, at the year-end reporting date, and any adjustments to tax
payable in respect of prior periods. Taxable profit for the period can differ from that reported in
the consolidated statement of comprehensive income due to non-taxable income, and certain
items which are not tax deductible, or which are deferred to subsequent periods.
Deferred tax is recognised on all temporary differences between the assets and liabilities in the
consolidated statement of financial position and their tax base, except when the deferred tax
liability arises from the initial recognition of goodwill. Deferred tax assets or liabilities are
accounted for using the balance sheet liability method. Deferred tax assets are recognised to
the extent that realising the related tax benefit through future taxable profits is probable,
and\u00a0are reassessed in each period for recognition.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset
current tax assets against current tax liabilities, and when the deferred income taxes relate to
the same fiscal authority.
At the date equity-based compensation awards are exercised, and where the current
estimated\u00a0fair value of an award exceeds the estimated fair value at the date they were granted,
corporation tax on this excess amount is recognised within equity. At the period end date,
equity-based compensation awards that have not been exercised, and for which the current
estimated fair value of an award exceeds the estimated fair value at the date they were granted,
have deferred tax on this excess amount recognised within shareholders' equity.
The Corporate Income Tax Amendment (No.\u202f2) Act 2025 and the Tax Credits Act 2025 was
effective in Bermuda from 11 December 2025 and is designed to incentivise and support an
enhanced on-island presence. Job-based and expense-based tax credits have been recognised
in total expenses for the year ending 31 December 2025 under the new legislation.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-264": { "value": "
Tax
The tax charge or credit represents the sum of the tax currently payable and any deferred tax.
The tax payable is calculated based on taxable profit for the period using tax rates and tax laws
enacted, or substantively enacted, at the year-end reporting date, and any adjustments to tax
payable in respect of prior periods. Taxable profit for the period can differ from that reported in
the consolidated statement of comprehensive income due to non-taxable income, and certain
items which are not tax deductible, or which are deferred to subsequent periods.
Deferred tax is recognised on all temporary differences between the assets and liabilities in the
consolidated statement of financial position and their tax base, except when the deferred tax
liability arises from the initial recognition of goodwill. Deferred tax assets or liabilities are
accounted for using the balance sheet liability method. Deferred tax assets are recognised to
the extent that realising the related tax benefit through future taxable profits is probable,
and\u00a0are reassessed in each period for recognition.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset
current tax assets against current tax liabilities, and when the deferred income taxes relate to
the same fiscal authority.
At the date equity-based compensation awards are exercised, and where the current
estimated\u00a0fair value of an award exceeds the estimated fair value at the date they were granted,
corporation tax on this excess amount is recognised within equity. At the period end date,
equity-based compensation awards that have not been exercised, and for which the current
estimated fair value of an award exceeds the estimated fair value at the date they were granted,
have deferred tax on this excess amount recognised within shareholders' equity.
The Corporate Income Tax Amendment (No.\u202f2) Act 2025 and the Tax Credits Act 2025 was
effective in Bermuda from 11 December 2025 and is designed to incentivise and support an
enhanced on-island presence. Job-based and expense-based tax credits have been recognised
in total expenses for the year ending 31 December 2025 under the new legislation.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-266": { "value": "
Own shares
Own shares include shares repurchased under share repurchase authorisations and held as
treasury shares, plus shares repurchased and held in trust, for the purposes of employee
equity-based compensation schemes. Own shares are deducted from shareholders\u2019 equity.
No\u00a0gain or loss is recognised on the purchase, sale, cancellation, or issue of own shares,
and\u00a0any consideration paid or received is recognised directly in shareholders' equity.
", "dimensions": { "concept": "lancashire:DescriptionOfAccountingPolicyForOwnSharesTextBlock", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-267": { "value": "
Risk disclosures: introduction
The Group is exposed to risks from various sources, which are classified into six primary risk
categories. These risk categories are:
A. Insurance risk;
D. Credit risk;
B. Market risk;
E. Operational risk; and
C. Liquidity risk;
F. Strategic risk.
The most significant risk to the Group is considered to be insurance risk. The primary objective
of the Group's ERM framework is to ensure that the capital resources held are matched to the
risk profile of the Group, and that the balance between risk and return is considered as part of
all key business decisions. The Group has formulated, and keeps under review, a risk appetite
which is set by the Board of Directors. The Group's appetite for risk will vary from time to time
to reflect the potential risks and returns that present themselves. However, protecting the
Group's capital and maximising risk-adjusted returns for investors over the long-term remain
constant elements of the Group's strategy. The risk appetite of the Group is central to how the
business is run and permeates into the risk appetites that the individual operating entity boards
of directors have adopted. These risk appetites are expressed through detailed risk tolerances
at\u00a0both a Group and an operating entity level. Risk tolerances represent the maximum amount
of capital, generally on a modelled basis, that the Group and its entities are prepared to expose
to certain risks.
The Board of Directors is responsible for setting and monitoring the Group's risk appetite and
tolerances, whereas the individual entity boards of directors are responsible for setting and
monitoring entity level risk tolerances. All risk tolerances are subject to at least an annual review
and consideration by the respective boards of directors. The LHL Board and individual entity
boards of directors review actual risk levels versus tolerances, emerging risks, and any risk
learning events at least quarterly. In addition, management assesses the modelled potential
catastrophe losses against the risk tolerances and seeks to ensure that risk levels are managed
in accordance with them.
Emerging risks
Artificial Intelligence (AI)
AI refers to the advancement of computer systems capable of performing tasks that typically
require human intelligence. Generative AI, a specialised subset, creates content using deep
learning models based on existing data patterns.
While AI offers significant potential, it also introduces risks such as misinformation, data privacy
concerns, intellectual property challenges, and ethical issues. The Group continues to evaluate
AI integration into business processes with robust risk mitigation measures to help ensure
responsible use.
Over the past year, we have matured and strengthened governance across AI evaluation,
implementation, and monitoring, seeking to align with regulatory and ethical standards.
The Group remains a cautious adopter, prioritising safe and controlled deployment to protect
client data, uphold compliance, and manage emerging risks.
Risk management works closely with IT and the business to identify, assess, and approve AI
solutions, supporting their implementation in a secure and responsible manner.
Insufficient cloud capacity
The rapid growth of AI is significantly increasing global demand for cloud capacity, creating a
risk that available data-centre capacity will be insufficient to meet companies\u2019 operational and
resilience needs. Cloud providers are facing GPU and hardware shortages, rising energy
demands, and regional capacity limits, which may restrict compute availability and increase
cloud costs.
Economic capital models
The Group maintains economic capital models at the LICL, LUK and syndicate levels.
These\u00a0models are primarily focused on insurance risks; however, they are also used to model
other risks, including market, credit and operational risks. The syndicate models are reviewed
and approved by Lloyd's as part of its own capital and solvency regulations.
The economic capital models produce data in the form of stochastic distributions for all classes,
including non-elemental classes. The distributions include the mean outcome and the result at
various return periods, including very remote events. Projected financial outcomes for each
insurance class are calculated, as well as the overall portfolio, including diversification credit.
Diversification credit arises as individual risks are generally not strongly correlated and are
unlikely to all produce profits or losses at the same time.
A. Insurance risk
Insurance risk is the risk that the Group's underwriting, reserving, claims management, or
reinsurance decisions and judgements result in a detrimental financial impact to the Group.
The\u00a0Group underwrites worldwide insurance and reinsurance contracts that transfer insurance
risk, including risks exposed to both natural and man-made catastrophes. The Group's exposure
in connection with insurance or reinsurance contracts underwritten is whether, in the event of
insured losses, premiums will be sufficient to cover the loss payments and expenses. Insurance
and reinsurance markets are cyclical and premium rates and terms and conditions vary by line
of business depending on market conditions and the stage of the underwriting cycle.
Market\u00a0conditions are impacted by capacity and recent loss events, and broader economic
cycle impacts, amongst other factors. The Group\u2019s underwriters assess likely losses using their
experience and knowledge of past loss experience, industry trends, and current circumstances.
This allows them to estimate the premiums sufficient to meet likely losses and expenses and
desired levels of profitability.
The Group considers insurance risk at an individual contract level, at a segment level, at a
geographic level, and at an aggregate portfolio level. This promotes careful risk selection,
consideration of concentration levels and appropriate portfolio diversification. The level of
insurance risk tolerance per peril is set by the Board and the boards of directors at individual
entity level and at the overall aggregate Group level.
A number of controls are deployed by the Group to manage the amount of insurance exposure
assumed:
\u2022 a rolling strategic plan that helps establish the business goals that the Board of Directors aims
to achieve;
\u2022 a detailed three-year business plan is produced annually. The plan is approved by the Board
of Directors and is monitored, reviewed and updated on an ongoing basis;
\u2022 for LSL, the syndicates' business forecasts and business plans are subject to review and
approval by Lloyd's;
\u2022 economic capital models are used to model risk levels and capital requirements;
\u2022 each authorised class has a predetermined normal maximum line structure;
\u2022 each underwriter has a clearly defined limit of underwriting authority;
\u2022 the Group and individual operating entities have predetermined tolerances on probabilistic and
deterministic losses of capital for certain single events, which are monitored on a regular basis;
\u2022 pricing and aggregation models are used to assist with the underwriting process; and
\u2022 reinsurance is purchased to mitigate both frequency and severity of losses on a facultative,
excess of loss treaty or proportional treaty basis.
Some of the Group's business provides coverage for natural catastrophes (for example, hurricanes,
earthquakes, wildfires and floods) and is subject to potential seasonal variation and the effects of
climate change. A proportion of the Group\u2019s business is exposed to large catastrophe losses in
North America, Europe and Japan as a result of windstorms. The level of windstorm activity,
and\u00a0landfall thereof, during the North American, European and Japanese wind seasons may
materially impact the Group\u2019s loss experience. The North American and Japanese wind seasons
are typically June to November, and the European wind season is typically November to March.
The Group also has exposure to large losses arising from other non-seasonal natural catastrophes,
such as earthquakes, tsunamis, droughts, floods and tornadoes, from risk losses throughout the
year and from war, terrorism and political risk, and other events.
Climate change may expose the Group to the risk of heightened severity and frequency of
weather-related losses. Climate-related risks are identified and assessed as part of the usual risk
identification and management process, which includes, but is not limited to, discussions with
risk owners and subject matter experts across the Group, discussions at the Emerging Risk
Forum, and at the ESG Committee.
Climate-related risks specific to the (re)insurance portfolios are identified and assessed as part
of the day-to-day underwriting process by individual underwriters in their analysis of specific
risk information, and more broadly in the context of the wider portfolio during the individual
class of business QBR process, and through the RRC meetings.
These reviews include: the physical location of assets insured, weather-related perils that have
impacted the location and their historical frequency and severity, as well as expected short-
term and long-term changes. Various underwriting committees and forums assess climate-
related risks of both current and anticipated future risks, which include, but are not limited to,
transition risk arising from a decline in the value of assets to be insured, changing energy costs,
and liability risks that could arise from climate-related litigation.
Physical, transition and liability risks are considered by business segment and geographical
location, and the expected impact from the risks identified is considered with respect to both
magnitude and timescale.
The Group manages climate risk by using stochastic models from third-party vendors that have
a long history of data quality governance. The Group adapts these models based upon views of
climate risk, as well as clients' exposure data, to create aggregate loss scenarios. Underwriting
guidelines support the underwriting process and provide guidance to assist underwriters in their
decision-making. Performance against guidelines is monitored through the regular meetings,
QBRs and related reporting. We have clear tolerances and preferences in place to actively
manage exposures, and the Board regularly monitors our PMLs.
The Group accepts risks for periods primarily of one year, which mitigates the potential short-
term impacts of climate risk. The Group has the ability to re-evaluate the portfolio on an
annual\u00a0basis and therefore reprice physical risk and reset exposure levels to consider new data
regarding the frequency and severity of elemental catastrophe events.
Catastrophe management
The Group actively monitors risk levels and manages catastrophe risk accumulations using
reinsurance and PML based risk tolerances, which are monitored as part of our climate-related
risks. The Group's exposures to certain peak zone elemental losses, as a percentage of tangible
capital, including long-term debt, are shown below. Net loss estimates are undiscounted before
income tax and net of reinstatement premiums and outwards reinsurance on a first occurrence
return period basis.
31 December 2025
31 December 2024
100 year return period estimated net loss1
$m
% of
tangible capital
$m
% of
tangible capital
Zones
Perils
Gulf of Mexico2
Hurricane
337.1
19.8%
335.8
19.3%
California
Earthquake
255.1
15.0%
247.6
14.2%
Non-Gulf of Mexico \u2013 US
Hurricane
239.5
14.1%
233.4
13.4%
Pan-European
Windstorm
109.6
6.4%
129.4
7.4%
Japan
Earthquake
78.7
4.6%
107.3
6.2%
Japan
Typhoon
78.8
4.6%
102.3
5.9%
Pacific North West
Earthquake
41.6
2.4%
34.3
2.0%
31 December 2025
31 December 2024
250 year return period estimated net loss1
$m
% of
tangible capital
$m
% of
tangible capital
Zones
Perils
Gulf of Mexico2
Hurricane
464.4
27.3%
435.4
25.0%
California
Earthquake
284.3
16.7%
302.6
17.4%
Non-Gulf of Mexico \u2013 US
Hurricane
421.5
24.7%
525.9
30.2%
Pan-European
Windstorm
173.4
10.2%
195.9
11.2%
Japan
Earthquake
164.6
9.7%
189.5
10.9%
Japan
Typhoon
114.7
6.7%
155.0
8.9%
Pacific North West
Earthquake
177.6
10.4%
170.9
9.8%
1. Estimated net loss balances presented in the table are unaudited.
2. Landing hurricane from Florida to Texas.
There can be no guarantee that the modelled assumptions and techniques deployed in
calculating these figures are accurate. There could also be an unmodelled loss which exceeds
these figures. In addition, any modelled loss scenario could cause a larger loss to capital than
the modelled expectation from the above return periods.
Geopolitical risks
The conflict in Ukraine shows no clear resolution, and tensions between Russia and the West
continue to escalate. Add to that US China relations; European and Arctic nations facing rising
threats of tariffs; and tensions between the US and Europe concerning the sovereignty of
Greenland; and you have a highly unstable geopolitical environment. Underwriting discipline
and informed decision-making are key in this environment.
Insurance revenue geographical split and operating segment
The following table provides an analysis of the Group's insurance revenue by operating
segment and geographical location:
2025
2024
For the year ended 31 December
Reinsurance
$m
Insurance
$m
Total
$m
Reinsurance
$m
Insurance
$m
Total
$m
US and Canada
487.8
362.5
850.3
437.7
318.7
756.4
Worldwide \u2013 multi territory
324.0
360.5
684.5
314.2
311.6
625.8
Europe
55.0
86.2
141.2
58.8
99.2
158.0
Rest of world
37.6
146.8
184.4
44.4
180.5
224.9
Total insurance revenue
904.4
956.0
1,860.4
855.1
910.0
1,765.1
I. Reinsurance segment
The Group's reinsurance segment comprises property reinsurance, specialty reinsurance and
casualty reinsurance. The property reinsurance portfolio is predominantly written on an excess
of loss basis with the 'catastrophe' portfolio exposed to large natural disasters and the 'risk'
portfolio exposed to individual man-made losses, such as fire and explosion. The specialty
reinsurance portfolio has a mix of exposures, with natural disasters exposing the retrocession
portfolio, and large, man-made risks from complex exposures, such as offshore energy
platforms, exposing the marine, energy, terror and aviation portfolios. This is underwritten
through a combination of excess of loss and proportional reinsurance. Casualty reinsurance is
primarily written through quota share reinsurance, assuming a mix of general liability and
professional lines exposures, predominantly from within the US.
II. Insurance segment
The Group's insurance segment is usually written on a direct or facultative basis and comprises
aviation insurance, casualty insurance, energy and marine insurance, property insurance and
specialty insurance. Within aviation, aviation deductible, aviation hull, aviation liability, aviation
war, and AV52 are the main exposures. Casualty insurance covers accident and health policies,
as well as a small number of consortia arrangements within Lloyd's. Energy insurance covers a
variety of energy exposures, from upstream and energy construction, downstream processing
and storage risks, power generation, and energy liability. Marine risks include cargo and specie
risks, as well as liability, hull and war. The property insurance portfolio contains worldwide
property exposure with a mix of Fortune 500 business and smaller accounts with exposure in an
individual location. Specialty insurance includes political risk, terror and credit exposures, and is
often written on a multi-year basis.
Outwards r einsurance
The Group, in the normal course of business and in accordance with its risk management
practices, seeks to reduce certain types of losses that may arise from events that could cause
unfavourable underwriting results by entering into external outwards reinsurance arrangements.
Reinsurance does not relieve the Group of its obligations to policyholders. Under the Group's
reinsurance security policy, reinsurers are assessed and approved based on their financial
strength ratings, together with other factors. The Group RSC considers reinsurers that are not
rated or do not fall within the predefined rating categories on a case-by-case basis, and may
require collateral to be provided to support the reinsurer's obligations. There are specific
guidelines for these collateralised contracts. The Group ORIF monitors the Group's reinsurers
on an ongoing basis, and formally reviews the Group's reinsurance arrangements as
deemed\u00a0necessary. Exposure to the Group's reinsurance counterparties, compared to the
Board-approved tolerances, is reported to the Board of Directors on a quarterly basis.
Reinsurance protection is typically purchased on an excess of loss basis; however, it may also
include ILW covers, or proportional treaty arrangements. The mix of reinsurance cover is
dependent on the specific loss mitigation requirements, market conditions, and available
capacity. Reinsurance may also be purchased to optimise the risk-adjusted return of the
underwriting portfolio. The structure varies between types of peril and sub-class. The Group
regularly reviews its catastrophe and other exposures, and may purchase reinsurance to reduce
its net exposure to a large natural catastrophe loss and/or to reduce net exposures to other
large losses. The Group can purchase both facultative and treaty reinsurance with varying cover
and attachment points. The reinsurance coverage is not intended to be available to meet all
potential loss circumstances. The Group will retain some losses, as the cover purchased is
unlikely to transfer the totality of the Group\u2019s exposure. Any loss amount which exceeds the
Group's reinsurance programme is retained by the Group. Some parts of the reinsurance
programme have limited reinstatements, therefore the number of claims which may be
recovered from second or subsequent losses in those particular circumstances is restricted.
Reserving
Estimates of future cash flows to fulfil insurance contracts issued
The Group measures the carrying amount of the LIC and the AIC at the end of each reporting
period, being the amount of the FCF. The FCF in respect of the LIC and the AIC comprises:
\u2022 unbiased probability-weighted best estimates of future cash flows within the boundary of
each insurance and reinsurance contract;
\u2022 an adjustment to reflect the time value of money and the financial risks related to future cash
flows, to the extent that the financial risks are not included in the estimates of future cash
flows (see interest rate risk section); and
\u2022 a risk adjustment for non-financial risk.
Further detail on each of these is provided in the section below.
Probability-weighted best estimate of future cash flows
In estimating future cash flows, the Group incorporates, in an unbiased way, all reasonable and
supportable information that is available at the reporting date. The Group uses internal and
external information about past events, current conditions and forecasts of future conditions.
The Group's estimate of future cash flows is calculated to represent the mean of a range of
theoretical scenarios that consider the full range of possible outcomes.
Cash flows within the boundary of a contract relate directly to the fulfilment of the contract,
including those for which the Group has discretion over the amount and timing. These include
payments to, or on behalf of, policyholders, and other costs incurred in fulfilling contracts.
Other costs that are incurred in fulfilling contracts comprise both direct costs and an allocation
of fixed and variable overheads. Where expenses are contract specific, these costs are taken
directly and aggregated, as required, to groups of insurance contracts. Where expenses are not
contract specific (for example, overheads) these are allocated to groups of insurance contracts
in a systematic way.
For all our contracts, uncertainty in the estimation of future claims and benefit payments arises
primarily from the severity and frequency of claims.
The Group estimates the ultimate costs of settling claims incurred but unpaid at the reporting
date, and the value of salvage and other expected recoveries, by reviewing individual claims
reported and making allowance for claims incurred but not yet reported. The ultimate cost of
settling claims is estimated using a range of loss reserving techniques (including the
Bornhuetter-Ferguson, loss ratio and chain-ladder methods). Actuarial techniques typically
assume that historic claims experience is indicative of future claims development patterns and,
therefore ultimate claims cost. The ultimate cost of settling all claims is estimated separately
for\u00a0each class of business.
The assumptions used, including loss ratios and future claims inflation, are derived from a
combination of historical information and judgement, that allows for where past trends might
not apply in the future and future trends that may emerge.
For each nominal fulfilment amount, the timing of future cash flows is determined by
applying\u00a0cash flow assumptions based, where available, on the Group\u2019s historical experience
for\u00a0the given portfolio of contracts. Where there is insufficient historical experience, reliance
may be placed on external benchmarks or portfolios which are believed to exhibit similar cash
flow characteristics.
Methods used to measure the risk adjustment for non-financial risk
The risk adjustment for non-financial risk is the compensation that is required for bearing the
uncertainty in respect of the amount and timing of cash flows that arises from non-financial risk
as the insurance contract is fulfilled. The Group estimates an adjustment for non-financial risk
separately from all other estimates.
Under the PAA, the risk adjustment for non-financial risk is limited to the LIC and the AIC,
with\u00a0the exception of onerous groups of contracts, where it is implicitly considered in
determining the required adjustment to the LRC and the ARC. The undiscounted risk
adjustment within the LIC and the AIC is set with reference to the Group\u2019s reserve risk appetite
and aligns with the Group's management margin, which depends on the prevailing uncertainty
in the FCF of the LIC and the AIC at each reporting date. The management margin is set
through a combination of initial expected loss ratio uplifts for attritional IBNR provisions and on
a case-by-case basis for individual reported events. This process is overseen by the Reserve and
Audit Committees. Given this granular approach, no further allocation of the risk adjustment to
groups of insurance contracts is required. The undiscounted risk adjustment is then discounted
to allow for the time value of money alongside the wider FCF within the LIC and the AIC.
Changes in the risk adjustment for non-financial risk are disaggregated into insurance services
and insurance financing components in the same way as the best estimate FCF.
The Group estimates that FCF within the net of reinsurance LIC (including the risk adjustment
for non-financial risks) correspond to a confidence level of 85% (31 December 2024 \u2013 86%) on
an ultimate time horizon.
The risk adjustment for non-financial risk is subject to discounting, and the confidence level is
inferred for the purpose of disclosure. The inference of the confidence level requires
assumptions around the perceived volatility of each portfolio and the aggregation to the overall
entity level. Volatility parameters are set with reference to historical internal and external data,
but may be adjusted at each reporting date to reflect the prevailing environment and associated
reserve uncertainties. Given the inference of the confidence level, the Group generally expects
this to fall within the range of the 80th to 90th percentile. Movements within this range
between periods are to be expected due to, for example, specific loss events or a change in
the\u00a0mix of business such as an increase in longer-tail casualty business written. The Group
would expect to remain within this range, unless there is a change in reserving risk appetite.
The\u00a0Group\u2019s reserve risk appetite and methods used to determine the risk adjustment for
non-financial risk, and the resulting confidence level, were not changed for the current
financial\u00a0year.
Sensitivity analysis
The following table presents information on how reasonably possible changes in assumptions
made by the Group impact the valuation of the net insurance contract liabilities, profit after tax
and shareholders' equity. Under the PAA, and given the current amount of the Group's loss
component, only the LIC component of insurance contract liabilities and the AIC component
of\u00a0reinsurance contract assets are considered sensitive to possible changes in insurance
risk\u00a0variables.
LIC as at
31 December 2025
$m
Impact on profit
after tax and
shareholders'
equity
$m
LIC as at 31
December 2024
$m
Impact on profit
after tax and
shareholders'
equity
$m
Insurance contract liabilities
2,644.8
2,237.7
Reinsurance contract assets
(757.0)
(608.5)
Net insurance contract liabilities
1,887.8
1,629.2
20% increase in unpaid claims and
expenses
Insurance contract liabilities
3,173.8
(478.6)
2,685.2
(391.2)
Reinsurance contract assets
(908.4)
123.5
(730.2)
99.6
Net insurance contract liabilities
2,265.4
(355.1)
1,955.0
(291.6)
The analysis is based on a change in an assumption while holding all other assumptions
constant. In practice, this is unlikely to occur, and changes in some of the assumptions may
be\u00a0correlated.
B. Market risk
Market risk is the risk that decisions, movements, trends, or other factors in global or local
financial markets impact the Group in a way that is financially detrimental. The Group's main
market risks include:
I. Insurance market risk;
II. Investment risk;
III. Debt risk; and
IV. Currency risk.
These risks, and the management thereof, are described below.
I. Insurance market risk
Insurance market risk is the risk that factors within either the global insurance market, or the
relevant local insurance markets in which the Group operates, have a detrimental financial
impact on the Group. The Group is exposed to insurance market risk from several sources,
including the following:
\u2022 the advent or continuation of a soft market, which may result in a stabilisation or decline in
premium rates and/or terms and conditions for certain lines, or across all lines;
\u2022 the actions and reactions of key competitors, which may directly result in volatility in
premium volumes and rates, fee levels and other input costs;
\u2022 market events, including unusual inflation in rates, which may result in a limit in the availability
of cover, resulting in political intervention or national remedies;
\u2022 failure to maintain broker, binding authority and client relationships, leading to a limited or
substandard choice of risks which are inconsistent with the Group\u2019s risk appetite;
\u2022 changes in regulation including capital, governance or licensing requirements; and
\u2022 changes in the geopolitical environment.
The most important method to mitigate insurance market risk is to maintain strict
underwriting\u00a0standards. The Group manages insurance market risk in numerous ways,
including\u00a0the following:
\u2022 reviews and amends underwriting plans and outlook as necessary;
\u2022 reduces exposure to market sectors where conditions have reached unattractive levels;
\u2022 purchases appropriate, cost-effective reinsurance cover to mitigate loss exposures;
\u2022 closely monitors changes in premium rates and terms and conditions;
\u2022 continuous regulatory capital management to seek to ensure that it does not allow surplus
capital to unduly influence underwriting appetite;
\u2022 has a collegiate approach towards taking risk, with most authority requiring at least four eyes
and pre-authorisation peer review;
\u2022 reviews all new and renewal business post-underwriting for LSL;
\u2022 reviews outputs from the economic capital models to assess up-to-date profitability of
classes and sectors;
\u2022 holds a monthly RRC meeting to discuss risk and reinsurance;
\u2022 holds a quarterly UURC meeting to review underwriting strategy; and
\u2022 holds regular meetings with regulators.
II. Investment risk
Investment risk is the risk that movements, trends or other factors, within either public or private
investment markets, have a detrimental financial impact on the price of securities within the
Group's investment portfolio. Movements in investments resulting from changes in prices,
interest rates, inflation rates, and currency exchange rates, amongst other factors, may lead to
an adverse impact on the value of the Group\u2019s investment portfolio.
Investment guidelines are established by the Investment Committee to manage this risk.
Investment guidelines set parameters within which the Group's external investment managers
must operate. All of the Group's fixed income managers and the majority of the private
investment managers are signatories of the UNPRI, which approximates to 96.7%
(31 December 2024 \u2013 96.7%) of the Group's externally managed assets. Important parameters
include guidelines on permissible asset classes, duration ranges, credit quality, currency,
maturity, sectors, geographical, sovereign and issuer exposures. Compliance with guidelines is
monitored on a monthly basis. Any adjustments to the investment guidelines are approved by
the Investment Committee and the Board of Directors.
The Group's business model emphasises the preservation of capital and the provision of
sufficient liquidity for the prompt payment of claims, in conjunction with providing a stable
income stream as far as possible. Management reviews the composition, duration and asset
allocation of the investment portfolio regularly to respond to changes in interest rates,
and\u00a0other market conditions.
The Group's fixed maturity portfolios are managed by external investment managers. The Group
also has a portfolio consisting of hedge funds, principal protected products, and private
investment funds. The performance of the managers is monitored on an ongoing basis.
The 'core' investment portfolio is aligned with the Group\u2019s long-term financial goals and risk
tolerance while the 'surplus' investment portfolio aims for higher returns and greater
diversification by investing in a wider array of assets with higher risk-return profiles, such as
high-yield securities, private investment funds, and hedge funds.
Within the Group\u2019s investment guidelines are subsets of guidelines for the core portion of funds
required to meet near-term obligations and cash flow needs following an extreme event.
These\u00a0guidelines add further requirements, including reducing permitted asset classes, higher
credit quality, shorter duration, and higher liquidity. The primary objectives for this portion of
assets are capital preservation and providing liquidity to meet insurance and other near-term
obligations. Alongside internally managed cash, the core portfolio holds funds specifically
allocated to cover potential liabilities, aligning their duration with that of the insurance liabilities
within an agreed range. The core portfolio is invested in fixed maturity securities, fixed maturity
funds, and cash and cash equivalents. The core portfolio may, at times, contain assets
significantly in excess of those required to meet insurance liabilities or other defined
funding\u00a0needs.
Assets in excess of those required to be held in the core portfolio are typically held in the
surplus portfolio. The surplus portfolio is invested in fixed maturity securities, principal
protected products, derivative instruments, cash and cash equivalents, private investment funds,
and hedge funds. In general, the duration of the surplus portfolio is slightly longer than the
core\u00a0portfolio.
The Group reviews the composition, duration and asset allocation of its investment portfolio on
a regular basis to respond to changes in interest rates and other market conditions. If certain
asset classes are anticipated to produce a higher return within management\u2019s risk tolerance,
an\u00a0adjustment in asset allocation may be made. Conversely, if the risk profile is expected to
move outside of management's risk tolerance levels, an adjustment to the asset allocation may
be made to reduce the risks in the portfolio.
The investment portfolio is currently structured to perform similarly in risk-on and risk-off
environments. The Group endeavours to limit losses in both risk-on, risk-off, and interest rate
hike scenarios. The Group models various periods of significant stress to better understand the
investment portfolio\u2019s risks and exposures. The scenarios represent what could, and most likely
will, occur (albeit not in the exact form of the scenarios, which are based on historic periods of
volatility). The Group also monitors the portfolio impact of more severe disaster scenarios
consisting of extreme shocks.
The Investment Committee oversees a strategic asset allocation study on a bi-annual basis,
which assesses the Group's overall strategy and seeks to determine if there is an alternative
asset allocation to achieve the highest risk-adjusted return within our risk tolerances.
The\u00a0IRRC\u00a0meets quarterly to seek to ensure that the Group\u2019s strategic and tactical investment
actions are consistent with investment risk preferences, appetite, risk and return objectives
and\u00a0tolerances. The IRRC also helps further develop the risk tolerances to be incorporated
into\u00a0the ERM framework.
The investment mix of the Group's investment portfolio is as follows:
2025
2024
Core
Surplus
Total
Core
Surplus
Total
As at 31 December
$m
$m
$m
$m
$m
$m
Short-term investments
13.0
2.0
15.0
27.9
4.6
32.5
Fixed maturity funds
30.4
\u2014
30.4
23.1
\u2014
23.1
US treasuries
364.5
28.4
392.9
382.8
127.1
509.9
Other government bonds
46.5
74.4
120.9
31.5
33.8
65.3
US municipal bonds
9.7
1.4
11.1
9.1
6.7
15.8
US government agency debt
\u2014
4.0
4.0
0.2
17.0
17.2
Asset backed securities
111.4
192.0
303.4
81.6
190.1
271.7
US government agency MBS
244.6
161.4
406.0
181.3
145.2
326.5
Non-agency MBS
62.4
35.4
97.8
22.5
33.0
55.5
US government agency CMBS
\u2014
1.1
1.1
\u2014
\u2014
\u2014
Non-agency commercial MBS
36.8
17.8
54.6
\u2014
20.5
20.5
Bank loans
\u2014
153.7
153.7
\u2014
153.4
153.4
Corporate bonds
913.9
305.4
1,219.3
827.9
280.1
1,108.0
Other fixed maturities
\u2014
\u2014
\u2014
\u2014
4.4
4.4
Total fixed maturity securities
1,833.2
977.0
2,810.2
1,587.9
1,015.9
2,603.8
Private investment funds
\u2014
291.2
291.2
\u2014
253.1
253.1
Hedge funds
\u2014
8.8
8.8
\u2014
7.9
7.9
Other investments
\u2014
(0.3)
(0.3)
\u2014
0.1
0.1
Total investments
1,833.2
1,276.7
3,109.9
1,587.9
1,277.0
2,864.9
The concentration risk of the Group's fixed maturity securities by location and sector is
as\u00a0follows:
2025
As at 31 December
Financials
$m
Industrial &
consumer
$m
Utility
$m
Government
&
government
agencies
$m
Structured1
$m
Other2
$m
Total3
$m
United States
338.3
654.4
19.1
829.3
222.5
\u2014
2,063.6
Cayman Islands
\u2014
\u2014
\u2014
\u2014
174.9
\u2014
174.9
Canada
33.1
23.4
\u2014
77.3
\u2014
\u2014
133.8
United Kingdom
50.3
25.6
0.3
\u2014
\u2014
\u2014
76.2
Europe 4
64.8
53.0
\u2014
13.6
2.1
\u2014
133.5
Other
48.5
54.0
9.1
29.9
56.3
30.4
228.2
Total fixed maturity securities
535.0
810.4
28.5
950.1
455.8
30.4
2,810.2
2024
As at 31 December
Financials
$m
Industrial &
consumer
$m
Utility
$m
Government
&
government
agencies
$m
Structured1
$m
Other2
$m
Total3
$m
United States
316.3
635.5
12.6
869.3
138.5
27.3
1,999.5
Cayman Islands
\u2014
1.2
\u2014
\u2014
151.8
\u2014
153.0
Canada
37.0
17.4
\u2014
27.8
\u2014
\u2014
82.2
United Kingdom
41.5
20.2
\u2014
2.2
\u2014
\u2014
63.9
Europe 4
58.5
37.1
\u2014
6.6
2.6
4.4
109.2
Other
29.4
51.2
7.9
28.8
54.8
23.9
196.0
Total fixed maturity securities
482.7
762.6
20.5
934.7
347.7
55.6
2,603.8
1. Structured products excludes any government structured products.
2. Other includes Lloyd's overseas deposits. Short term investments have been allocated to sector in the
current\u00a0period.
3. Location represents the country of risk for the majority of the fixed maturity securities. If the country of risk is not
available, the location will reflect the country of the Issuer.
4. Europe excludes the United Kingdom.
The Group's net asset value is directly impacted by movements in the fair value of investments
held. Fair values can be impacted by movements in interest rates, credit ratings, exchange rates,
the current economic environment and outlook.
Interest rate risk
(i) Investments
Interest rate risk is the risk that movements in market interest rates, which are typically
correlated with the interest rates set by central banks, have a detrimental financial impact on
the value of the Group's assets and liabilities. The Group\u2019s investment portfolio is mainly
comprised of fixed maturity securities and cash and cash equivalents. Fixed maturity funds are
overseas deposits held by the syndicates in trust for the benefit of the policyholders in those
overseas jurisdictions. They consist of high-quality, short-duration fixed maturity securities.
The\u00a0fair value of the Group\u2019s fixed maturity portfolio is generally inversely correlated to
movements in market interest rates. If market interest rates fall, the fair value of the Group\u2019s
fixed maturity securities would tend to rise, and vice versa.
The sensitivity of the price of fixed maturity securities, and certain derivatives, to movements
in\u00a0interest rates is indicated by their duration. The greater a security\u2019s duration, the greater its
price volatility to movements in interest rates. The sensitivity of the Group\u2019s fixed maturity
investment portfolio to interest rate movements is detailed below, assuming linear movements
in interest rates:
2025
2024
As at 31 December
$m
%
$m
%
Immediate shift in yield (basis points)
100
(62.9)
(2.2)
(62.2)
(2.4)
75
(47.2)
(1.7)
(46.6)
(1.8)
50
(31.4)
(1.1)
(31.1)
(1.2)
25
(15.7)
(0.6)
(15.5)
(0.6)
(25)
15.7
0.6
13.7
0.5
(50)
31.4
1.1
27.5
1.1
(75)
47.1
1.7
41.2
1.6
(100)
62.8
2.2
54.9
2.1
The Group mitigates interest rate risk on the investment portfolio by establishing and
monitoring duration ranges in its investment guidelines. The duration of the core portfolio is
matched to the modelled duration of the net insurance contract liabilities, within a permitted
range. The permitted duration range for the surplus portfolio is between one and five years.
The overall duration for fixed maturity securities, managed cash and cash equivalents is
2.1 years (31 December 2024 \u2013 2.0 years).
In addition to duration management, the Group monitors VaR to measure potential losses in
the\u00a0estimated fair values of its cash and invested assets, and to understand and monitor risk.
The\u00a0VaR calculation is performed using variance/covariance risk modelling to capture the cash
flows and embedded optionality of the investment portfolio. Securities are valued individually
using standard market pricing models. These security valuations serve as the input to risk
analytics, including full valuation risk analyses, as well as parametric methods that rely on
option-adjusted risk sensitivities to approximate the risk and return profiles of the portfolio.
The principal VaR measure that is produced is an annual VaR at the 99th percentile confidence
level. Under normal conditions, the investment portfolio value is not expected to decrease
more than the VaR metric listed in the table below 99% of the time over a one-year time
horizon. The appropriateness of this measure is considered by the Investment Committee,
on\u00a0behalf of the Board of Directors, on an annual basis.
The Group\u2019s annual VaR calculations are as follows:
2025
2024
As at 31 December
$m
% of shareholders'
equity
$m
% of shareholders'
equity
99th percentile confidence level1
119.6
7.9
157.8
10.6
1. Including the impact of internal foreign exchange hedges.
(ii) Discounting approach on the LIC and the AIC
The Group's LIC and AIC are discounted on initial recognition and remeasured to current interest
rates at each quarter end date, and are therefore sensitive to changes in market interest rates.
The Group applies the bottom-up approach when deriving its discount rates for discounting the
LIC and the AIC. This approach requires the use of an appropriate (liquid) risk-free yield curve,
plus a specific illiquidity premium above the risk-free yield curve to represent the reduced
liquidity of the insurance contract cash flows compared to the observable risk-free rates.
The\u00a0risk-free yields and illiquidity premium are derived using reference data supplied by third
parties with management judgement applied where appropriate, in particular in the derivation
of the illiquidity premium, which is informed by the implied illiquidity premium of a
representative portfolio of corporate bonds determined using the top-down method.
The Group writes predominantly short-duration contracts and has not identified any significant
financing component in the LRC or the ARC, and has therefore applied judgement to determine
that there is no requirement to discount these balances.
The following table sets out the one-, three-, five- and seven-year yield curves (risk-free rate
plus illiquidity premium) used to discount the cash flows of insurance contracts issued and
reinsurance contracts held for the Group's major currencies:
2025
2024
As at 31 December
1 year
3 years
5 years
7 years
1 year
3 years
5 years
7 years
USD
3.83%
4.03%
4.31%
4.55%
5.33%
4.40%
4.29%
4.34%
GBP
3.94%
4.23%
4.51%
4.75%
5.31%
4.34%
4.14%
4.16%
EUR
2.57%
3.08%
3.43%
3.68%
4.03%
3.21%
3.21%
3.33%
JPY
1.30%
2.02%
2.35%
2.60%
0.65%
0.96%
1.24%
1.52%
The following table presents information on how reasonably possible changes in the yield curve
could impact the valuation of the net insurance contract liabilities, profit after tax and
shareholders' equity. Under the PAA, and given the current amount of the Group's loss
component, only the LIC component of insurance contract liabilities and the AIC component of
reinsurance contract assets are sensitive to possible changes in interest rate risk variables.
LIC as at
31 December
2025
$m
Impact on profit
after tax and
shareholders'
equity
$m
LIC as at
31 December
2024
$m
Impact on profit
after tax and
shareholders'
equity
$m
Insurance contract liabilities
2,644.8
2,237.7
Reinsurance contract assets
(757.0)
(608.5)
Net insurance contract liabilities
1,887.8
1,629.2
1% increase in yield curves
Insurance contract liabilities
2,589.7
54.3
2,195.6
37.9
Reinsurance contract assets
(747.1)
(11.4)
(600.6)
(6.7)
Net insurance contract liabilities
1,842.6
42.9
1,595.0
31.2
The analysis is based on a change in an assumption while holding all other assumptions
constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be
correlated.
Price risk
Price risk is the risk that the fair value of the Group's investment portfolio will fluctuate because
of changes in market prices (other than those arising from interest rate or foreign exchange rate
risk), whether those changes are caused by factors specific to the individual investment or other
market factors.
The Group's price risk exposure relates to private investment funds and hedge funds. Listed
investments that are quoted in an active market are recognised at quoted bid price, which is
deemed to be the 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 11).
This includes comparison to comparable orderly transactions between active market
participants, reference to benchmarks or other indices to assess reasonableness, and other
valuation techniques that are commonly used by market participants.
A 10% asset price decrease at 31 December 2025 would reduce the value of our private
investment funds and hedge funds by approximately $30.0 million (31 December 2024 \u2013
$26.1 million).
Derivative financial instruments
The Group\u2019s investment guidelines permit the investment managers to utilise forward foreign
currency contracts to manage foreign currency exposure. These positions are monitored
regularly. The Group may also use OTC or exchange-traded managed derivatives to mitigate
interest rate risk and foreign currency exposures. The Group principally has exposure to
derivatives related to the following types of risks: interest rate risk, foreign currency risk,
and\u00a0credit risk.
Forward foreign currency contracts
A forward foreign currency contract is a commitment to purchase or sell a foreign currency at a
future date, at a defined rate. The Group may utilise forward foreign currency contracts to gain
exposure to a certain currency or market rate, to manage the impact of fluctuations in foreign
currencies on the value of its foreign currency denominated investments, debt, insurance-
related currency exposures and/or expenses.
Forward contracts expose the Group to credit, market and liquidity risks. Credit risk arises from
the potential inability of counterparties to perform under the terms of the contract. The Group
is exposed to market risk to the extent that adverse changes occur in the exchange rate of the
underlying foreign currency. Liquidity risk represents the possibility that the Group may not be
able to rapidly adjust the size of its forward positions at a reasonable price in times of high
volatility and financial stress. These risks are mitigated by requiring a minimum counterparty
credit quality, restricting the maximum notional exposure as a percentage of the investment
portfolio\u2019s estimated fair value, and restricting exposures to foreign currencies, individually
and\u00a0in aggregate, as a percentage of the investment portfolio\u2019s estimated fair value.
Where forward foreign currency contracts are within externally managed investment portfolios,
they are disclosed as other investments. Where they are managed directly by the Group, they
are disclosed as either other receivables, or other payables, as appropriate.
The notional amount of a derivative contract is the underlying quantity upon which payment
obligations are calculated. A long position is equivalent to buying the underlying currency,
whereas a short position is equivalent to having sold the underlying currency.
The net gains or losses on the Group\u2019s derivative financial instruments recognised in the
consolidated statement of comprehensive income are as follows:
For the year ended 31 December
2025
$m
2024
$m
Net foreign exchange losses on forward foreign currency contracts
(1.2)
(2.3)
The estimated fair values of the Group\u2019s derivative instruments are as follows:
2025
2024
As at 31 December
Other
investments
$m
Other
receivables
$m
Other
payables
$m
Other
investments
$m
Other
receivables
$m
Other
payables
$m
Forward foreign currency contracts
(0.3)
\u2014
(1.0)
0.1
0.2
(0.4)
The Group has the following open forward foreign currency contracts:
2025
2024
As at 31 December
Notional
long
$m
Notional
short
$m
Net notional
long (short)
$m
Notional
long
$m
Notional
short
$m
Net notional
long (short)
$m
Canadian Dollar
\u2014
48.0
(48.0)
\u2014
25.3
(25.3)
Euro
\u2014
2.6
(2.6)
31.6
2.3
29.3
Australian Dollar
\u2014
2.8
(2.8)
\u2014
\u2014
\u2014
Sterling
54.0
0.8
53.2
\u2014
0.5
(0.5)
Danish Krone
\u2014
0.3
(0.3)
\u2014
0.2
(0.2)
Total
54.0
54.5
(0.5)
31.6
28.3
3.3
III. Debt risk
Debt risk is the risk that the Group will not be able to service either the interest payment, or the
principal repayment, amounts on its external borrowings as they fall due. In 2021, the Group
issued $450.0 million (in aggregate principal amount) of 5.625% fixed-rate reset junior
subordinated notes, repayable on 18 September 2041 (see note 18). The fixed interest rate will
reset on 18 September 2031 at a rate per annum equal to the prevailing five-year treasury rate,
plus a credit spread of 4.08% and a 100 basis point step up.
The Group is exposed to interest rate risk in the future if prevailing rates at the time of reset are
materially different from the existing rates on the debt issue.
IV. Currency risk
Currency risk is the risk that movements in currency exchange rates have a detrimental financial
impact on the Group. The Group underwrites from multiple locations and risks are assumed on
a worldwide basis. Risks assumed are predominantly denominated in US dollars. The Group is
exposed to currency risk to the extent its assets and liabilities are denominated in different
currencies to its US dollar reporting currency. The exchange gains and losses which arise on
these assets and liabilities impact the consolidated statement of comprehensive income.
The Group hedges monetary non-US dollar liabilities primarily with non-US dollar assets, but
may also use derivatives to mitigate foreign currency exposures. The Group's main foreign
currency exposure relates to its insurance contract liabilities and reinsurance contract assets,
investments and cash and cash equivalents, and other monetary assets and liabilities. The Group
uses forward foreign currency contracts for the purposes of managing currency exposures.
The\u00a0Group\u2019s assets and liabilities, categorised by currency at their translated carrying amount,
are as follows:
2025
Assets
US $
$m
Sterling
$m
Euro
$m
Japanese Yen
$m
Other
$m
Total
$m
Cash and cash equivalents
375.2
67.2
48.3
12.9
57.8
561.4
Accrued interest receivable
23.6
\u2014
0.5
\u2014
0.5
24.6
Investments
2,917.0
36.0
73.6
\u2014
83.3
3,109.9
Reinsurance contract assets
650.9
28.5
37.8
(0.6)
1.2
717.8
Other receivables
88.1
11.5
0.8
\u2014
0.8
101.2
Corporation tax receivable
0.2
0.2
\u2014
\u2014
\u2014
0.4
Investment in associate
4.8
\u2014
\u2014
\u2014
\u2014
4.8
Right-of-use assets
8.6
13.5
\u2014
\u2014
0.6
22.7
Property, plant and equipment
2.4
5.8
\u2014
\u2014
\u2014
8.2
Intangible assets
143.4
109.6
\u2014
\u2014
\u2014
253.0
Total assets as at 31 December
4,214.2
272.3
161.0
12.3
144.2
4,804.0
2025
Liabilities
US $
$m
Sterling
$m
Euro
$m
Japanese Yen
$m
Other
$m
Total
$m
Insurance contract liabilities
2,318.1
135.1
153.2
10.1
95.6
2,712.1
Other payables
32.2
55.3
0.6
\u2014
1.7
89.8
Deferred tax liability
10.8
5.1
\u2014
\u2014
(0.3)
15.6
Lease liabilities
8.7
20.3
\u2014
\u2014
0.7
29.7
Long-term debt
447.5
\u2014
\u2014
\u2014
\u2014
447.5
Total liabilities as at 31 December
2,817.3
215.8
153.8
10.1
97.7
3,294.7
2024
Assets
US $
$m
Sterling
$m
Euro
$m
Japanese Yen
$m
Other
$m
Total
$m
Cash and cash equivalents
449.8
141.0
21.5
17.9
54.1
684.3
Accrued interest receivable
21.3
\u2014
0.4
\u2014
0.3
22.0
Investments
2,721.4
27.0
59.1
\u2014
57.4
2,864.9
Reinsurance contract assets
497.9
25.3
36.4
(0.2)
(2.2)
557.2
Other receivables
8.9
10.5
\u2014
\u2014
1.1
20.5
Investment in associate
9.1
\u2014
\u2014
\u2014
\u2014
9.1
Right-of-use assets
1.4
14.8
\u2014
\u2014
\u2014
16.2
Property, plant and equipment
0.8
7.9
\u2014
\u2014
\u2014
8.7
Intangible assets
153.8
43.2
\u2014
\u2014
\u2014
197.0
Total assets as at 31 December
3,864.4
269.7
117.4
17.7
110.7
4,379.9
2024
Liabilities
US $
$m
Sterling
$m
Euro
$m
Japanese Yen
$m
Other
$m
Total
$m
Insurance contract liabilities
1,948.7
117.5
129.0
15.6
89.6
2,300.4
Other payables
43.8
46.2
\u2014
\u2014
1.9
91.9
Corporation tax payable
(0.3)
3.0
\u2014
\u2014
\u2014
2.7
Deferred tax liability
11.3
11.2
\u2014
\u2014
(0.2)
22.3
Lease liabilities
1.4
20.8
\u2014
\u2014
0.1
22.3
Long-term debt
447.0
\u2014
\u2014
\u2014
\u2014
447.0
Total liabilities as at 31 December
2,451.9
198.7
129.0
15.6
91.4
2,886.6
The impact on net income of a proportional foreign exchange movement of 10.0% up and
10.0% down for the aggregated total of all non-US dollar currencies against the US dollar, taken
at the year-end spot rates, would be an decrease or increase of $1.7 million (31 December 2024
\u2013 an increase or decrease of $1.5 million).
C. Liquidity risk
Liquidity risk is the risk that cash may not be available to pay obligations when they are due
without incurring an unreasonable cost. The Group's main exposures to liquidity risk are with
respect to its insurance, investment, and operational activities. The Group is exposed to such
risk if proceeds from financial assets are not sufficient to fund obligations arising from its
insurance contracts issued. The Group can be exposed to daily calls on its available investment
assets, principally to settle insurance claims and to fund trust accounts following a large
catastrophe loss.
The most significant exposures in relation to the Group's insurance activities are as follows:
\u2022 large catastrophic events, or multiple medium-sized events in quick succession, resulting in a
requirement to pay a large value of claims within a relatively short time frame, or to fund trust
accounts;
\u2022 failure of insureds or cedants to meet their contractual obligations with respect to the
payment of premiums in a timely manner; and
\u2022 failure of reinsurers to meet their contractual obligations with respect to the payment of
claims in a timely manner.
The most significant exposures in relation to the Group's investment activities are as follows:
\u2022 adverse market movements and/or a duration mismatch to obligations, resulting in
investments being disposed of at a significant realised loss; and
\u2022 an inability to liquidate investments due to market conditions.
The maturity dates of the Group\u2019s fixed maturity portfolio are as follows:
2025
2024
As at 31 December
Core
$m
Surplus
$m
Total\u00a0
$m
Core
$m
Surplus
$m
Total
$m
Less than one year
217.8
31.3
249.1
255.3
39.7
295.0
Between one and two years
348.3
48.3
396.6
346.1
77.3
423.4
Between two and three years
348.6
70.9
419.5
263.7
67.9
331.6
Between three and four years
136.2
102.8
239.0
195.5
120.4
315.9
Between four and five years
104.6
93.4
198.0
80.7
88.9
169.6
Over five years
222.5
222.6
445.1
161.2
232.9
394.1
ABS and MBS
455.2
407.7
862.9
285.4
388.8
674.2
Total fixed maturity securities
1,833.2
977.0
2,810.2
1,587.9
1,015.9
2,603.8
The maturity profile of the insurance contracts issued and financial liabilities of the Group is
as\u00a0follows:
Years until liability becomes due - undiscounted values
As at 31 December 2025
Statement of
financial
position\u00a0
$m
Less than
one\u00a0
$m
One to three\u00a0
$m
Three to five\u00a0
$m
Over five\u00a0
$m
Total\u00a0
$m
Insurance contract liabilities1
2,712.1
1,053.4
963.5
447.5
452.6
2,917.0
Other payables
89.8
89.8
\u2014
\u2014
\u2014
89.8
Lease liabilities
29.7
6.0
12.6
10.3
6.7
35.6
Long-term debt2
447.5
25.3
50.6
50.6
475.3
601.8
Total
3,279.1
1,174.5
1,026.7
508.4
934.6
3,644.2
Years until liability becomes due - undiscounted values
As at 31 December 2024
Statement of
financial
position
$m
Less than
one\u00a0
$m
One to three\u00a0
$m
Three to five\u00a0
$m
Over five\u00a0
$m
Total\u00a0
$m
Insurance contract liabilities1
2,300.4
1,017.5
861.4
342.0
248.8
2,469.7
Other payables
91.9
91.9
\u2014
\u2014
\u2014
91.9
Lease liabilities
22.3
5.8
7.4
7.2
5.8
26.2
Long-term debt2
447.0
25.3
50.6
50.6
500.6
627.1
Total
2,861.6
1,140.5
919.4
399.8
755.2
3,214.9
1. Since the Group applies the PAA model for all insurance contracts issued, the maturity profile represents only the
liability for incurred claims, and has been presented on an undiscounted basis.
2. The maturity profile of long-term debt includes accrued interest.
Within the tables shown above, the insurance contract liabilities balance discloses the period
when the claims in respect of insurance contracts issued by the Group are expected to be
settled. All other liability balances within the table disclose the earliest period in which the
relevant counterparty could contractually require the Group to make payment. Actual maturities
of the above may differ from contractual maturities because certain counterparties have the
right to call or prepay certain obligations with or without call or prepayment penalties.
While the estimation of future cash flows in relation to ultimate claims settlement is complex
and incorporates a significant amount of judgement, the timing of the payment of claims is also
uncertain and cannot be predicted as simply as for other financial liabilities. Actuarial and
statistical techniques, past experience, and management's judgement have been used to
determine a likely settlement pattern based on the earliest period in which the Group could be
required by the relevant counterparty to make payment. There are no amounts contained
within the insurance contract liabilities or reinsurance contract assets as at 31 December 2025
(31 December 2024 \u2013 nil) that are payable on demand.
As at 31 December 2025, cash and cash equivalents were $561.4 million (31 December 2024 \u2013
$684.3 million). The Group manages its liquidity risks through its investment strategy to hold
high-quality, liquid securities, sufficient to meet its insurance liabilities and other near-term
liquidity requirements. The core portfolio, with its subset of guidelines, aims to ensure funds are
readily available to meet potential insurance liabilities, plus other liquidity requirements, in an
extreme event. In addition, the Group has established asset allocation and duration parameters
within the investment guidelines, such that the majority of the investments are in high-quality
assets which could be converted into cash promptly and at minimal expense. The Group
monitors market changes and outlook, and reallocates assets as deemed necessary.
As at 31 December 2025, the Group considers that it has more than adequate liquidity to pay its
obligations as they fall due.
D. Credit risk
Credit risk is the risk that a counterparty may fail to pay, or repay, a debt or obligation.
The Group is exposed to credit risk in respect of its fixed maturity investment portfolio, cash and
cash equivalents, accrued interest receivable, derivative financial instruments, amounts
recoverable from reinsurers within reinsurance contract assets, amounts receivable from
insureds and cedants included within insurance contract liabilities, and other receivables.
Credit risk on the fixed maturity portfolio is mitigated through the Group\u2019s policy to invest in
instruments of high credit quality issuers, and to limit the amounts of credit exposure with
respect to particular ratings categories and any one issuer. Securities rated below an S&P or
equivalent rating of BBB-/Baa3 may comprise no more than 15.0% of total market value of the
fixed maturity portfolio. In addition, no one issuer, with the exception of US government and
agency securities, other G10 government guaranteed securities (excluding Italy), and Australian
sovereign debt, should exceed 5.0% of total market value of the fixed maturity portfolio. The
Group is therefore not exposed to any significant credit concentration risk on either its fixed
maturity investment portfolio, or cash and cash equivalents, except for fixed maturity securities
issued by the US government and government agencies, and other highly-rated governments.
Credit risk on insurance contract cash flows from insureds and cedants is managed by
conducting business with reputable broking organisations, with whom the Group has
established relationships, and by rigorous cash collection procedures. The Group also has a
broker approval process in place. Binding authorities are subject to standard market controls,
including credit control. Credit risk from reinsurance contract cash flows is primarily managed
by the review and approval of reinsurer security, as discussed in the outwards reinsurance
section above.
Reinsurance contracts held in the table below represent the credit exposed components of
reinsurance contract assets. These have been presented on an undiscounted basis, and
represent the maximum exposure to credit risk considering the Group's ability to offset
balances, where applicable, under the relevant reinsurance contracts held.
The table below presents an analysis of the Group\u2019s maximum exposures to counterparty credit
risk, based on their rating:
2025
2024
As at 31 December
Cash and cash
equivalents
$m
Fixed maturity
securities\u00a0
$m
Credit exposed
component of
reinsurance\u00a0
contracts held\u00a0
$m
Cash and cash
equivalents
$m
Fixed maturity
securities\u00a0
$m
Credit exposed
component of
reinsurance\u00a0
contracts held\u00a0
$m
AAA
304.2
405.5
\u2014
487.9
265.0
\u2014
AA+, AA, AA-
\u2014
1,054.1
3.9
\u2014
1,073.0
1.8
A+, A, A-
257.2
758.2
750.0
195.9
748.8
593.7
BBB+, BBB, BBB-
\u2014
428.6
0.4
0.5
360.2
1.0
Other1
\u2014
163.8
43.6
\u2014
156.8
41.6
Total
561.4
2,810.2
797.9
684.3
2,603.8
638.1
1. Reinsurance contracts held classified as 'other' include $31.6 million as at 31 December 2025 (2024 \u2013
$32.1 million) which are fully collateralised. Other under fixed maturity securities mainly consists of bank loans for
which no rating is available.
Reinsurance is ceded across all geographic regions in which the Group operates. The Group
does not have a significant concentration of credit risk with any single reinsurer.
The Group's maximum exposure to credit risk arising from insurance contracts issued is
$838.4 million (31 December 2024 \u2013 $777.5 million), which relates to the elements of the
insurance contract liabilities balance which are considered to be exposed to credit risk,
specifically, premium receivables and reinstatement premium receivables, net of profit
commissions payable on inwards reinsurance business.
ECL have been determined to be immaterial as at 31 December 2025 and 31 December 2024.
E. Operational risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes,
personnel, systems, or non-insurance external events. The Group and its subsidiaries have
identified and evaluated their key operational risks, and these are incorporated in the risk
registers and modelled within the subsidiaries' capital models. The Group has also established,
and monitors compliance with, internal operational risk tolerances. The RRC reviews
operational risk on at least an annual basis and operational risk is covered in the Group CRO's
quarterly ORSA report to the LHL Board of Directors, entity level boards, and in the LSL
RCC\u00a0reporting.
To manage operational risks, the Group has implemented a robust governance framework.
Policies and procedures are documented and identify the key risks and controls within
processes. Key risk indicators have been established and are monitored on a regular basis, and a
formal loss event and near-miss reporting process has been implemented. The risk
management function facilitates a quarterly risk and control affirmation process and performs
detailed control validation and testing, the outcomes of which inform the CRO's quarterly
opinion of the overall control environment.
The Group's internal audit function provides independent feedback with regard to the accuracy
and completeness of key risks and controls, and independently verifies the effective operation
of these through sample testing. The highest rated risk areas are considered for audit annually,
medium risk areas every two years and the lowest risk areas every three to five years.
It is widely recognised that the current geopolitical risks have also increased the risk of cyber attacks. Whilst
the Group does not write standalone cyber as a separate class of business, it does have some exposure
within broader policy coverage of existing classes of business. The Group also has exposure from the
operational risk of suffering a cyber attack on its systems, the resultant downtime of systems, the expense
in getting back up and running and the potential for missed business opportunities during the downtime.
To mitigate this risk, the Group has established an information security function which works
with a specialist third-party to identify, assess, monitor and manage cyber risk. A robust cyber
risk framework has been developed, this includes a range of key risk and performance
indicators which are monitored and reported against regularly. A cyber incident response plan
has been developed and is tested on an annual basis.
The operational cyber risk that comes with employees working from home is managed through
enhanced monitoring of network activity, targeted staff training, a quarterly risk and control
affirmation process, annual testing of business continuity plans and disaster recovery plans, and
a cyber security incident response plan. The risk is monitored on an ongoing basis through the
use of a series of quantitative key risk indicators, which are the aggregate of key performance
indicators monitored by the Group\u2019s information security function.
Management continue to closely monitor the progress of the legislative process in the
jurisdictions in which it operates as it relates to OECD global minimum tax and Bermuda
corporate income tax. Further details are outlined in note 14.
F. Strategic risk
Strategic risk is the risk that the Group does not develop and implement an appropriate long-
term strategy to meet its business goals. The Group has identified several strategic risks.
These\u00a0include: i) business planning risk, ii) inflation risk, iii) capital management risk, iv) retention
risk, v) growth risk and vi) climate change risk.
I. Business planning risk
Business planning risk is the risk that either the poor execution of the business plan or an
inappropriate business plan, results in a strategy that fails to adequately consider and reflect the
current trading environment, resulting in an inability of the Group to optimise performance,
increasing reputational risk. The Group addresses the risks associated with the planning and
execution of the business plan through a combination of the following:
\u2022 an iterative annual forward-looking business planning process with cross-departmental involvement;
\u2022 evaluation and approval of the annual business plan by the Board of Directors;
\u2022 regular monitoring of actual versus planned results;
\u2022 periodic review and re-forecasting as market conditions change; and
\u2022 evaluation of climate-related risks and the potential short-, medium- and long-term
implications/considerations for the business.
The forward-looking business planning process covers a three-year period from 2026 to 2028,
and applies a number of sensitivity, stress and scenario tests. These tests include consideration
of climate-related risks. The sensitivity and stress testing has confirmed that even under the
more extreme stress scenarios, the Group had more than adequate liquidity and regulatory
solvency capital headroom.
II. Inflation risk
Both UK and worldwide inflation rates have decreased from their peak in 2022 with UK rates
starting to trend upwards again during 2025 from its low in 2024. The Group routinely monitors
inflation and factors the impact of inflation in its RPI (Renewal Price Index) and estimated claims
costs. On this basis, inflation remains a focus for management and those charged with
governance at both the Board of Directors and the appropriate committees.
III. Capital management risk
Capital management risk is the risk of the Group failing to maintain adequate capital, accessing
capital at an inflated cost, or the inability to access capital. This includes unanticipated changes
in vendor, regulatory and/or rating agency models, that could result in an increase in capital
requirements, or a change in the type of capital required. The total capital of the Group is
as\u00a0follows:
As at 31 December
2025
$m
2024
$m
Shareholders' equity
1,509.3
1,493.3
Long-term debt
447.5
447.0
Total capital
1,956.8
1,940.3
Less: intangible assets
253.0
197.0
Total tangible capital
1,703.8
1,743.3
Risks associated with the effectiveness of the Group's capital management are mitigated
as\u00a0follows:
\u2022 regular monitoring of current and prospective regulatory and rating agency capital
requirements;
\u2022 regular discussion with the LSL management team regarding Lloyd's capital requirements;
\u2022 oversight of capital requirements by the Board of Directors, including regulatory capital
requirements;
\u2022 ability to purchase sufficient, cost-effective reinsurance;
\u2022 maintaining contact with vendors, regulators and rating agencies to stay abreast of upcoming
developments; and
\u2022 participation in industry groups such as the International Underwriters Association, the
Association of Bermuda Insurers and Reinsurers and the Lloyd's Market Association.
The Group reviews the level and composition of capital on an ongoing basis with a view to:
\u2022 maintaining sufficient capital for underwriting opportunities and to meet obligations
to\u00a0policyholders;
\u2022 maximising the risk-adjusted return to shareholders within predetermined risk tolerances;
\u2022 maintaining adequate financial strength ratings; and
\u2022 meeting internal, rating agency and regulatory capital requirements.
Increases in the Group's capital are held within the Group, invested, or returned to shareholders
as appropriate. The retention of earnings generated by the Group leads to an increase in capital.
Capital raising can include debt or equity, and returns of capital may be made through
dividends, share repurchases, a redemption of debt, or any combination thereof. All capital
actions require approval by the Board of Directors.
Internal methods have been developed to review the profitability of classes of business and their
estimated capital requirements, and the capital requirements of the combination of a wide\u00a0range
of other business activities. These approaches are used by management in decision-making.
The Group's long-term debt held is approved as 'Tier 2 Ancillary Capital' by the BMA.
The Group's aim is to maximise risk-adjusted returns for its shareholders across the cycle. The
return is measured by management in terms of the change in DBVS in the period. This aim is a
long-term goal, acknowledging that management expects both higher and lower results in the
shorter term. The cyclicality and volatility of the insurance market is expected to be the largest
driver of this pattern. Management monitors these peaks and troughs by adjusting the Group's
insurance portfolio to make the most effective use of available capital and seeking to maximise
the risk-adjusted return.
The sources of capital used by the Group are equity shareholders' funds and borrowings. As a
holding company, LHL relies on dividends from its operating entities to provide the cash flow
required for debt service and dividends to shareholders. The operating entities\u2019 ability to pay
dividends and make capital distributions is subject to the legal and regulatory restrictions of the
jurisdictions in which they operate.
Both the Group and LICL are regulated by the BMA, and are required to monitor their enhanced
capital requirement under the BMA's regulatory framework, which has been assessed as
equivalent to the Solvency II regime. Bermuda is also recognised as a qualified and reciprocal
jurisdiction by the US NAIC, and LICL is approved as a reciprocal reinsurer. The Group and
LICL's capital requirements are calculated using the BSCR standard formula model. For the
years ended 31 December 2025 and 31 December 2024, both the Group and LICL were more
than adequately capitalised under the BMA\u2019s regulatory regime.
The Group's UK-regulated insurance companies are required to comply with the Solvency II
regime and are regulated by the PRA and FCA. LSL is also regulated by Lloyd's. Under Solvency
II, the basis for assessing regulatory capital and solvency comprises a market-consistent
economic balance sheet and a SCR, determined using either an internal model or the
standard\u00a0formula.
LUK calculates its SCR using the standard formula. LUK's Solvency II own funds that comprise
Tier 1 items for the years ended 31 December 2025 and 31 December 2024. Tier 1 capital is the
highest-quality capital under Solvency II with the greatest loss-absorbing capacity, comprising
share capital and retained earnings.\u00a0For the years ended 31 December 2025 and 31 December
2024, LUK was more than adequately capitalised under the Solvency II regime.
The Group's underwriting capacity in its Lloyd's syndicates must be supported by providing a
deposit in the form of cash, investment securities, or LOCs, which are referred to as FAL.
The\u00a0capital framework at Lloyd's requires each managing agent to calculate the capital
requirement for each syndicate they manage. Solvency II internal models are used to determine
capital requirements for Syndicate 2010 and Syndicate 3010 based on the uSCR. Lloyd's has the
discretion to take into account other factors at syndicate or member level to uplift the
calculated uSCR. This may include perceived deficiencies in the internal model result, as well as
the need to maintain Lloyd\u2019s overall security rating. Currently, as a minimum, Lloyd's applies a
35.0% uplift to each syndicate's uSCR to arrive at the ECA.
Lloyd's then uses each syndicate\u2019s ECA as a basis for determining member level capital
requirements, which is backed by FAL. For the 2026 calendar year, the Group's corporate
member's FAL requirement was set at 69.9% (2025 \u2013 66.6%) of underwriting capacity.
Further\u00a0solvency adjustments are made to allow for open-year profits and losses of the
syndicates on which the corporate member participates. The Group has a FAL requirement
of\u00a0\u00a3559.2 million as at 31 December 2025 (31 December 2024 \u2013 \u00a3478.7 million).
For the years ended 31 December 2025 and 31 December 2024, the regulatory capital
requirements of all the Group\u2019s regulatory jurisdictions were met.
IV. Retention risk
Retention risk is the risk of inappropriate succession planning, poor staff retention in key roles,
and poor management of key person risks. Risks associated with succession planning, staff
retention and key person risks are mitigated through a combination of resource planning
processes and controls, including:
\u2022 the identification of key personnel, together with appropriate succession plans;
\u2022 documented recruitment procedures, position descriptions and employment contracts;
\u2022 resource monitoring and the provision of appropriate compensation, including equity based
compensation which vests over a defined time horizon;
\u2022 the use of KRIs for the voluntary turnover of members of staff; and
\u2022 training schemes.
V. Growth risk
Growth risk is the risk of organisational stretch as the Group grows, in terms of volume of
business written and number of employees, as well as from transformation programmes
designed to ensure the Group has appropriate systems, infrastructure and data in place to
support business activities. Growth risk is mitigated through continuous monitoring of the
Group's current state against the Group's business plan and goals, together with engagement
with individual management teams across the Group to validate that they have the resources
they require to deliver their own business objectives.
VI. Climate change risk
The Group is exposed to both climate change-related risks and opportunities. The two major
categories of risk being transition risk and physical risk.
Transition risks are those risks relating to the transition to a lower-carbon economy and include
risks such as policy and legal risk, technology risk, market risk and reputation risk. Physical risks
are those relating to the physical impacts of climate change which can be acute (those from
increased frequency and severity of climate-related events) or chronic (due to longer-term
shifts in climate patterns). As a (re)insurance underwriter, the Group is more significantly
affected by physical risk through its potential exposure to acute and chronic climate change.
The potential financial impact from these climate-related risks is assessed through scenario
testing and mitigated by the Group's strategic and risk management decisions around managing
these risks. A risk radar has been prepared to illustrate the risks identified and the likelihood and
magnitude of these risks; this diagram can be found on page 58. The risk assessment also
considers the products currently offered by the Group and how these might change over time
during the transition to a lower-carbon economy. A table summarising potential opportunities,
their time frame, likelihood and magnitude is included on page 54. The Group's current
assessment of risk in relation to climate change is discussed in more detail within the TCFD
report on pages 50 to 62.
The Group's process in identifying, assessing and managing climate risk with respect to
insurance risk, investment risk (a component of market risk) and business plan risk
(a\u00a0component of strategic risk) is discussed further within the relevant sections above.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-268": { "value": "
A. Insurance risk
Insurance risk is the risk that the Group's underwriting, reserving, claims management, or
reinsurance decisions and judgements result in a detrimental financial impact to the Group.
The\u00a0Group underwrites worldwide insurance and reinsurance contracts that transfer insurance
risk, including risks exposed to both natural and man-made catastrophes. The Group's exposure
in connection with insurance or reinsurance contracts underwritten is whether, in the event of
insured losses, premiums will be sufficient to cover the loss payments and expenses. Insurance
and reinsurance markets are cyclical and premium rates and terms and conditions vary by line
of business depending on market conditions and the stage of the underwriting cycle.
Market\u00a0conditions are impacted by capacity and recent loss events, and broader economic
cycle impacts, amongst other factors. The Group\u2019s underwriters assess likely losses using their
experience and knowledge of past loss experience, industry trends, and current circumstances.
This allows them to estimate the premiums sufficient to meet likely losses and expenses and
desired levels of profitability.
The Group considers insurance risk at an individual contract level, at a segment level, at a
geographic level, and at an aggregate portfolio level. This promotes careful risk selection,
consideration of concentration levels and appropriate portfolio diversification. The level of
insurance risk tolerance per peril is set by the Board and the boards of directors at individual
entity level and at the overall aggregate Group level.
A number of controls are deployed by the Group to manage the amount of insurance exposure
assumed:
\u2022 a rolling strategic plan that helps establish the business goals that the Board of Directors aims
to achieve;
\u2022 a detailed three-year business plan is produced annually. The plan is approved by the Board
of Directors and is monitored, reviewed and updated on an ongoing basis;
\u2022 for LSL, the syndicates' business forecasts and business plans are subject to review and
approval by Lloyd's;
\u2022 economic capital models are used to model risk levels and capital requirements;
\u2022 each authorised class has a predetermined normal maximum line structure;
\u2022 each underwriter has a clearly defined limit of underwriting authority;
\u2022 the Group and individual operating entities have predetermined tolerances on probabilistic and
deterministic losses of capital for certain single events, which are monitored on a regular basis;
\u2022 pricing and aggregation models are used to assist with the underwriting process; and
\u2022 reinsurance is purchased to mitigate both frequency and severity of losses on a facultative,
excess of loss treaty or proportional treaty basis.
Some of the Group's business provides coverage for natural catastrophes (for example, hurricanes,
earthquakes, wildfires and floods) and is subject to potential seasonal variation and the effects of
climate change. A proportion of the Group\u2019s business is exposed to large catastrophe losses in
North America, Europe and Japan as a result of windstorms. The level of windstorm activity,
and\u00a0landfall thereof, during the North American, European and Japanese wind seasons may
materially impact the Group\u2019s loss experience. The North American and Japanese wind seasons
are typically June to November, and the European wind season is typically November to March.
The Group also has exposure to large losses arising from other non-seasonal natural catastrophes,
such as earthquakes, tsunamis, droughts, floods and tornadoes, from risk losses throughout the
year and from war, terrorism and political risk, and other events.
Climate change may expose the Group to the risk of heightened severity and frequency of
weather-related losses. Climate-related risks are identified and assessed as part of the usual risk
identification and management process, which includes, but is not limited to, discussions with
risk owners and subject matter experts across the Group, discussions at the Emerging Risk
Forum, and at the ESG Committee.
Climate-related risks specific to the (re)insurance portfolios are identified and assessed as part
of the day-to-day underwriting process by individual underwriters in their analysis of specific
risk information, and more broadly in the context of the wider portfolio during the individual
class of business QBR process, and through the RRC meetings.
These reviews include: the physical location of assets insured, weather-related perils that have
impacted the location and their historical frequency and severity, as well as expected short-
term and long-term changes. Various underwriting committees and forums assess climate-
related risks of both current and anticipated future risks, which include, but are not limited to,
transition risk arising from a decline in the value of assets to be insured, changing energy costs,
and liability risks that could arise from climate-related litigation.
Physical, transition and liability risks are considered by business segment and geographical
location, and the expected impact from the risks identified is considered with respect to both
magnitude and timescale.
The Group manages climate risk by using stochastic models from third-party vendors that have
a long history of data quality governance. The Group adapts these models based upon views of
climate risk, as well as clients' exposure data, to create aggregate loss scenarios. Underwriting
guidelines support the underwriting process and provide guidance to assist underwriters in their
decision-making. Performance against guidelines is monitored through the regular meetings,
QBRs and related reporting. We have clear tolerances and preferences in place to actively
manage exposures, and the Board regularly monitors our PMLs.
The Group accepts risks for periods primarily of one year, which mitigates the potential short-
term impacts of climate risk. The Group has the ability to re-evaluate the portfolio on an
annual\u00a0basis and therefore reprice physical risk and reset exposure levels to consider new data
regarding the frequency and severity of elemental catastrophe events.
Catastrophe management
The Group actively monitors risk levels and manages catastrophe risk accumulations using
reinsurance and PML based risk tolerances, which are monitored as part of our climate-related
risks. The Group's exposures to certain peak zone elemental losses, as a percentage of tangible
capital, including long-term debt, are shown below. Net loss estimates are undiscounted before
income tax and net of reinstatement premiums and outwards reinsurance on a first occurrence
return period basis.
31 December 2025
31 December 2024
100 year return period estimated net loss1
$m
% of
tangible capital
$m
% of
tangible capital
Zones
Perils
Gulf of Mexico2
Hurricane
337.1
19.8%
335.8
19.3%
California
Earthquake
255.1
15.0%
247.6
14.2%
Non-Gulf of Mexico \u2013 US
Hurricane
239.5
14.1%
233.4
13.4%
Pan-European
Windstorm
109.6
6.4%
129.4
7.4%
Japan
Earthquake
78.7
4.6%
107.3
6.2%
Japan
Typhoon
78.8
4.6%
102.3
5.9%
Pacific North West
Earthquake
41.6
2.4%
34.3
2.0%
31 December 2025
31 December 2024
250 year return period estimated net loss1
$m
% of
tangible capital
$m
% of
tangible capital
Zones
Perils
Gulf of Mexico2
Hurricane
464.4
27.3%
435.4
25.0%
California
Earthquake
284.3
16.7%
302.6
17.4%
Non-Gulf of Mexico \u2013 US
Hurricane
421.5
24.7%
525.9
30.2%
Pan-European
Windstorm
173.4
10.2%
195.9
11.2%
Japan
Earthquake
164.6
9.7%
189.5
10.9%
Japan
Typhoon
114.7
6.7%
155.0
8.9%
Pacific North West
Earthquake
177.6
10.4%
170.9
9.8%
1. Estimated net loss balances presented in the table are unaudited.
2. Landing hurricane from Florida to Texas.
There can be no guarantee that the modelled assumptions and techniques deployed in
calculating these figures are accurate. There could also be an unmodelled loss which exceeds
these figures. In addition, any modelled loss scenario could cause a larger loss to capital than
the modelled expectation from the above return periods.
Geopolitical risks
The conflict in Ukraine shows no clear resolution, and tensions between Russia and the West
continue to escalate. Add to that US China relations; European and Arctic nations facing rising
threats of tariffs; and tensions between the US and Europe concerning the sovereignty of
Greenland; and you have a highly unstable geopolitical environment. Underwriting discipline
and informed decision-making are key in this environment.
Insurance revenue geographical split and operating segment
The following table provides an analysis of the Group's insurance revenue by operating
segment and geographical location:
2025
2024
For the year ended 31 December
Reinsurance
$m
Insurance
$m
Total
$m
Reinsurance
$m
Insurance
$m
Total
$m
US and Canada
487.8
362.5
850.3
437.7
318.7
756.4
Worldwide \u2013 multi territory
324.0
360.5
684.5
314.2
311.6
625.8
Europe
55.0
86.2
141.2
58.8
99.2
158.0
Rest of world
37.6
146.8
184.4
44.4
180.5
224.9
Total insurance revenue
904.4
956.0
1,860.4
855.1
910.0
1,765.1
I. Reinsurance segment
The Group's reinsurance segment comprises property reinsurance, specialty reinsurance and
casualty reinsurance. The property reinsurance portfolio is predominantly written on an excess
of loss basis with the 'catastrophe' portfolio exposed to large natural disasters and the 'risk'
portfolio exposed to individual man-made losses, such as fire and explosion. The specialty
reinsurance portfolio has a mix of exposures, with natural disasters exposing the retrocession
portfolio, and large, man-made risks from complex exposures, such as offshore energy
platforms, exposing the marine, energy, terror and aviation portfolios. This is underwritten
through a combination of excess of loss and proportional reinsurance. Casualty reinsurance is
primarily written through quota share reinsurance, assuming a mix of general liability and
professional lines exposures, predominantly from within the US.
II. Insurance segment
The Group's insurance segment is usually written on a direct or facultative basis and comprises
aviation insurance, casualty insurance, energy and marine insurance, property insurance and
specialty insurance. Within aviation, aviation deductible, aviation hull, aviation liability, aviation
war, and AV52 are the main exposures. Casualty insurance covers accident and health policies,
as well as a small number of consortia arrangements within Lloyd's. Energy insurance covers a
variety of energy exposures, from upstream and energy construction, downstream processing
and storage risks, power generation, and energy liability. Marine risks include cargo and specie
risks, as well as liability, hull and war. The property insurance portfolio contains worldwide
property exposure with a mix of Fortune 500 business and smaller accounts with exposure in an
individual location. Specialty insurance includes political risk, terror and credit exposures, and is
often written on a multi-year basis.
Outwards r einsurance
The Group, in the normal course of business and in accordance with its risk management
practices, seeks to reduce certain types of losses that may arise from events that could cause
unfavourable underwriting results by entering into external outwards reinsurance arrangements.
Reinsurance does not relieve the Group of its obligations to policyholders. Under the Group's
reinsurance security policy, reinsurers are assessed and approved based on their financial
strength ratings, together with other factors. The Group RSC considers reinsurers that are not
rated or do not fall within the predefined rating categories on a case-by-case basis, and may
require collateral to be provided to support the reinsurer's obligations. There are specific
guidelines for these collateralised contracts. The Group ORIF monitors the Group's reinsurers
on an ongoing basis, and formally reviews the Group's reinsurance arrangements as
deemed\u00a0necessary. Exposure to the Group's reinsurance counterparties, compared to the
Board-approved tolerances, is reported to the Board of Directors on a quarterly basis.
Reinsurance protection is typically purchased on an excess of loss basis; however, it may also
include ILW covers, or proportional treaty arrangements. The mix of reinsurance cover is
dependent on the specific loss mitigation requirements, market conditions, and available
capacity. Reinsurance may also be purchased to optimise the risk-adjusted return of the
underwriting portfolio. The structure varies between types of peril and sub-class. The Group
regularly reviews its catastrophe and other exposures, and may purchase reinsurance to reduce
its net exposure to a large natural catastrophe loss and/or to reduce net exposures to other
large losses. The Group can purchase both facultative and treaty reinsurance with varying cover
and attachment points. The reinsurance coverage is not intended to be available to meet all
potential loss circumstances. The Group will retain some losses, as the cover purchased is
unlikely to transfer the totality of the Group\u2019s exposure. Any loss amount which exceeds the
Group's reinsurance programme is retained by the Group. Some parts of the reinsurance
programme have limited reinstatements, therefore the number of claims which may be
recovered from second or subsequent losses in those particular circumstances is restricted.
Reserving
Estimates of future cash flows to fulfil insurance contracts issued
The Group measures the carrying amount of the LIC and the AIC at the end of each reporting
period, being the amount of the FCF. The FCF in respect of the LIC and the AIC comprises:
\u2022 unbiased probability-weighted best estimates of future cash flows within the boundary of
each insurance and reinsurance contract;
\u2022 an adjustment to reflect the time value of money and the financial risks related to future cash
flows, to the extent that the financial risks are not included in the estimates of future cash
flows (see interest rate risk section); and
\u2022 a risk adjustment for non-financial risk.
Further detail on each of these is provided in the section below.
Probability-weighted best estimate of future cash flows
In estimating future cash flows, the Group incorporates, in an unbiased way, all reasonable and
supportable information that is available at the reporting date. The Group uses internal and
external information about past events, current conditions and forecasts of future conditions.
The Group's estimate of future cash flows is calculated to represent the mean of a range of
theoretical scenarios that consider the full range of possible outcomes.
Cash flows within the boundary of a contract relate directly to the fulfilment of the contract,
including those for which the Group has discretion over the amount and timing. These include
payments to, or on behalf of, policyholders, and other costs incurred in fulfilling contracts.
Other costs that are incurred in fulfilling contracts comprise both direct costs and an allocation
of fixed and variable overheads. Where expenses are contract specific, these costs are taken
directly and aggregated, as required, to groups of insurance contracts. Where expenses are not
contract specific (for example, overheads) these are allocated to groups of insurance contracts
in a systematic way.
For all our contracts, uncertainty in the estimation of future claims and benefit payments arises
primarily from the severity and frequency of claims.
The Group estimates the ultimate costs of settling claims incurred but unpaid at the reporting
date, and the value of salvage and other expected recoveries, by reviewing individual claims
reported and making allowance for claims incurred but not yet reported. The ultimate cost of
settling claims is estimated using a range of loss reserving techniques (including the
Bornhuetter-Ferguson, loss ratio and chain-ladder methods). Actuarial techniques typically
assume that historic claims experience is indicative of future claims development patterns and,
therefore ultimate claims cost. The ultimate cost of settling all claims is estimated separately
for\u00a0each class of business.
The assumptions used, including loss ratios and future claims inflation, are derived from a
combination of historical information and judgement, that allows for where past trends might
not apply in the future and future trends that may emerge.
For each nominal fulfilment amount, the timing of future cash flows is determined by
applying\u00a0cash flow assumptions based, where available, on the Group\u2019s historical experience
for\u00a0the given portfolio of contracts. Where there is insufficient historical experience, reliance
may be placed on external benchmarks or portfolios which are believed to exhibit similar cash
flow characteristics.
Methods used to measure the risk adjustment for non-financial risk
The risk adjustment for non-financial risk is the compensation that is required for bearing the
uncertainty in respect of the amount and timing of cash flows that arises from non-financial risk
as the insurance contract is fulfilled. The Group estimates an adjustment for non-financial risk
separately from all other estimates.
Under the PAA, the risk adjustment for non-financial risk is limited to the LIC and the AIC,
with\u00a0the exception of onerous groups of contracts, where it is implicitly considered in
determining the required adjustment to the LRC and the ARC. The undiscounted risk
adjustment within the LIC and the AIC is set with reference to the Group\u2019s reserve risk appetite
and aligns with the Group's management margin, which depends on the prevailing uncertainty
in the FCF of the LIC and the AIC at each reporting date. The management margin is set
through a combination of initial expected loss ratio uplifts for attritional IBNR provisions and on
a case-by-case basis for individual reported events. This process is overseen by the Reserve and
Audit Committees. Given this granular approach, no further allocation of the risk adjustment to
groups of insurance contracts is required. The undiscounted risk adjustment is then discounted
to allow for the time value of money alongside the wider FCF within the LIC and the AIC.
Changes in the risk adjustment for non-financial risk are disaggregated into insurance services
and insurance financing components in the same way as the best estimate FCF.
The Group estimates that FCF within the net of reinsurance LIC (including the risk adjustment
for non-financial risks) correspond to a confidence level of 85% (31 December 2024 \u2013 86%) on
an ultimate time horizon.
The risk adjustment for non-financial risk is subject to discounting, and the confidence level is
inferred for the purpose of disclosure. The inference of the confidence level requires
assumptions around the perceived volatility of each portfolio and the aggregation to the overall
entity level. Volatility parameters are set with reference to historical internal and external data,
but may be adjusted at each reporting date to reflect the prevailing environment and associated
reserve uncertainties. Given the inference of the confidence level, the Group generally expects
this to fall within the range of the 80th to 90th percentile. Movements within this range
between periods are to be expected due to, for example, specific loss events or a change in
the\u00a0mix of business such as an increase in longer-tail casualty business written. The Group
would expect to remain within this range, unless there is a change in reserving risk appetite.
The\u00a0Group\u2019s reserve risk appetite and methods used to determine the risk adjustment for
non-financial risk, and the resulting confidence level, were not changed for the current
financial\u00a0year.
Sensitivity analysis
The following table presents information on how reasonably possible changes in assumptions
made by the Group impact the valuation of the net insurance contract liabilities, profit after tax
and shareholders' equity. Under the PAA, and given the current amount of the Group's loss
component, only the LIC component of insurance contract liabilities and the AIC component
of\u00a0reinsurance contract assets are considered sensitive to possible changes in insurance
risk\u00a0variables.
LIC as at
31 December 2025
$m
Impact on profit
after tax and
shareholders'
equity
$m
LIC as at 31
December 2024
$m
Impact on profit
after tax and
shareholders'
equity
$m
Insurance contract liabilities
2,644.8
2,237.7
Reinsurance contract assets
(757.0)
(608.5)
Net insurance contract liabilities
1,887.8
1,629.2
20% increase in unpaid claims and
expenses
Insurance contract liabilities
3,173.8
(478.6)
2,685.2
(391.2)
Reinsurance contract assets
(908.4)
123.5
(730.2)
99.6
Net insurance contract liabilities
2,265.4
(355.1)
1,955.0
(291.6)
The analysis is based on a change in an assumption while holding all other assumptions
constant. In practice, this is unlikely to occur, and changes in some of the assumptions may
be\u00a0correlated.
", "dimensions": { "concept": "ifrs-full:DisclosureOfNatureAndExtentOfRisksThatAriseFromContractsWithinScopeOfIFRS17Explanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-270": { "value": "
B. Market risk
Market risk is the risk that decisions, movements, trends, or other factors in global or local
financial markets impact the Group in a way that is financially detrimental. The Group's main
market risks include:
I. Insurance market risk;
II. Investment risk;
III. Debt risk; and
IV. Currency risk.
These risks, and the management thereof, are described below.
I. Insurance market risk
Insurance market risk is the risk that factors within either the global insurance market, or the
relevant local insurance markets in which the Group operates, have a detrimental financial
impact on the Group. The Group is exposed to insurance market risk from several sources,
including the following:
\u2022 the advent or continuation of a soft market, which may result in a stabilisation or decline in
premium rates and/or terms and conditions for certain lines, or across all lines;
\u2022 the actions and reactions of key competitors, which may directly result in volatility in
premium volumes and rates, fee levels and other input costs;
\u2022 market events, including unusual inflation in rates, which may result in a limit in the availability
of cover, resulting in political intervention or national remedies;
\u2022 failure to maintain broker, binding authority and client relationships, leading to a limited or
substandard choice of risks which are inconsistent with the Group\u2019s risk appetite;
\u2022 changes in regulation including capital, governance or licensing requirements; and
\u2022 changes in the geopolitical environment.
The most important method to mitigate insurance market risk is to maintain strict
underwriting\u00a0standards. The Group manages insurance market risk in numerous ways,
including\u00a0the following:
\u2022 reviews and amends underwriting plans and outlook as necessary;
\u2022 reduces exposure to market sectors where conditions have reached unattractive levels;
\u2022 purchases appropriate, cost-effective reinsurance cover to mitigate loss exposures;
\u2022 closely monitors changes in premium rates and terms and conditions;
\u2022 continuous regulatory capital management to seek to ensure that it does not allow surplus
capital to unduly influence underwriting appetite;
\u2022 has a collegiate approach towards taking risk, with most authority requiring at least four eyes
and pre-authorisation peer review;
\u2022 reviews all new and renewal business post-underwriting for LSL;
\u2022 reviews outputs from the economic capital models to assess up-to-date profitability of
classes and sectors;
\u2022 holds a monthly RRC meeting to discuss risk and reinsurance;
\u2022 holds a quarterly UURC meeting to review underwriting strategy; and
\u2022 holds regular meetings with regulators.
II. Investment risk
Investment risk is the risk that movements, trends or other factors, within either public or private
investment markets, have a detrimental financial impact on the price of securities within the
Group's investment portfolio. Movements in investments resulting from changes in prices,
interest rates, inflation rates, and currency exchange rates, amongst other factors, may lead to
an adverse impact on the value of the Group\u2019s investment portfolio.
Investment guidelines are established by the Investment Committee to manage this risk.
Investment guidelines set parameters within which the Group's external investment managers
must operate. All of the Group's fixed income managers and the majority of the private
investment managers are signatories of the UNPRI, which approximates to 96.7%
(31 December 2024 \u2013 96.7%) of the Group's externally managed assets. Important parameters
include guidelines on permissible asset classes, duration ranges, credit quality, currency,
maturity, sectors, geographical, sovereign and issuer exposures. Compliance with guidelines is
monitored on a monthly basis. Any adjustments to the investment guidelines are approved by
the Investment Committee and the Board of Directors.
The Group's business model emphasises the preservation of capital and the provision of
sufficient liquidity for the prompt payment of claims, in conjunction with providing a stable
income stream as far as possible. Management reviews the composition, duration and asset
allocation of the investment portfolio regularly to respond to changes in interest rates,
and\u00a0other market conditions.
The Group's fixed maturity portfolios are managed by external investment managers. The Group
also has a portfolio consisting of hedge funds, principal protected products, and private
investment funds. The performance of the managers is monitored on an ongoing basis.
The 'core' investment portfolio is aligned with the Group\u2019s long-term financial goals and risk
tolerance while the 'surplus' investment portfolio aims for higher returns and greater
diversification by investing in a wider array of assets with higher risk-return profiles, such as
high-yield securities, private investment funds, and hedge funds.
Within the Group\u2019s investment guidelines are subsets of guidelines for the core portion of funds
required to meet near-term obligations and cash flow needs following an extreme event.
These\u00a0guidelines add further requirements, including reducing permitted asset classes, higher
credit quality, shorter duration, and higher liquidity. The primary objectives for this portion of
assets are capital preservation and providing liquidity to meet insurance and other near-term
obligations. Alongside internally managed cash, the core portfolio holds funds specifically
allocated to cover potential liabilities, aligning their duration with that of the insurance liabilities
within an agreed range. The core portfolio is invested in fixed maturity securities, fixed maturity
funds, and cash and cash equivalents. The core portfolio may, at times, contain assets
significantly in excess of those required to meet insurance liabilities or other defined
funding\u00a0needs.
Assets in excess of those required to be held in the core portfolio are typically held in the
surplus portfolio. The surplus portfolio is invested in fixed maturity securities, principal
protected products, derivative instruments, cash and cash equivalents, private investment funds,
and hedge funds. In general, the duration of the surplus portfolio is slightly longer than the
core\u00a0portfolio.
The Group reviews the composition, duration and asset allocation of its investment portfolio on
a regular basis to respond to changes in interest rates and other market conditions. If certain
asset classes are anticipated to produce a higher return within management\u2019s risk tolerance,
an\u00a0adjustment in asset allocation may be made. Conversely, if the risk profile is expected to
move outside of management's risk tolerance levels, an adjustment to the asset allocation may
be made to reduce the risks in the portfolio.
The investment portfolio is currently structured to perform similarly in risk-on and risk-off
environments. The Group endeavours to limit losses in both risk-on, risk-off, and interest rate
hike scenarios. The Group models various periods of significant stress to better understand the
investment portfolio\u2019s risks and exposures. The scenarios represent what could, and most likely
will, occur (albeit not in the exact form of the scenarios, which are based on historic periods of
volatility). The Group also monitors the portfolio impact of more severe disaster scenarios
consisting of extreme shocks.
The Investment Committee oversees a strategic asset allocation study on a bi-annual basis,
which assesses the Group's overall strategy and seeks to determine if there is an alternative
asset allocation to achieve the highest risk-adjusted return within our risk tolerances.
The\u00a0IRRC\u00a0meets quarterly to seek to ensure that the Group\u2019s strategic and tactical investment
actions are consistent with investment risk preferences, appetite, risk and return objectives
and\u00a0tolerances. The IRRC also helps further develop the risk tolerances to be incorporated
into\u00a0the ERM framework.
The investment mix of the Group's investment portfolio is as follows:
2025
2024
Core
Surplus
Total
Core
Surplus
Total
As at 31 December
$m
$m
$m
$m
$m
$m
Short-term investments
13.0
2.0
15.0
27.9
4.6
32.5
Fixed maturity funds
30.4
\u2014
30.4
23.1
\u2014
23.1
US treasuries
364.5
28.4
392.9
382.8
127.1
509.9
Other government bonds
46.5
74.4
120.9
31.5
33.8
65.3
US municipal bonds
9.7
1.4
11.1
9.1
6.7
15.8
US government agency debt
\u2014
4.0
4.0
0.2
17.0
17.2
Asset backed securities
111.4
192.0
303.4
81.6
190.1
271.7
US government agency MBS
244.6
161.4
406.0
181.3
145.2
326.5
Non-agency MBS
62.4
35.4
97.8
22.5
33.0
55.5
US government agency CMBS
\u2014
1.1
1.1
\u2014
\u2014
\u2014
Non-agency commercial MBS
36.8
17.8
54.6
\u2014
20.5
20.5
Bank loans
\u2014
153.7
153.7
\u2014
153.4
153.4
Corporate bonds
913.9
305.4
1,219.3
827.9
280.1
1,108.0
Other fixed maturities
\u2014
\u2014
\u2014
\u2014
4.4
4.4
Total fixed maturity securities
1,833.2
977.0
2,810.2
1,587.9
1,015.9
2,603.8
Private investment funds
\u2014
291.2
291.2
\u2014
253.1
253.1
Hedge funds
\u2014
8.8
8.8
\u2014
7.9
7.9
Other investments
\u2014
(0.3)
(0.3)
\u2014
0.1
0.1
Total investments
1,833.2
1,276.7
3,109.9
1,587.9
1,277.0
2,864.9
The concentration risk of the Group's fixed maturity securities by location and sector is
as\u00a0follows:
2025
As at 31 December
Financials
$m
Industrial &
consumer
$m
Utility
$m
Government
&
government
agencies
$m
Structured1
$m
Other2
$m
Total3
$m
United States
338.3
654.4
19.1
829.3
222.5
\u2014
2,063.6
Cayman Islands
\u2014
\u2014
\u2014
\u2014
174.9
\u2014
174.9
Canada
33.1
23.4
\u2014
77.3
\u2014
\u2014
133.8
United Kingdom
50.3
25.6
0.3
\u2014
\u2014
\u2014
76.2
Europe 4
64.8
53.0
\u2014
13.6
2.1
\u2014
133.5
Other
48.5
54.0
9.1
29.9
56.3
30.4
228.2
Total fixed maturity securities
535.0
810.4
28.5
950.1
455.8
30.4
2,810.2
2024
As at 31 December
Financials
$m
Industrial &
consumer
$m
Utility
$m
Government
&
government
agencies
$m
Structured1
$m
Other2
$m
Total3
$m
United States
316.3
635.5
12.6
869.3
138.5
27.3
1,999.5
Cayman Islands
\u2014
1.2
\u2014
\u2014
151.8
\u2014
153.0
Canada
37.0
17.4
\u2014
27.8
\u2014
\u2014
82.2
United Kingdom
41.5
20.2
\u2014
2.2
\u2014
\u2014
63.9
Europe 4
58.5
37.1
\u2014
6.6
2.6
4.4
109.2
Other
29.4
51.2
7.9
28.8
54.8
23.9
196.0
Total fixed maturity securities
482.7
762.6
20.5
934.7
347.7
55.6
2,603.8
1. Structured products excludes any government structured products.
2. Other includes Lloyd's overseas deposits. Short term investments have been allocated to sector in the
current\u00a0period.
3. Location represents the country of risk for the majority of the fixed maturity securities. If the country of risk is not
available, the location will reflect the country of the Issuer.
4. Europe excludes the United Kingdom.
The Group's net asset value is directly impacted by movements in the fair value of investments
held. Fair values can be impacted by movements in interest rates, credit ratings, exchange rates,
the current economic environment and outlook.
Interest rate risk
(i) Investments
Interest rate risk is the risk that movements in market interest rates, which are typically
correlated with the interest rates set by central banks, have a detrimental financial impact on
the value of the Group's assets and liabilities. The Group\u2019s investment portfolio is mainly
comprised of fixed maturity securities and cash and cash equivalents. Fixed maturity funds are
overseas deposits held by the syndicates in trust for the benefit of the policyholders in those
overseas jurisdictions. They consist of high-quality, short-duration fixed maturity securities.
The\u00a0fair value of the Group\u2019s fixed maturity portfolio is generally inversely correlated to
movements in market interest rates. If market interest rates fall, the fair value of the Group\u2019s
fixed maturity securities would tend to rise, and vice versa.
The sensitivity of the price of fixed maturity securities, and certain derivatives, to movements
in\u00a0interest rates is indicated by their duration. The greater a security\u2019s duration, the greater its
price volatility to movements in interest rates. The sensitivity of the Group\u2019s fixed maturity
investment portfolio to interest rate movements is detailed below, assuming linear movements
in interest rates:
2025
2024
As at 31 December
$m
%
$m
%
Immediate shift in yield (basis points)
100
(62.9)
(2.2)
(62.2)
(2.4)
75
(47.2)
(1.7)
(46.6)
(1.8)
50
(31.4)
(1.1)
(31.1)
(1.2)
25
(15.7)
(0.6)
(15.5)
(0.6)
(25)
15.7
0.6
13.7
0.5
(50)
31.4
1.1
27.5
1.1
(75)
47.1
1.7
41.2
1.6
(100)
62.8
2.2
54.9
2.1
The Group mitigates interest rate risk on the investment portfolio by establishing and
monitoring duration ranges in its investment guidelines. The duration of the core portfolio is
matched to the modelled duration of the net insurance contract liabilities, within a permitted
range. The permitted duration range for the surplus portfolio is between one and five years.
The overall duration for fixed maturity securities, managed cash and cash equivalents is
2.1 years (31 December 2024 \u2013 2.0 years).
In addition to duration management, the Group monitors VaR to measure potential losses in
the\u00a0estimated fair values of its cash and invested assets, and to understand and monitor risk.
The\u00a0VaR calculation is performed using variance/covariance risk modelling to capture the cash
flows and embedded optionality of the investment portfolio. Securities are valued individually
using standard market pricing models. These security valuations serve as the input to risk
analytics, including full valuation risk analyses, as well as parametric methods that rely on
option-adjusted risk sensitivities to approximate the risk and return profiles of the portfolio.
The principal VaR measure that is produced is an annual VaR at the 99th percentile confidence
level. Under normal conditions, the investment portfolio value is not expected to decrease
more than the VaR metric listed in the table below 99% of the time over a one-year time
horizon. The appropriateness of this measure is considered by the Investment Committee,
on\u00a0behalf of the Board of Directors, on an annual basis.
The Group\u2019s annual VaR calculations are as follows:
2025
2024
As at 31 December
$m
% of shareholders'
equity
$m
% of shareholders'
equity
99th percentile confidence level1
119.6
7.9
157.8
10.6
1. Including the impact of internal foreign exchange hedges.
(ii) Discounting approach on the LIC and the AIC
The Group's LIC and AIC are discounted on initial recognition and remeasured to current interest
rates at each quarter end date, and are therefore sensitive to changes in market interest rates.
The Group applies the bottom-up approach when deriving its discount rates for discounting the
LIC and the AIC. This approach requires the use of an appropriate (liquid) risk-free yield curve,
plus a specific illiquidity premium above the risk-free yield curve to represent the reduced
liquidity of the insurance contract cash flows compared to the observable risk-free rates.
The\u00a0risk-free yields and illiquidity premium are derived using reference data supplied by third
parties with management judgement applied where appropriate, in particular in the derivation
of the illiquidity premium, which is informed by the implied illiquidity premium of a
representative portfolio of corporate bonds determined using the top-down method.
The Group writes predominantly short-duration contracts and has not identified any significant
financing component in the LRC or the ARC, and has therefore applied judgement to determine
that there is no requirement to discount these balances.
The following table sets out the one-, three-, five- and seven-year yield curves (risk-free rate
plus illiquidity premium) used to discount the cash flows of insurance contracts issued and
reinsurance contracts held for the Group's major currencies:
2025
2024
As at 31 December
1 year
3 years
5 years
7 years
1 year
3 years
5 years
7 years
USD
3.83%
4.03%
4.31%
4.55%
5.33%
4.40%
4.29%
4.34%
GBP
3.94%
4.23%
4.51%
4.75%
5.31%
4.34%
4.14%
4.16%
EUR
2.57%
3.08%
3.43%
3.68%
4.03%
3.21%
3.21%
3.33%
JPY
1.30%
2.02%
2.35%
2.60%
0.65%
0.96%
1.24%
1.52%
The following table presents information on how reasonably possible changes in the yield curve
could impact the valuation of the net insurance contract liabilities, profit after tax and
shareholders' equity. Under the PAA, and given the current amount of the Group's loss
component, only the LIC component of insurance contract liabilities and the AIC component of
reinsurance contract assets are sensitive to possible changes in interest rate risk variables.
LIC as at
31 December
2025
$m
Impact on profit
after tax and
shareholders'
equity
$m
LIC as at
31 December
2024
$m
Impact on profit
after tax and
shareholders'
equity
$m
Insurance contract liabilities
2,644.8
2,237.7
Reinsurance contract assets
(757.0)
(608.5)
Net insurance contract liabilities
1,887.8
1,629.2
1% increase in yield curves
Insurance contract liabilities
2,589.7
54.3
2,195.6
37.9
Reinsurance contract assets
(747.1)
(11.4)
(600.6)
(6.7)
Net insurance contract liabilities
1,842.6
42.9
1,595.0
31.2
The analysis is based on a change in an assumption while holding all other assumptions
constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be
correlated.
Price risk
Price risk is the risk that the fair value of the Group's investment portfolio will fluctuate because
of changes in market prices (other than those arising from interest rate or foreign exchange rate
risk), whether those changes are caused by factors specific to the individual investment or other
market factors.
The Group's price risk exposure relates to private investment funds and hedge funds. Listed
investments that are quoted in an active market are recognised at quoted bid price, which is
deemed to be the 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 11).
This includes comparison to comparable orderly transactions between active market
participants, reference to benchmarks or other indices to assess reasonableness, and other
valuation techniques that are commonly used by market participants.
A 10% asset price decrease at 31 December 2025 would reduce the value of our private
investment funds and hedge funds by approximately $30.0 million (31 December 2024 \u2013
$26.1 million).
Derivative financial instruments
The Group\u2019s investment guidelines permit the investment managers to utilise forward foreign
currency contracts to manage foreign currency exposure. These positions are monitored
regularly. The Group may also use OTC or exchange-traded managed derivatives to mitigate
interest rate risk and foreign currency exposures. The Group principally has exposure to
derivatives related to the following types of risks: interest rate risk, foreign currency risk,
and\u00a0credit risk.
Forward foreign currency contracts
A forward foreign currency contract is a commitment to purchase or sell a foreign currency at a
future date, at a defined rate. The Group may utilise forward foreign currency contracts to gain
exposure to a certain currency or market rate, to manage the impact of fluctuations in foreign
currencies on the value of its foreign currency denominated investments, debt, insurance-
related currency exposures and/or expenses.
Forward contracts expose the Group to credit, market and liquidity risks. Credit risk arises from
the potential inability of counterparties to perform under the terms of the contract. The Group
is exposed to market risk to the extent that adverse changes occur in the exchange rate of the
underlying foreign currency. Liquidity risk represents the possibility that the Group may not be
able to rapidly adjust the size of its forward positions at a reasonable price in times of high
volatility and financial stress. These risks are mitigated by requiring a minimum counterparty
credit quality, restricting the maximum notional exposure as a percentage of the investment
portfolio\u2019s estimated fair value, and restricting exposures to foreign currencies, individually
and\u00a0in aggregate, as a percentage of the investment portfolio\u2019s estimated fair value.
Where forward foreign currency contracts are within externally managed investment portfolios,
they are disclosed as other investments. Where they are managed directly by the Group, they
are disclosed as either other receivables, or other payables, as appropriate.
The notional amount of a derivative contract is the underlying quantity upon which payment
obligations are calculated. A long position is equivalent to buying the underlying currency,
whereas a short position is equivalent to having sold the underlying currency.
The net gains or losses on the Group\u2019s derivative financial instruments recognised in the
consolidated statement of comprehensive income are as follows:
For the year ended 31 December
2025
$m
2024
$m
Net foreign exchange losses on forward foreign currency contracts
(1.2)
(2.3)
The estimated fair values of the Group\u2019s derivative instruments are as follows:
2025
2024
As at 31 December
Other
investments
$m
Other
receivables
$m
Other
payables
$m
Other
investments
$m
Other
receivables
$m
Other
payables
$m
Forward foreign currency contracts
(0.3)
\u2014
(1.0)
0.1
0.2
(0.4)
The Group has the following open forward foreign currency contracts:
2025
2024
As at 31 December
Notional
long
$m
Notional
short
$m
Net notional
long (short)
$m
Notional
long
$m
Notional
short
$m
Net notional
long (short)
$m
Canadian Dollar
\u2014
48.0
(48.0)
\u2014
25.3
(25.3)
Euro
\u2014
2.6
(2.6)
31.6
2.3
29.3
Australian Dollar
\u2014
2.8
(2.8)
\u2014
\u2014
\u2014
Sterling
54.0
0.8
53.2
\u2014
0.5
(0.5)
Danish Krone
\u2014
0.3
(0.3)
\u2014
0.2
(0.2)
Total
54.0
54.5
(0.5)
31.6
28.3
3.3
III. Debt risk
Debt risk is the risk that the Group will not be able to service either the interest payment, or the
principal repayment, amounts on its external borrowings as they fall due. In 2021, the Group
issued $450.0 million (in aggregate principal amount) of 5.625% fixed-rate reset junior
subordinated notes, repayable on 18 September 2041 (see note 18). The fixed interest rate will
reset on 18 September 2031 at a rate per annum equal to the prevailing five-year treasury rate,
plus a credit spread of 4.08% and a 100 basis point step up.
The Group is exposed to interest rate risk in the future if prevailing rates at the time of reset are
materially different from the existing rates on the debt issue.
IV. Currency risk
Currency risk is the risk that movements in currency exchange rates have a detrimental financial
impact on the Group. The Group underwrites from multiple locations and risks are assumed on
a worldwide basis. Risks assumed are predominantly denominated in US dollars. The Group is
exposed to currency risk to the extent its assets and liabilities are denominated in different
currencies to its US dollar reporting currency. The exchange gains and losses which arise on
these assets and liabilities impact the consolidated statement of comprehensive income.
The Group hedges monetary non-US dollar liabilities primarily with non-US dollar assets, but
may also use derivatives to mitigate foreign currency exposures. The Group's main foreign
currency exposure relates to its insurance contract liabilities and reinsurance contract assets,
investments and cash and cash equivalents, and other monetary assets and liabilities. The Group
uses forward foreign currency contracts for the purposes of managing currency exposures.
The\u00a0Group\u2019s assets and liabilities, categorised by currency at their translated carrying amount,
are as follows:
2025
Assets
US $
$m
Sterling
$m
Euro
$m
Japanese Yen
$m
Other
$m
Total
$m
Cash and cash equivalents
375.2
67.2
48.3
12.9
57.8
561.4
Accrued interest receivable
23.6
\u2014
0.5
\u2014
0.5
24.6
Investments
2,917.0
36.0
73.6
\u2014
83.3
3,109.9
Reinsurance contract assets
650.9
28.5
37.8
(0.6)
1.2
717.8
Other receivables
88.1
11.5
0.8
\u2014
0.8
101.2
Corporation tax receivable
0.2
0.2
\u2014
\u2014
\u2014
0.4
Investment in associate
4.8
\u2014
\u2014
\u2014
\u2014
4.8
Right-of-use assets
8.6
13.5
\u2014
\u2014
0.6
22.7
Property, plant and equipment
2.4
5.8
\u2014
\u2014
\u2014
8.2
Intangible assets
143.4
109.6
\u2014
\u2014
\u2014
253.0
Total assets as at 31 December
4,214.2
272.3
161.0
12.3
144.2
4,804.0
2025
Liabilities
US $
$m
Sterling
$m
Euro
$m
Japanese Yen
$m
Other
$m
Total
$m
Insurance contract liabilities
2,318.1
135.1
153.2
10.1
95.6
2,712.1
Other payables
32.2
55.3
0.6
\u2014
1.7
89.8
Deferred tax liability
10.8
5.1
\u2014
\u2014
(0.3)
15.6
Lease liabilities
8.7
20.3
\u2014
\u2014
0.7
29.7
Long-term debt
447.5
\u2014
\u2014
\u2014
\u2014
447.5
Total liabilities as at 31 December
2,817.3
215.8
153.8
10.1
97.7
3,294.7
2024
Assets
US $
$m
Sterling
$m
Euro
$m
Japanese Yen
$m
Other
$m
Total
$m
Cash and cash equivalents
449.8
141.0
21.5
17.9
54.1
684.3
Accrued interest receivable
21.3
\u2014
0.4
\u2014
0.3
22.0
Investments
2,721.4
27.0
59.1
\u2014
57.4
2,864.9
Reinsurance contract assets
497.9
25.3
36.4
(0.2)
(2.2)
557.2
Other receivables
8.9
10.5
\u2014
\u2014
1.1
20.5
Investment in associate
9.1
\u2014
\u2014
\u2014
\u2014
9.1
Right-of-use assets
1.4
14.8
\u2014
\u2014
\u2014
16.2
Property, plant and equipment
0.8
7.9
\u2014
\u2014
\u2014
8.7
Intangible assets
153.8
43.2
\u2014
\u2014
\u2014
197.0
Total assets as at 31 December
3,864.4
269.7
117.4
17.7
110.7
4,379.9
2024
Liabilities
US $
$m
Sterling
$m
Euro
$m
Japanese Yen
$m
Other
$m
Total
$m
Insurance contract liabilities
1,948.7
117.5
129.0
15.6
89.6
2,300.4
Other payables
43.8
46.2
\u2014
\u2014
1.9
91.9
Corporation tax payable
(0.3)
3.0
\u2014
\u2014
\u2014
2.7
Deferred tax liability
11.3
11.2
\u2014
\u2014
(0.2)
22.3
Lease liabilities
1.4
20.8
\u2014
\u2014
0.1
22.3
Long-term debt
447.0
\u2014
\u2014
\u2014
\u2014
447.0
Total liabilities as at 31 December
2,451.9
198.7
129.0
15.6
91.4
2,886.6
The impact on net income of a proportional foreign exchange movement of 10.0% up and
10.0% down for the aggregated total of all non-US dollar currencies against the US dollar, taken
at the year-end spot rates, would be an decrease or increase of $1.7 million (31 December 2024
\u2013 an increase or decrease of $1.5 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-269": { "value": "
B. Market risk
Market risk is the risk that decisions, movements, trends, or other factors in global or local
financial markets impact the Group in a way that is financially detrimental. The Group's main
market risks include:
I. Insurance market risk;
II. Investment risk;
III. Debt risk; and
IV. Currency risk.
These risks, and the management thereof, are described below.
I. Insurance market risk
Insurance market risk is the risk that factors within either the global insurance market, or the
relevant local insurance markets in which the Group operates, have a detrimental financial
impact on the Group. The Group is exposed to insurance market risk from several sources,
including the following:
\u2022 the advent or continuation of a soft market, which may result in a stabilisation or decline in
premium rates and/or terms and conditions for certain lines, or across all lines;
\u2022 the actions and reactions of key competitors, which may directly result in volatility in
premium volumes and rates, fee levels and other input costs;
\u2022 market events, including unusual inflation in rates, which may result in a limit in the availability
of cover, resulting in political intervention or national remedies;
\u2022 failure to maintain broker, binding authority and client relationships, leading to a limited or
substandard choice of risks which are inconsistent with the Group\u2019s risk appetite;
\u2022 changes in regulation including capital, governance or licensing requirements; and
\u2022 changes in the geopolitical environment.
The most important method to mitigate insurance market risk is to maintain strict
underwriting\u00a0standards. The Group manages insurance market risk in numerous ways,
including\u00a0the following:
\u2022 reviews and amends underwriting plans and outlook as necessary;
\u2022 reduces exposure to market sectors where conditions have reached unattractive levels;
\u2022 purchases appropriate, cost-effective reinsurance cover to mitigate loss exposures;
\u2022 closely monitors changes in premium rates and terms and conditions;
\u2022 continuous regulatory capital management to seek to ensure that it does not allow surplus
capital to unduly influence underwriting appetite;
\u2022 has a collegiate approach towards taking risk, with most authority requiring at least four eyes
and pre-authorisation peer review;
\u2022 reviews all new and renewal business post-underwriting for LSL;
\u2022 reviews outputs from the economic capital models to assess up-to-date profitability of
classes and sectors;
\u2022 holds a monthly RRC meeting to discuss risk and reinsurance;
\u2022 holds a quarterly UURC meeting to review underwriting strategy; and
\u2022 holds regular meetings with regulators.
II. Investment risk
Investment risk is the risk that movements, trends or other factors, within either public or private
investment markets, have a detrimental financial impact on the price of securities within the
Group's investment portfolio. Movements in investments resulting from changes in prices,
interest rates, inflation rates, and currency exchange rates, amongst other factors, may lead to
an adverse impact on the value of the Group\u2019s investment portfolio.
Investment guidelines are established by the Investment Committee to manage this risk.
Investment guidelines set parameters within which the Group's external investment managers
must operate. All of the Group's fixed income managers and the majority of the private
investment managers are signatories of the UNPRI, which approximates to 96.7%
(31 December 2024 \u2013 96.7%) of the Group's externally managed assets. Important parameters
include guidelines on permissible asset classes, duration ranges, credit quality, currency,
maturity, sectors, geographical, sovereign and issuer exposures. Compliance with guidelines is
monitored on a monthly basis. Any adjustments to the investment guidelines are approved by
the Investment Committee and the Board of Directors.
The Group's business model emphasises the preservation of capital and the provision of
sufficient liquidity for the prompt payment of claims, in conjunction with providing a stable
income stream as far as possible. Management reviews the composition, duration and asset
allocation of the investment portfolio regularly to respond to changes in interest rates,
and\u00a0other market conditions.
The Group's fixed maturity portfolios are managed by external investment managers. The Group
also has a portfolio consisting of hedge funds, principal protected products, and private
investment funds. The performance of the managers is monitored on an ongoing basis.
The 'core' investment portfolio is aligned with the Group\u2019s long-term financial goals and risk
tolerance while the 'surplus' investment portfolio aims for higher returns and greater
diversification by investing in a wider array of assets with higher risk-return profiles, such as
high-yield securities, private investment funds, and hedge funds.
Within the Group\u2019s investment guidelines are subsets of guidelines for the core portion of funds
required to meet near-term obligations and cash flow needs following an extreme event.
These\u00a0guidelines add further requirements, including reducing permitted asset classes, higher
credit quality, shorter duration, and higher liquidity. The primary objectives for this portion of
assets are capital preservation and providing liquidity to meet insurance and other near-term
obligations. Alongside internally managed cash, the core portfolio holds funds specifically
allocated to cover potential liabilities, aligning their duration with that of the insurance liabilities
within an agreed range. The core portfolio is invested in fixed maturity securities, fixed maturity
funds, and cash and cash equivalents. The core portfolio may, at times, contain assets
significantly in excess of those required to meet insurance liabilities or other defined
funding\u00a0needs.
Assets in excess of those required to be held in the core portfolio are typically held in the
surplus portfolio. The surplus portfolio is invested in fixed maturity securities, principal
protected products, derivative instruments, cash and cash equivalents, private investment funds,
and hedge funds. In general, the duration of the surplus portfolio is slightly longer than the
core\u00a0portfolio.
The Group reviews the composition, duration and asset allocation of its investment portfolio on
a regular basis to respond to changes in interest rates and other market conditions. If certain
asset classes are anticipated to produce a higher return within management\u2019s risk tolerance,
an\u00a0adjustment in asset allocation may be made. Conversely, if the risk profile is expected to
move outside of management's risk tolerance levels, an adjustment to the asset allocation may
be made to reduce the risks in the portfolio.
The investment portfolio is currently structured to perform similarly in risk-on and risk-off
environments. The Group endeavours to limit losses in both risk-on, risk-off, and interest rate
hike scenarios. The Group models various periods of significant stress to better understand the
investment portfolio\u2019s risks and exposures. The scenarios represent what could, and most likely
will, occur (albeit not in the exact form of the scenarios, which are based on historic periods of
volatility). The Group also monitors the portfolio impact of more severe disaster scenarios
consisting of extreme shocks.
The Investment Committee oversees a strategic asset allocation study on a bi-annual basis,
which assesses the Group's overall strategy and seeks to determine if there is an alternative
asset allocation to achieve the highest risk-adjusted return within our risk tolerances.
The\u00a0IRRC\u00a0meets quarterly to seek to ensure that the Group\u2019s strategic and tactical investment
actions are consistent with investment risk preferences, appetite, risk and return objectives
and\u00a0tolerances. The IRRC also helps further develop the risk tolerances to be incorporated
into\u00a0the ERM framework.
The investment mix of the Group's investment portfolio is as follows:
2025
2024
Core
Surplus
Total
Core
Surplus
Total
As at 31 December
$m
$m
$m
$m
$m
$m
Short-term investments
13.0
2.0
15.0
27.9
4.6
32.5
Fixed maturity funds
30.4
\u2014
30.4
23.1
\u2014
23.1
US treasuries
364.5
28.4
392.9
382.8
127.1
509.9
Other government bonds
46.5
74.4
120.9
31.5
33.8
65.3
US municipal bonds
9.7
1.4
11.1
9.1
6.7
15.8
US government agency debt
\u2014
4.0
4.0
0.2
17.0
17.2
Asset backed securities
111.4
192.0
303.4
81.6
190.1
271.7
US government agency MBS
244.6
161.4
406.0
181.3
145.2
326.5
Non-agency MBS
62.4
35.4
97.8
22.5
33.0
55.5
US government agency CMBS
\u2014
1.1
1.1
\u2014
\u2014
\u2014
Non-agency commercial MBS
36.8
17.8
54.6
\u2014
20.5
20.5
Bank loans
\u2014
153.7
153.7
\u2014
153.4
153.4
Corporate bonds
913.9
305.4
1,219.3
827.9
280.1
1,108.0
Other fixed maturities
\u2014
\u2014
\u2014
\u2014
4.4
4.4
Total fixed maturity securities
1,833.2
977.0
2,810.2
1,587.9
1,015.9
2,603.8
Private investment funds
\u2014
291.2
291.2
\u2014
253.1
253.1
Hedge funds
\u2014
8.8
8.8
\u2014
7.9
7.9
Other investments
\u2014
(0.3)
(0.3)
\u2014
0.1
0.1
Total investments
1,833.2
1,276.7
3,109.9
1,587.9
1,277.0
2,864.9
The concentration risk of the Group's fixed maturity securities by location and sector is
as\u00a0follows:
2025
As at 31 December
Financials
$m
Industrial &
consumer
$m
Utility
$m
Government
&
government
agencies
$m
Structured1
$m
Other2
$m
Total3
$m
United States
338.3
654.4
19.1
829.3
222.5
\u2014
2,063.6
Cayman Islands
\u2014
\u2014
\u2014
\u2014
174.9
\u2014
174.9
Canada
33.1
23.4
\u2014
77.3
\u2014
\u2014
133.8
United Kingdom
50.3
25.6
0.3
\u2014
\u2014
\u2014
76.2
Europe 4
64.8
53.0
\u2014
13.6
2.1
\u2014
133.5
Other
48.5
54.0
9.1
29.9
56.3
30.4
228.2
Total fixed maturity securities
535.0
810.4
28.5
950.1
455.8
30.4
2,810.2
2024
As at 31 December
Financials
$m
Industrial &
consumer
$m
Utility
$m
Government
&
government
agencies
$m
Structured1
$m
Other2
$m
Total3
$m
United States
316.3
635.5
12.6
869.3
138.5
27.3
1,999.5
Cayman Islands
\u2014
1.2
\u2014
\u2014
151.8
\u2014
153.0
Canada
37.0
17.4
\u2014
27.8
\u2014
\u2014
82.2
United Kingdom
41.5
20.2
\u2014
2.2
\u2014
\u2014
63.9
Europe 4
58.5
37.1
\u2014
6.6
2.6
4.4
109.2
Other
29.4
51.2
7.9
28.8
54.8
23.9
196.0
Total fixed maturity securities
482.7
762.6
20.5
934.7
347.7
55.6
2,603.8
1. Structured products excludes any government structured products.
2. Other includes Lloyd's overseas deposits. Short term investments have been allocated to sector in the
current\u00a0period.
3. Location represents the country of risk for the majority of the fixed maturity securities. If the country of risk is not
available, the location will reflect the country of the Issuer.
4. Europe excludes the United Kingdom.
The Group's net asset value is directly impacted by movements in the fair value of investments
held. Fair values can be impacted by movements in interest rates, credit ratings, exchange rates,
the current economic environment and outlook.
Interest rate risk
(i) Investments
Interest rate risk is the risk that movements in market interest rates, which are typically
correlated with the interest rates set by central banks, have a detrimental financial impact on
the value of the Group's assets and liabilities. The Group\u2019s investment portfolio is mainly
comprised of fixed maturity securities and cash and cash equivalents. Fixed maturity funds are
overseas deposits held by the syndicates in trust for the benefit of the policyholders in those
overseas jurisdictions. They consist of high-quality, short-duration fixed maturity securities.
The\u00a0fair value of the Group\u2019s fixed maturity portfolio is generally inversely correlated to
movements in market interest rates. If market interest rates fall, the fair value of the Group\u2019s
fixed maturity securities would tend to rise, and vice versa.
The sensitivity of the price of fixed maturity securities, and certain derivatives, to movements
in\u00a0interest rates is indicated by their duration. The greater a security\u2019s duration, the greater its
price volatility to movements in interest rates. The sensitivity of the Group\u2019s fixed maturity
investment portfolio to interest rate movements is detailed below, assuming linear movements
in interest rates:
2025
2024
As at 31 December
$m
%
$m
%
Immediate shift in yield (basis points)
100
(62.9)
(2.2)
(62.2)
(2.4)
75
(47.2)
(1.7)
(46.6)
(1.8)
50
(31.4)
(1.1)
(31.1)
(1.2)
25
(15.7)
(0.6)
(15.5)
(0.6)
(25)
15.7
0.6
13.7
0.5
(50)
31.4
1.1
27.5
1.1
(75)
47.1
1.7
41.2
1.6
(100)
62.8
2.2
54.9
2.1
The Group mitigates interest rate risk on the investment portfolio by establishing and
monitoring duration ranges in its investment guidelines. The duration of the core portfolio is
matched to the modelled duration of the net insurance contract liabilities, within a permitted
range. The permitted duration range for the surplus portfolio is between one and five years.
The overall duration for fixed maturity securities, managed cash and cash equivalents is
2.1 years (31 December 2024 \u2013 2.0 years).
In addition to duration management, the Group monitors VaR to measure potential losses in
the\u00a0estimated fair values of its cash and invested assets, and to understand and monitor risk.
The\u00a0VaR calculation is performed using variance/covariance risk modelling to capture the cash
flows and embedded optionality of the investment portfolio. Securities are valued individually
using standard market pricing models. These security valuations serve as the input to risk
analytics, including full valuation risk analyses, as well as parametric methods that rely on
option-adjusted risk sensitivities to approximate the risk and return profiles of the portfolio.
The principal VaR measure that is produced is an annual VaR at the 99th percentile confidence
level. Under normal conditions, the investment portfolio value is not expected to decrease
more than the VaR metric listed in the table below 99% of the time over a one-year time
horizon. The appropriateness of this measure is considered by the Investment Committee,
on\u00a0behalf of the Board of Directors, on an annual basis.
The Group\u2019s annual VaR calculations are as follows:
2025
2024
As at 31 December
$m
% of shareholders'
equity
$m
% of shareholders'
equity
99th percentile confidence level1
119.6
7.9
157.8
10.6
1. Including the impact of internal foreign exchange hedges.
(ii) Discounting approach on the LIC and the AIC
The Group's LIC and AIC are discounted on initial recognition and remeasured to current interest
rates at each quarter end date, and are therefore sensitive to changes in market interest rates.
The Group applies the bottom-up approach when deriving its discount rates for discounting the
LIC and the AIC. This approach requires the use of an appropriate (liquid) risk-free yield curve,
plus a specific illiquidity premium above the risk-free yield curve to represent the reduced
liquidity of the insurance contract cash flows compared to the observable risk-free rates.
The\u00a0risk-free yields and illiquidity premium are derived using reference data supplied by third
parties with management judgement applied where appropriate, in particular in the derivation
of the illiquidity premium, which is informed by the implied illiquidity premium of a
representative portfolio of corporate bonds determined using the top-down method.
The Group writes predominantly short-duration contracts and has not identified any significant
financing component in the LRC or the ARC, and has therefore applied judgement to determine
that there is no requirement to discount these balances.
The following table sets out the one-, three-, five- and seven-year yield curves (risk-free rate
plus illiquidity premium) used to discount the cash flows of insurance contracts issued and
reinsurance contracts held for the Group's major currencies:
2025
2024
As at 31 December
1 year
3 years
5 years
7 years
1 year
3 years
5 years
7 years
USD
3.83%
4.03%
4.31%
4.55%
5.33%
4.40%
4.29%
4.34%
GBP
3.94%
4.23%
4.51%
4.75%
5.31%
4.34%
4.14%
4.16%
EUR
2.57%
3.08%
3.43%
3.68%
4.03%
3.21%
3.21%
3.33%
JPY
1.30%
2.02%
2.35%
2.60%
0.65%
0.96%
1.24%
1.52%
The following table presents information on how reasonably possible changes in the yield curve
could impact the valuation of the net insurance contract liabilities, profit after tax and
shareholders' equity. Under the PAA, and given the current amount of the Group's loss
component, only the LIC component of insurance contract liabilities and the AIC component of
reinsurance contract assets are sensitive to possible changes in interest rate risk variables.
LIC as at
31 December
2025
$m
Impact on profit
after tax and
shareholders'
equity
$m
LIC as at
31 December
2024
$m
Impact on profit
after tax and
shareholders'
equity
$m
Insurance contract liabilities
2,644.8
2,237.7
Reinsurance contract assets
(757.0)
(608.5)
Net insurance contract liabilities
1,887.8
1,629.2
1% increase in yield curves
Insurance contract liabilities
2,589.7
54.3
2,195.6
37.9
Reinsurance contract assets
(747.1)
(11.4)
(600.6)
(6.7)
Net insurance contract liabilities
1,842.6
42.9
1,595.0
31.2
The analysis is based on a change in an assumption while holding all other assumptions
constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be
correlated.
Price risk
Price risk is the risk that the fair value of the Group's investment portfolio will fluctuate because
of changes in market prices (other than those arising from interest rate or foreign exchange rate
risk), whether those changes are caused by factors specific to the individual investment or other
market factors.
The Group's price risk exposure relates to private investment funds and hedge funds. Listed
investments that are quoted in an active market are recognised at quoted bid price, which is
deemed to be the 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 11).
This includes comparison to comparable orderly transactions between active market
participants, reference to benchmarks or other indices to assess reasonableness, and other
valuation techniques that are commonly used by market participants.
A 10% asset price decrease at 31 December 2025 would reduce the value of our private
investment funds and hedge funds by approximately $30.0 million (31 December 2024 \u2013
$26.1 million).
Derivative financial instruments
The Group\u2019s investment guidelines permit the investment managers to utilise forward foreign
currency contracts to manage foreign currency exposure. These positions are monitored
regularly. The Group may also use OTC or exchange-traded managed derivatives to mitigate
interest rate risk and foreign currency exposures. The Group principally has exposure to
derivatives related to the following types of risks: interest rate risk, foreign currency risk,
and\u00a0credit risk.
Forward foreign currency contracts
A forward foreign currency contract is a commitment to purchase or sell a foreign currency at a
future date, at a defined rate. The Group may utilise forward foreign currency contracts to gain
exposure to a certain currency or market rate, to manage the impact of fluctuations in foreign
currencies on the value of its foreign currency denominated investments, debt, insurance-
related currency exposures and/or expenses.
Forward contracts expose the Group to credit, market and liquidity risks. Credit risk arises from
the potential inability of counterparties to perform under the terms of the contract. The Group
is exposed to market risk to the extent that adverse changes occur in the exchange rate of the
underlying foreign currency. Liquidity risk represents the possibility that the Group may not be
able to rapidly adjust the size of its forward positions at a reasonable price in times of high
volatility and financial stress. These risks are mitigated by requiring a minimum counterparty
credit quality, restricting the maximum notional exposure as a percentage of the investment
portfolio\u2019s estimated fair value, and restricting exposures to foreign currencies, individually
and\u00a0in aggregate, as a percentage of the investment portfolio\u2019s estimated fair value.
Where forward foreign currency contracts are within externally managed investment portfolios,
they are disclosed as other investments. Where they are managed directly by the Group, they
are disclosed as either other receivables, or other payables, as appropriate.
The notional amount of a derivative contract is the underlying quantity upon which payment
obligations are calculated. A long position is equivalent to buying the underlying currency,
whereas a short position is equivalent to having sold the underlying currency.
The net gains or losses on the Group\u2019s derivative financial instruments recognised in the
consolidated statement of comprehensive income are as follows:
For the year ended 31 December
2025
$m
2024
$m
Net foreign exchange losses on forward foreign currency contracts
(1.2)
(2.3)
The estimated fair values of the Group\u2019s derivative instruments are as follows:
2025
2024
As at 31 December
Other
investments
$m
Other
receivables
$m
Other
payables
$m
Other
investments
$m
Other
receivables
$m
Other
payables
$m
Forward foreign currency contracts
(0.3)
\u2014
(1.0)
0.1
0.2
(0.4)
The Group has the following open forward foreign currency contracts:
2025
2024
As at 31 December
Notional
long
$m
Notional
short
$m
Net notional
long (short)
$m
Notional
long
$m
Notional
short
$m
Net notional
long (short)
$m
Canadian Dollar
\u2014
48.0
(48.0)
\u2014
25.3
(25.3)
Euro
\u2014
2.6
(2.6)
31.6
2.3
29.3
Australian Dollar
\u2014
2.8
(2.8)
\u2014
\u2014
\u2014
Sterling
54.0
0.8
53.2
\u2014
0.5
(0.5)
Danish Krone
\u2014
0.3
(0.3)
\u2014
0.2
(0.2)
Total
54.0
54.5
(0.5)
31.6
28.3
3.3
III. Debt risk
Debt risk is the risk that the Group will not be able to service either the interest payment, or the
principal repayment, amounts on its external borrowings as they fall due. In 2021, the Group
issued $450.0 million (in aggregate principal amount) of 5.625% fixed-rate reset junior
subordinated notes, repayable on 18 September 2041 (see note 18). The fixed interest rate will
reset on 18 September 2031 at a rate per annum equal to the prevailing five-year treasury rate,
plus a credit spread of 4.08% and a 100 basis point step up.
The Group is exposed to interest rate risk in the future if prevailing rates at the time of reset are
materially different from the existing rates on the debt issue.
IV. Currency risk
Currency risk is the risk that movements in currency exchange rates have a detrimental financial
impact on the Group. The Group underwrites from multiple locations and risks are assumed on
a worldwide basis. Risks assumed are predominantly denominated in US dollars. The Group is
exposed to currency risk to the extent its assets and liabilities are denominated in different
currencies to its US dollar reporting currency. The exchange gains and losses which arise on
these assets and liabilities impact the consolidated statement of comprehensive income.
The Group hedges monetary non-US dollar liabilities primarily with non-US dollar assets, but
may also use derivatives to mitigate foreign currency exposures. The Group's main foreign
currency exposure relates to its insurance contract liabilities and reinsurance contract assets,
investments and cash and cash equivalents, and other monetary assets and liabilities. The Group
uses forward foreign currency contracts for the purposes of managing currency exposures.
The\u00a0Group\u2019s assets and liabilities, categorised by currency at their translated carrying amount,
are as follows:
2025
Assets
US $
$m
Sterling
$m
Euro
$m
Japanese Yen
$m
Other
$m
Total
$m
Cash and cash equivalents
375.2
67.2
48.3
12.9
57.8
561.4
Accrued interest receivable
23.6
\u2014
0.5
\u2014
0.5
24.6
Investments
2,917.0
36.0
73.6
\u2014
83.3
3,109.9
Reinsurance contract assets
650.9
28.5
37.8
(0.6)
1.2
717.8
Other receivables
88.1
11.5
0.8
\u2014
0.8
101.2
Corporation tax receivable
0.2
0.2
\u2014
\u2014
\u2014
0.4
Investment in associate
4.8
\u2014
\u2014
\u2014
\u2014
4.8
Right-of-use assets
8.6
13.5
\u2014
\u2014
0.6
22.7
Property, plant and equipment
2.4
5.8
\u2014
\u2014
\u2014
8.2
Intangible assets
143.4
109.6
\u2014
\u2014
\u2014
253.0
Total assets as at 31 December
4,214.2
272.3
161.0
12.3
144.2
4,804.0
2025
Liabilities
US $
$m
Sterling
$m
Euro
$m
Japanese Yen
$m
Other
$m
Total
$m
Insurance contract liabilities
2,318.1
135.1
153.2
10.1
95.6
2,712.1
Other payables
32.2
55.3
0.6
\u2014
1.7
89.8
Deferred tax liability
10.8
5.1
\u2014
\u2014
(0.3)
15.6
Lease liabilities
8.7
20.3
\u2014
\u2014
0.7
29.7
Long-term debt
447.5
\u2014
\u2014
\u2014
\u2014
447.5
Total liabilities as at 31 December
2,817.3
215.8
153.8
10.1
97.7
3,294.7
2024
Assets
US $
$m
Sterling
$m
Euro
$m
Japanese Yen
$m
Other
$m
Total
$m
Cash and cash equivalents
449.8
141.0
21.5
17.9
54.1
684.3
Accrued interest receivable
21.3
\u2014
0.4
\u2014
0.3
22.0
Investments
2,721.4
27.0
59.1
\u2014
57.4
2,864.9
Reinsurance contract assets
497.9
25.3
36.4
(0.2)
(2.2)
557.2
Other receivables
8.9
10.5
\u2014
\u2014
1.1
20.5
Investment in associate
9.1
\u2014
\u2014
\u2014
\u2014
9.1
Right-of-use assets
1.4
14.8
\u2014
\u2014
\u2014
16.2
Property, plant and equipment
0.8
7.9
\u2014
\u2014
\u2014
8.7
Intangible assets
153.8
43.2
\u2014
\u2014
\u2014
197.0
Total assets as at 31 December
3,864.4
269.7
117.4
17.7
110.7
4,379.9
2024
Liabilities
US $
$m
Sterling
$m
Euro
$m
Japanese Yen
$m
Other
$m
Total
$m
Insurance contract liabilities
1,948.7
117.5
129.0
15.6
89.6
2,300.4
Other payables
43.8
46.2
\u2014
\u2014
1.9
91.9
Corporation tax payable
(0.3)
3.0
\u2014
\u2014
\u2014
2.7
Deferred tax liability
11.3
11.2
\u2014
\u2014
(0.2)
22.3
Lease liabilities
1.4
20.8
\u2014
\u2014
0.1
22.3
Long-term debt
447.0
\u2014
\u2014
\u2014
\u2014
447.0
Total liabilities as at 31 December
2,451.9
198.7
129.0
15.6
91.4
2,886.6
The impact on net income of a proportional foreign exchange movement of 10.0% up and
10.0% down for the aggregated total of all non-US dollar currencies against the US dollar, taken
at the year-end spot rates, would be an decrease or increase of $1.7 million (31 December 2024
\u2013 an increase or decrease of $1.5 million).
", "dimensions": { "concept": "ifrs-full:SensitivityAnalysisForEachTypeOfMarketRisk", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-271": { "value": "
Derivative financial instruments
The Group\u2019s investment guidelines permit the investment managers to utilise forward foreign
currency contracts to manage foreign currency exposure. These positions are monitored
regularly. The Group may also use OTC or exchange-traded managed derivatives to mitigate
interest rate risk and foreign currency exposures. The Group principally has exposure to
derivatives related to the following types of risks: interest rate risk, foreign currency risk,
and\u00a0credit risk.
Forward foreign currency contracts
A forward foreign currency contract is a commitment to purchase or sell a foreign currency at a
future date, at a defined rate. The Group may utilise forward foreign currency contracts to gain
exposure to a certain currency or market rate, to manage the impact of fluctuations in foreign
currencies on the value of its foreign currency denominated investments, debt, insurance-
related currency exposures and/or expenses.
Forward contracts expose the Group to credit, market and liquidity risks. Credit risk arises from
the potential inability of counterparties to perform under the terms of the contract. The Group
is exposed to market risk to the extent that adverse changes occur in the exchange rate of the
underlying foreign currency. Liquidity risk represents the possibility that the Group may not be
able to rapidly adjust the size of its forward positions at a reasonable price in times of high
volatility and financial stress. These risks are mitigated by requiring a minimum counterparty
credit quality, restricting the maximum notional exposure as a percentage of the investment
portfolio\u2019s estimated fair value, and restricting exposures to foreign currencies, individually
and\u00a0in aggregate, as a percentage of the investment portfolio\u2019s estimated fair value.
Where forward foreign currency contracts are within externally managed investment portfolios,
they are disclosed as other investments. Where they are managed directly by the Group, they
are disclosed as either other receivables, or other payables, as appropriate.
The notional amount of a derivative contract is the underlying quantity upon which payment
obligations are calculated. A long position is equivalent to buying the underlying currency,
whereas a short position is equivalent to having sold the underlying currency.
The net gains or losses on the Group\u2019s derivative financial instruments recognised in the
consolidated statement of comprehensive income are as follows:
For the year ended 31 December
2025
$m
2024
$m
Net foreign exchange losses on forward foreign currency contracts
(1.2)
(2.3)
The estimated fair values of the Group\u2019s derivative instruments are as follows:
2025
2024
As at 31 December
Other
investments
$m
Other
receivables
$m
Other
payables
$m
Other
investments
$m
Other
receivables
$m
Other
payables
$m
Forward foreign currency contracts
(0.3)
\u2014
(1.0)
0.1
0.2
(0.4)
The Group has the following open forward foreign currency contracts:
2025
2024
As at 31 December
Notional
long
$m
Notional
short
$m
Net notional
long (short)
$m
Notional
long
$m
Notional
short
$m
Net notional
long (short)
$m
Canadian Dollar
\u2014
48.0
(48.0)
\u2014
25.3
(25.3)
Euro
\u2014
2.6
(2.6)
31.6
2.3
29.3
Australian Dollar
\u2014
2.8
(2.8)
\u2014
\u2014
\u2014
Sterling
54.0
0.8
53.2
\u2014
0.5
(0.5)
Danish Krone
\u2014
0.3
(0.3)
\u2014
0.2
(0.2)
Total
54.0
54.5
(0.5)
31.6
28.3
3.3
", "dimensions": { "concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-273": { "value": "
C. Liquidity risk
Liquidity risk is the risk that cash may not be available to pay obligations when they are due
without incurring an unreasonable cost. The Group's main exposures to liquidity risk are with
respect to its insurance, investment, and operational activities. The Group is exposed to such
risk if proceeds from financial assets are not sufficient to fund obligations arising from its
insurance contracts issued. The Group can be exposed to daily calls on its available investment
assets, principally to settle insurance claims and to fund trust accounts following a large
catastrophe loss.
The most significant exposures in relation to the Group's insurance activities are as follows:
\u2022 large catastrophic events, or multiple medium-sized events in quick succession, resulting in a
requirement to pay a large value of claims within a relatively short time frame, or to fund trust
accounts;
\u2022 failure of insureds or cedants to meet their contractual obligations with respect to the
payment of premiums in a timely manner; and
\u2022 failure of reinsurers to meet their contractual obligations with respect to the payment of
claims in a timely manner.
The most significant exposures in relation to the Group's investment activities are as follows:
\u2022 adverse market movements and/or a duration mismatch to obligations, resulting in
investments being disposed of at a significant realised loss; and
\u2022 an inability to liquidate investments due to market conditions.
The maturity dates of the Group\u2019s fixed maturity portfolio are as follows:
2025
2024
As at 31 December
Core
$m
Surplus
$m
Total\u00a0
$m
Core
$m
Surplus
$m
Total
$m
Less than one year
217.8
31.3
249.1
255.3
39.7
295.0
Between one and two years
348.3
48.3
396.6
346.1
77.3
423.4
Between two and three years
348.6
70.9
419.5
263.7
67.9
331.6
Between three and four years
136.2
102.8
239.0
195.5
120.4
315.9
Between four and five years
104.6
93.4
198.0
80.7
88.9
169.6
Over five years
222.5
222.6
445.1
161.2
232.9
394.1
ABS and MBS
455.2
407.7
862.9
285.4
388.8
674.2
Total fixed maturity securities
1,833.2
977.0
2,810.2
1,587.9
1,015.9
2,603.8
The maturity profile of the insurance contracts issued and financial liabilities of the Group is
as\u00a0follows:
Years until liability becomes due - undiscounted values
As at 31 December 2025
Statement of
financial
position\u00a0
$m
Less than
one\u00a0
$m
One to three\u00a0
$m
Three to five\u00a0
$m
Over five\u00a0
$m
Total\u00a0
$m
Insurance contract liabilities1
2,712.1
1,053.4
963.5
447.5
452.6
2,917.0
Other payables
89.8
89.8
\u2014
\u2014
\u2014
89.8
Lease liabilities
29.7
6.0
12.6
10.3
6.7
35.6
Long-term debt2
447.5
25.3
50.6
50.6
475.3
601.8
Total
3,279.1
1,174.5
1,026.7
508.4
934.6
3,644.2
Years until liability becomes due - undiscounted values
As at 31 December 2024
Statement of
financial
position
$m
Less than
one\u00a0
$m
One to three\u00a0
$m
Three to five\u00a0
$m
Over five\u00a0
$m
Total\u00a0
$m
Insurance contract liabilities1
2,300.4
1,017.5
861.4
342.0
248.8
2,469.7
Other payables
91.9
91.9
\u2014
\u2014
\u2014
91.9
Lease liabilities
22.3
5.8
7.4
7.2
5.8
26.2
Long-term debt2
447.0
25.3
50.6
50.6
500.6
627.1
Total
2,861.6
1,140.5
919.4
399.8
755.2
3,214.9
1. Since the Group applies the PAA model for all insurance contracts issued, the maturity profile represents only the
liability for incurred claims, and has been presented on an undiscounted basis.
2. The maturity profile of long-term debt includes accrued interest.
Within the tables shown above, the insurance contract liabilities balance discloses the period
when the claims in respect of insurance contracts issued by the Group are expected to be
settled. All other liability balances within the table disclose the earliest period in which the
relevant counterparty could contractually require the Group to make payment. Actual maturities
of the above may differ from contractual maturities because certain counterparties have the
right to call or prepay certain obligations with or without call or prepayment penalties.
While the estimation of future cash flows in relation to ultimate claims settlement is complex
and incorporates a significant amount of judgement, the timing of the payment of claims is also
uncertain and cannot be predicted as simply as for other financial liabilities. Actuarial and
statistical techniques, past experience, and management's judgement have been used to
determine a likely settlement pattern based on the earliest period in which the Group could be
required by the relevant counterparty to make payment. There are no amounts contained
within the insurance contract liabilities or reinsurance contract assets as at 31 December 2025
(31 December 2024 \u2013 nil) that are payable on demand.
As at 31 December 2025, cash and cash equivalents were $561.4 million (31 December 2024 \u2013
$684.3 million). The Group manages its liquidity risks through its investment strategy to hold
high-quality, liquid securities, sufficient to meet its insurance liabilities and other near-term
liquidity requirements. The core portfolio, with its subset of guidelines, aims to ensure funds are
readily available to meet potential insurance liabilities, plus other liquidity requirements, in an
extreme event. In addition, the Group has established asset allocation and duration parameters
within the investment guidelines, such that the majority of the investments are in high-quality
assets which could be converted into cash promptly and at minimal expense. The Group
monitors market changes and outlook, and reallocates assets as deemed necessary.
As at 31 December 2025, the Group considers that it has more than adequate liquidity to pay its
obligations as they fall due.
", "dimensions": { "concept": "ifrs-full:DescriptionOfManagingLiquidityRisk", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-272": { "value": "
C. Liquidity risk
Liquidity risk is the risk that cash may not be available to pay obligations when they are due
without incurring an unreasonable cost. The Group's main exposures to liquidity risk are with
respect to its insurance, investment, and operational activities. The Group is exposed to such
risk if proceeds from financial assets are not sufficient to fund obligations arising from its
insurance contracts issued. The Group can be exposed to daily calls on its available investment
assets, principally to settle insurance claims and to fund trust accounts following a large
catastrophe loss.
The most significant exposures in relation to the Group's insurance activities are as follows:
\u2022 large catastrophic events, or multiple medium-sized events in quick succession, resulting in a
requirement to pay a large value of claims within a relatively short time frame, or to fund trust
accounts;
\u2022 failure of insureds or cedants to meet their contractual obligations with respect to the
payment of premiums in a timely manner; and
\u2022 failure of reinsurers to meet their contractual obligations with respect to the payment of
claims in a timely manner.
The most significant exposures in relation to the Group's investment activities are as follows:
\u2022 adverse market movements and/or a duration mismatch to obligations, resulting in
investments being disposed of at a significant realised loss; and
\u2022 an inability to liquidate investments due to market conditions.
The maturity dates of the Group\u2019s fixed maturity portfolio are as follows:
2025
2024
As at 31 December
Core
$m
Surplus
$m
Total\u00a0
$m
Core
$m
Surplus
$m
Total
$m
Less than one year
217.8
31.3
249.1
255.3
39.7
295.0
Between one and two years
348.3
48.3
396.6
346.1
77.3
423.4
Between two and three years
348.6
70.9
419.5
263.7
67.9
331.6
Between three and four years
136.2
102.8
239.0
195.5
120.4
315.9
Between four and five years
104.6
93.4
198.0
80.7
88.9
169.6
Over five years
222.5
222.6
445.1
161.2
232.9
394.1
ABS and MBS
455.2
407.7
862.9
285.4
388.8
674.2
Total fixed maturity securities
1,833.2
977.0
2,810.2
1,587.9
1,015.9
2,603.8
The maturity profile of the insurance contracts issued and financial liabilities of the Group is
as\u00a0follows:
Years until liability becomes due - undiscounted values
As at 31 December 2025
Statement of
financial
position\u00a0
$m
Less than
one\u00a0
$m
One to three\u00a0
$m
Three to five\u00a0
$m
Over five\u00a0
$m
Total\u00a0
$m
Insurance contract liabilities1
2,712.1
1,053.4
963.5
447.5
452.6
2,917.0
Other payables
89.8
89.8
\u2014
\u2014
\u2014
89.8
Lease liabilities
29.7
6.0
12.6
10.3
6.7
35.6
Long-term debt2
447.5
25.3
50.6
50.6
475.3
601.8
Total
3,279.1
1,174.5
1,026.7
508.4
934.6
3,644.2
Years until liability becomes due - undiscounted values
As at 31 December 2024
Statement of
financial
position
$m
Less than
one\u00a0
$m
One to three\u00a0
$m
Three to five\u00a0
$m
Over five\u00a0
$m
Total\u00a0
$m
Insurance contract liabilities1
2,300.4
1,017.5
861.4
342.0
248.8
2,469.7
Other payables
91.9
91.9
\u2014
\u2014
\u2014
91.9
Lease liabilities
22.3
5.8
7.4
7.2
5.8
26.2
Long-term debt2
447.0
25.3
50.6
50.6
500.6
627.1
Total
2,861.6
1,140.5
919.4
399.8
755.2
3,214.9
1. Since the Group applies the PAA model for all insurance contracts issued, the maturity profile represents only the
liability for incurred claims, and has been presented on an undiscounted basis.
2. The maturity profile of long-term debt includes accrued interest.
Within the tables shown above, the insurance contract liabilities balance discloses the period
when the claims in respect of insurance contracts issued by the Group are expected to be
settled. All other liability balances within the table disclose the earliest period in which the
relevant counterparty could contractually require the Group to make payment. Actual maturities
of the above may differ from contractual maturities because certain counterparties have the
right to call or prepay certain obligations with or without call or prepayment penalties.
While the estimation of future cash flows in relation to ultimate claims settlement is complex
and incorporates a significant amount of judgement, the timing of the payment of claims is also
uncertain and cannot be predicted as simply as for other financial liabilities. Actuarial and
statistical techniques, past experience, and management's judgement have been used to
determine a likely settlement pattern based on the earliest period in which the Group could be
required by the relevant counterparty to make payment. There are no amounts contained
within the insurance contract liabilities or reinsurance contract assets as at 31 December 2025
(31 December 2024 \u2013 nil) that are payable on demand.
As at 31 December 2025, cash and cash equivalents were $561.4 million (31 December 2024 \u2013
$684.3 million). The Group manages its liquidity risks through its investment strategy to hold
high-quality, liquid securities, sufficient to meet its insurance liabilities and other near-term
liquidity requirements. The core portfolio, with its subset of guidelines, aims to ensure funds are
readily available to meet potential insurance liabilities, plus other liquidity requirements, in an
extreme event. In addition, the Group has established asset allocation and duration parameters
within the investment guidelines, such that the majority of the investments are in high-quality
assets which could be converted into cash promptly and at minimal expense. The Group
monitors market changes and outlook, and reallocates assets as deemed necessary.
As at 31 December 2025, the Group considers that it has more than adequate liquidity to pay its
obligations as they fall due.
", "dimensions": { "concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-274": { "value": "
D. Credit risk
Credit risk is the risk that a counterparty may fail to pay, or repay, a debt or obligation.
The Group is exposed to credit risk in respect of its fixed maturity investment portfolio, cash and
cash equivalents, accrued interest receivable, derivative financial instruments, amounts
recoverable from reinsurers within reinsurance contract assets, amounts receivable from
insureds and cedants included within insurance contract liabilities, and other receivables.
Credit risk on the fixed maturity portfolio is mitigated through the Group\u2019s policy to invest in
instruments of high credit quality issuers, and to limit the amounts of credit exposure with
respect to particular ratings categories and any one issuer. Securities rated below an S&P or
equivalent rating of BBB-/Baa3 may comprise no more than 15.0% of total market value of the
fixed maturity portfolio. In addition, no one issuer, with the exception of US government and
agency securities, other G10 government guaranteed securities (excluding Italy), and Australian
sovereign debt, should exceed 5.0% of total market value of the fixed maturity portfolio. The
Group is therefore not exposed to any significant credit concentration risk on either its fixed
maturity investment portfolio, or cash and cash equivalents, except for fixed maturity securities
issued by the US government and government agencies, and other highly-rated governments.
Credit risk on insurance contract cash flows from insureds and cedants is managed by
conducting business with reputable broking organisations, with whom the Group has
established relationships, and by rigorous cash collection procedures. The Group also has a
broker approval process in place. Binding authorities are subject to standard market controls,
including credit control. Credit risk from reinsurance contract cash flows is primarily managed
by the review and approval of reinsurer security, as discussed in the outwards reinsurance
section above.
Reinsurance contracts held in the table below represent the credit exposed components of
reinsurance contract assets. These have been presented on an undiscounted basis, and
represent the maximum exposure to credit risk considering the Group's ability to offset
balances, where applicable, under the relevant reinsurance contracts held.
The table below presents an analysis of the Group\u2019s maximum exposures to counterparty credit
risk, based on their rating:
2025
2024
As at 31 December
Cash and cash
equivalents
$m
Fixed maturity
securities\u00a0
$m
Credit exposed
component of
reinsurance\u00a0
contracts held\u00a0
$m
Cash and cash
equivalents
$m
Fixed maturity
securities\u00a0
$m
Credit exposed
component of
reinsurance\u00a0
contracts held\u00a0
$m
AAA
304.2
405.5
\u2014
487.9
265.0
\u2014
AA+, AA, AA-
\u2014
1,054.1
3.9
\u2014
1,073.0
1.8
A+, A, A-
257.2
758.2
750.0
195.9
748.8
593.7
BBB+, BBB, BBB-
\u2014
428.6
0.4
0.5
360.2
1.0
Other1
\u2014
163.8
43.6
\u2014
156.8
41.6
Total
561.4
2,810.2
797.9
684.3
2,603.8
638.1
1. Reinsurance contracts held classified as 'other' include $31.6 million as at 31 December 2025 (2024 \u2013
$32.1 million) which are fully collateralised. Other under fixed maturity securities mainly consists of bank loans for
which no rating is available.
Reinsurance is ceded across all geographic regions in which the Group operates. The Group
does not have a significant concentration of credit risk with any single reinsurer.
The Group's maximum exposure to credit risk arising from insurance contracts issued is
$838.4 million (31 December 2024 \u2013 $777.5 million), which relates to the elements of the
insurance contract liabilities balance which are considered to be exposed to credit risk,
specifically, premium receivables and reinstatement premium receivables, net of profit
commissions payable on inwards reinsurance business.
ECL have been determined to be immaterial as at 31 December 2025 and 31 December 2024.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-275": { "value": "ECL have been determined to be immaterial as at 31 December 2025 and 31 December 2024", "dimensions": { "concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-276": { "value": "
E. Operational risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes,
personnel, systems, or non-insurance external events. The Group and its subsidiaries have
identified and evaluated their key operational risks, and these are incorporated in the risk
registers and modelled within the subsidiaries' capital models. The Group has also established,
and monitors compliance with, internal operational risk tolerances. The RRC reviews
operational risk on at least an annual basis and operational risk is covered in the Group CRO's
quarterly ORSA report to the LHL Board of Directors, entity level boards, and in the LSL
RCC\u00a0reporting.
To manage operational risks, the Group has implemented a robust governance framework.
Policies and procedures are documented and identify the key risks and controls within
processes. Key risk indicators have been established and are monitored on a regular basis, and a
formal loss event and near-miss reporting process has been implemented. The risk
management function facilitates a quarterly risk and control affirmation process and performs
detailed control validation and testing, the outcomes of which inform the CRO's quarterly
opinion of the overall control environment.
The Group's internal audit function provides independent feedback with regard to the accuracy
and completeness of key risks and controls, and independently verifies the effective operation
of these through sample testing. The highest rated risk areas are considered for audit annually,
medium risk areas every two years and the lowest risk areas every three to five years.
It is widely recognised that the current geopolitical risks have also increased the risk of cyber attacks. Whilst
the Group does not write standalone cyber as a separate class of business, it does have some exposure
within broader policy coverage of existing classes of business. The Group also has exposure from the
operational risk of suffering a cyber attack on its systems, the resultant downtime of systems, the expense
in getting back up and running and the potential for missed business opportunities during the downtime.
To mitigate this risk, the Group has established an information security function which works
with a specialist third-party to identify, assess, monitor and manage cyber risk. A robust cyber
risk framework has been developed, this includes a range of key risk and performance
indicators which are monitored and reported against regularly. A cyber incident response plan
has been developed and is tested on an annual basis.
The operational cyber risk that comes with employees working from home is managed through
enhanced monitoring of network activity, targeted staff training, a quarterly risk and control
affirmation process, annual testing of business continuity plans and disaster recovery plans, and
a cyber security incident response plan. The risk is monitored on an ongoing basis through the
use of a series of quantitative key risk indicators, which are the aggregate of key performance
indicators monitored by the Group\u2019s information security function.
Management continue to closely monitor the progress of the legislative process in the
jurisdictions in which it operates as it relates to OECD global minimum tax and Bermuda
corporate income tax. Further details are outlined in note 14.
", "dimensions": { "concept": "lancashire:DisclosureOfOperationalRiskTextBlock", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-277": { "value": "
F. Strategic risk
Strategic risk is the risk that the Group does not develop and implement an appropriate long-
term strategy to meet its business goals. The Group has identified several strategic risks.
These\u00a0include: i) business planning risk, ii) inflation risk, iii) capital management risk, iv) retention
risk, v) growth risk and vi) climate change risk.
I. Business planning risk
Business planning risk is the risk that either the poor execution of the business plan or an
inappropriate business plan, results in a strategy that fails to adequately consider and reflect the
current trading environment, resulting in an inability of the Group to optimise performance,
increasing reputational risk. The Group addresses the risks associated with the planning and
execution of the business plan through a combination of the following:
\u2022 an iterative annual forward-looking business planning process with cross-departmental involvement;
\u2022 evaluation and approval of the annual business plan by the Board of Directors;
\u2022 regular monitoring of actual versus planned results;
\u2022 periodic review and re-forecasting as market conditions change; and
\u2022 evaluation of climate-related risks and the potential short-, medium- and long-term
implications/considerations for the business.
The forward-looking business planning process covers a three-year period from 2026 to 2028,
and applies a number of sensitivity, stress and scenario tests. These tests include consideration
of climate-related risks. The sensitivity and stress testing has confirmed that even under the
more extreme stress scenarios, the Group had more than adequate liquidity and regulatory
solvency capital headroom.
II. Inflation risk
Both UK and worldwide inflation rates have decreased from their peak in 2022 with UK rates
starting to trend upwards again during 2025 from its low in 2024. The Group routinely monitors
inflation and factors the impact of inflation in its RPI (Renewal Price Index) and estimated claims
costs. On this basis, inflation remains a focus for management and those charged with
governance at both the Board of Directors and the appropriate committees.
III. Capital management risk
Capital management risk is the risk of the Group failing to maintain adequate capital, accessing
capital at an inflated cost, or the inability to access capital. This includes unanticipated changes
in vendor, regulatory and/or rating agency models, that could result in an increase in capital
requirements, or a change in the type of capital required. The total capital of the Group is
as\u00a0follows:
As at 31 December
2025
$m
2024
$m
Shareholders' equity
1,509.3
1,493.3
Long-term debt
447.5
447.0
Total capital
1,956.8
1,940.3
Less: intangible assets
253.0
197.0
Total tangible capital
1,703.8
1,743.3
Risks associated with the effectiveness of the Group's capital management are mitigated
as\u00a0follows:
\u2022 regular monitoring of current and prospective regulatory and rating agency capital
requirements;
\u2022 regular discussion with the LSL management team regarding Lloyd's capital requirements;
\u2022 oversight of capital requirements by the Board of Directors, including regulatory capital
requirements;
\u2022 ability to purchase sufficient, cost-effective reinsurance;
\u2022 maintaining contact with vendors, regulators and rating agencies to stay abreast of upcoming
developments; and
\u2022 participation in industry groups such as the International Underwriters Association, the
Association of Bermuda Insurers and Reinsurers and the Lloyd's Market Association.
The Group reviews the level and composition of capital on an ongoing basis with a view to:
\u2022 maintaining sufficient capital for underwriting opportunities and to meet obligations
to\u00a0policyholders;
\u2022 maximising the risk-adjusted return to shareholders within predetermined risk tolerances;
\u2022 maintaining adequate financial strength ratings; and
\u2022 meeting internal, rating agency and regulatory capital requirements.
Increases in the Group's capital are held within the Group, invested, or returned to shareholders
as appropriate. The retention of earnings generated by the Group leads to an increase in capital.
Capital raising can include debt or equity, and returns of capital may be made through
dividends, share repurchases, a redemption of debt, or any combination thereof. All capital
actions require approval by the Board of Directors.
Internal methods have been developed to review the profitability of classes of business and their
estimated capital requirements, and the capital requirements of the combination of a wide\u00a0range
of other business activities. These approaches are used by management in decision-making.
The Group's long-term debt held is approved as 'Tier 2 Ancillary Capital' by the BMA.
The Group's aim is to maximise risk-adjusted returns for its shareholders across the cycle. The
return is measured by management in terms of the change in DBVS in the period. This aim is a
long-term goal, acknowledging that management expects both higher and lower results in the
shorter term. The cyclicality and volatility of the insurance market is expected to be the largest
driver of this pattern. Management monitors these peaks and troughs by adjusting the Group's
insurance portfolio to make the most effective use of available capital and seeking to maximise
the risk-adjusted return.
The sources of capital used by the Group are equity shareholders' funds and borrowings. As a
holding company, LHL relies on dividends from its operating entities to provide the cash flow
required for debt service and dividends to shareholders. The operating entities\u2019 ability to pay
dividends and make capital distributions is subject to the legal and regulatory restrictions of the
jurisdictions in which they operate.
Both the Group and LICL are regulated by the BMA, and are required to monitor their enhanced
capital requirement under the BMA's regulatory framework, which has been assessed as
equivalent to the Solvency II regime. Bermuda is also recognised as a qualified and reciprocal
jurisdiction by the US NAIC, and LICL is approved as a reciprocal reinsurer. The Group and
LICL's capital requirements are calculated using the BSCR standard formula model. For the
years ended 31 December 2025 and 31 December 2024, both the Group and LICL were more
than adequately capitalised under the BMA\u2019s regulatory regime.
The Group's UK-regulated insurance companies are required to comply with the Solvency II
regime and are regulated by the PRA and FCA. LSL is also regulated by Lloyd's. Under Solvency
II, the basis for assessing regulatory capital and solvency comprises a market-consistent
economic balance sheet and a SCR, determined using either an internal model or the
standard\u00a0formula.
LUK calculates its SCR using the standard formula. LUK's Solvency II own funds that comprise
Tier 1 items for the years ended 31 December 2025 and 31 December 2024. Tier 1 capital is the
highest-quality capital under Solvency II with the greatest loss-absorbing capacity, comprising
share capital and retained earnings.\u00a0For the years ended 31 December 2025 and 31 December
2024, LUK was more than adequately capitalised under the Solvency II regime.
The Group's underwriting capacity in its Lloyd's syndicates must be supported by providing a
deposit in the form of cash, investment securities, or LOCs, which are referred to as FAL.
The\u00a0capital framework at Lloyd's requires each managing agent to calculate the capital
requirement for each syndicate they manage. Solvency II internal models are used to determine
capital requirements for Syndicate 2010 and Syndicate 3010 based on the uSCR. Lloyd's has the
discretion to take into account other factors at syndicate or member level to uplift the
calculated uSCR. This may include perceived deficiencies in the internal model result, as well as
the need to maintain Lloyd\u2019s overall security rating. Currently, as a minimum, Lloyd's applies a
35.0% uplift to each syndicate's uSCR to arrive at the ECA.
Lloyd's then uses each syndicate\u2019s ECA as a basis for determining member level capital
requirements, which is backed by FAL. For the 2026 calendar year, the Group's corporate
member's FAL requirement was set at 69.9% (2025 \u2013 66.6%) of underwriting capacity.
Further\u00a0solvency adjustments are made to allow for open-year profits and losses of the
syndicates on which the corporate member participates. The Group has a FAL requirement
of\u00a0\u00a3559.2 million as at 31 December 2025 (31 December 2024 \u2013 \u00a3478.7 million).
For the years ended 31 December 2025 and 31 December 2024, the regulatory capital
requirements of all the Group\u2019s regulatory jurisdictions were met.
IV. Retention risk
Retention risk is the risk of inappropriate succession planning, poor staff retention in key roles,
and poor management of key person risks. Risks associated with succession planning, staff
retention and key person risks are mitigated through a combination of resource planning
processes and controls, including:
\u2022 the identification of key personnel, together with appropriate succession plans;
\u2022 documented recruitment procedures, position descriptions and employment contracts;
\u2022 resource monitoring and the provision of appropriate compensation, including equity based
compensation which vests over a defined time horizon;
\u2022 the use of KRIs for the voluntary turnover of members of staff; and
\u2022 training schemes.
V. Growth risk
Growth risk is the risk of organisational stretch as the Group grows, in terms of volume of
business written and number of employees, as well as from transformation programmes
designed to ensure the Group has appropriate systems, infrastructure and data in place to
support business activities. Growth risk is mitigated through continuous monitoring of the
Group's current state against the Group's business plan and goals, together with engagement
with individual management teams across the Group to validate that they have the resources
they require to deliver their own business objectives.
VI. Climate change risk
The Group is exposed to both climate change-related risks and opportunities. The two major
categories of risk being transition risk and physical risk.
Transition risks are those risks relating to the transition to a lower-carbon economy and include
risks such as policy and legal risk, technology risk, market risk and reputation risk. Physical risks
are those relating to the physical impacts of climate change which can be acute (those from
increased frequency and severity of climate-related events) or chronic (due to longer-term
shifts in climate patterns). As a (re)insurance underwriter, the Group is more significantly
affected by physical risk through its potential exposure to acute and chronic climate change.
The potential financial impact from these climate-related risks is assessed through scenario
testing and mitigated by the Group's strategic and risk management decisions around managing
these risks. A risk radar has been prepared to illustrate the risks identified and the likelihood and
magnitude of these risks; this diagram can be found on page 58. The risk assessment also
considers the products currently offered by the Group and how these might change over time
during the transition to a lower-carbon economy. A table summarising potential opportunities,
their time frame, likelihood and magnitude is included on page 54. The Group's current
assessment of risk in relation to climate change is discussed in more detail within the TCFD
report on pages 50 to 62.
The Group's process in identifying, assessing and managing climate risk with respect to
insurance risk, investment risk (a component of market risk) and business plan risk
(a\u00a0component of strategic risk) is discussed further within the relevant sections above.
", "dimensions": { "concept": "lancashire:DisclosureOfStrategicRiskTextBlock", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-278": { "value": "
1. General information
The Group is a provider of global specialty (re)insurance products with operations in London,
Bermuda , the US, and Australia. LHL (registered number 37415) was incorporated under the
laws of Bermuda and its common shares trade on the main market of the LSE. LHL\u2019s head office
and registered office is Power House, 7 Par-la-Ville Road, Hamilton HM 11, Bermuda.
The consolidated financial statements for the year ended 31 December 2025 include LHL's
subsidiary companies, the Group's investment in associate, and the Group's share of the
syndicates' assets and liabilities, and income and expenses. A full listing of the Group\u2019s related
parties can be found in note 22.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-279": { "value": "The Group is a provider of global specialty (re)insurance products with operations in London, Bermuda , the US, and Australia.", "dimensions": { "concept": "ifrs-full:DescriptionOfNatureOfEntitysOperationsAndPrincipalActivities", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-280": { "value": "Bermuda", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-281": { "value": "Bermuda", "dimensions": { "concept": "ifrs-full:CountryOfIncorporation", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-282": { "value": "Power House, 7 Par-la-Ville Road, Hamilton HM 11, Bermuda", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-283": { "value": "Segmental reporting
Management and the Board of Directors review the Group's insurance business primarily by its
two principal segments: reinsurance and insurance. These segments are therefore deemed to
be the Group's operating segments for the purposes of segmental reporting. Lines of business
are underwritten within each operating segment. These lines of business are written primarily,
but not exclusively, on a reinsurance or insurance basis.
Operating segment performance is measured by the insurance service result and net insurance
ratio. The performance of the overall Group is measured by the combined ratio on both an
undiscounted and discounted basis.
All amounts reported are transactions with external parties and the Group's associate, see note
15. There are no significant inter-segmental transactions, and there are no significant insurance
or reinsurance contracts that insure or reinsure risks located in Bermuda, the Group's country
of\u00a0domicile.
2025
For the year ended 31 December
Reinsurance
$m
Insurance
$m
Total\u00a0
$m
Insurance revenue
904.4
956.0
1,860.4
Insurance service expenses
(511.9)
(939.3)
(1,451.2)
Insurance service result before reinsurance contracts held
392.5
16.7
409.2
Allocation of reinsurance premium
(163.7)
(259.8)
(423.5)
Amounts recoverable from reinsurers
63.6
331.8
395.4
Net (expense) income from reinsurance contracts held
(100.1)
72.0
(28.1)
Insurance service result
292.4
88.7
381.1
Finance expense from insurance contracts issued
(75.5)
(58.1)
(133.6)
Finance income from reinsurance contracts held
12.3
18.4
30.7
Net insurance financing result
(63.2)
(39.7)
(102.9)
Net investment return
218.0
Other operating expenses
(146.2)
Net other unallocated (expenses) and income
(45.1)
Profit before tax
304.9
Net insurance ratio
60.5%
87.3%
73.5%
Net operating expense ratio
10.2%
Combined ratio (discounted)
83.7%
Discounting impact on combined ratio
9.4%
Combined ratio (undiscounted)
93.1%
2024
For the year ended 31 December
Reinsurance
$m
Insurance
$m
Total\u00a0
$m
Insurance revenue
855.1
910.0
1,765.1
Insurance service expenses
(420.0)
(766.1)
(1,186.1)
Insurance service result before reinsurance contracts held
435.1
143.9
579.0
Allocation of reinsurance premium
(168.2)
(271.2)
(439.4)
Amounts recoverable from reinsurers
(2.8)
243.1
240.3
Net expense from reinsurance contracts held
(171.0)
(28.1)
(199.1)
Insurance service result
264.1
115.8
379.9
Finance expense from insurance contracts issued
(41.0)
(36.9)
(77.9)
Finance income from reinsurance contracts held
11.9
12.1
24.0
Net insurance financing result
(29.1)
(24.8)
(53.9)
Net investment return
162.2
Other operating expenses
(115.9)
Net other unallocated (expenses) and income
(35.6)
Profit before tax
336.7
Net insurance ratio
61.6%
81.9%
71.3%
Net operating expense ratio
8.7%
Combined ratio (discounted)
80.0%
Discounting impact on combined ratio
9.1%
Combined ratio (undiscounted)
89.1%
", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-285": { "value": "
3. Net insurance financing result
Insurance contracts issued, and reinsurance contracts held, are accounted for on a discounted
basis. The table below shows the total impact of discounting recognised in the consolidated
statement of comprehensive income for the years ended 31 December 2025 and
31 December 2024:
2025
2024
For the year ended 31 December
Insurance
contracts
issued
$m
Reinsurance
contracts
held
$m
Total
$m
Insurance
contracts
issued
$m
Reinsurance
contracts
held
$m
Total
$m
Initial discount included
in insurance service result
169.3
(33.9)
135.4
144.4
(24.1)
120.3
Unwind of discount
(101.1)
23.6
(77.5)
(95.5)
26.9
(68.6)
Impact of change in
assumptions
(32.5)
7.1
(25.4)
17.6
(2.9)
14.7
Finance (expense) income
(133.6)
30.7
(102.9)
(77.9)
24.0
(53.9)
.
Total net discounting
income (expense)
35.7
(3.2)
32.5
66.5
(0.1)
66.4
The discounting approach and the yield curves used to discount the cash flows of insurance
contracts issued and reinsurance contracts held for our major currencies are provided in the
interest rate risk disclosures.
The relationship between the Group's total finance income and expense from insurance
contracts issued, and reinsurance contracts held, is not typically expected to correlate directly
with the Group's net investment return since:
\u2022 the Group's investment portfolio is of greater magnitude than its insurance contract liabilities,
net of its reinsurance contract assets;
\u2022 the discount rates used in respect of the Group's insurance contract liabilities, and
reinsurance contract assets, are set with specific reference to the Group's insurance
contracts, and not its investment portfolio; and
\u2022 there are a mixture of securities within the Group's investment portfolio, certain of which do
not have their valuation directly or primarily affected by changes in interest rates.
", "dimensions": { "concept": "lancashire:DisclosureOfFinanceIncomeExpenseFromReinsuranceContractsHeldRecognisedInProfitOrLossTextBlock", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-284": { "value": "
3. Net insurance financing result
Insurance contracts issued, and reinsurance contracts held, are accounted for on a discounted
basis. The table below shows the total impact of discounting recognised in the consolidated
statement of comprehensive income for the years ended 31 December 2025 and
31 December 2024:
2025
2024
For the year ended 31 December
Insurance
contracts
issued
$m
Reinsurance
contracts
held
$m
Total
$m
Insurance
contracts
issued
$m
Reinsurance
contracts
held
$m
Total
$m
Initial discount included
in insurance service result
169.3
(33.9)
135.4
144.4
(24.1)
120.3
Unwind of discount
(101.1)
23.6
(77.5)
(95.5)
26.9
(68.6)
Impact of change in
assumptions
(32.5)
7.1
(25.4)
17.6
(2.9)
14.7
Finance (expense) income
(133.6)
30.7
(102.9)
(77.9)
24.0
(53.9)
.
Total net discounting
income (expense)
35.7
(3.2)
32.5
66.5
(0.1)
66.4
The discounting approach and the yield curves used to discount the cash flows of insurance
contracts issued and reinsurance contracts held for our major currencies are provided in the
interest rate risk disclosures.
The relationship between the Group's total finance income and expense from insurance
contracts issued, and reinsurance contracts held, is not typically expected to correlate directly
with the Group's net investment return since:
\u2022 the Group's investment portfolio is of greater magnitude than its insurance contract liabilities,
net of its reinsurance contract assets;
\u2022 the discount rates used in respect of the Group's insurance contract liabilities, and
reinsurance contract assets, are set with specific reference to the Group's insurance
contracts, and not its investment portfolio; and
\u2022 there are a mixture of securities within the Group's investment portfolio, certain of which do
not have their valuation directly or primarily affected by changes in interest rates.
", "dimensions": { "concept": "lancashire:DisclosureOfFinanceIncomeExpenseFromInsuranceContractsIssuedRecognisedInProfitOrLossTextBlock", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-286": { "value": "
4. Net investment return
For the year ended 31 December
2025
$m
2024
$m
Interest and dividend income on financial investments at FVTPL
143.1
115.3
Interest on cash and cash equivalents
21.6
29.5
Net realised gains
1.3
2.7
Net unrealised gains
58.2
20.4
Investment income
224.2
167.9
Investment management fees
(6.2)
(5.7)
Total net investment return
218.0
162.2
", "dimensions": { "concept": "lancashire:DisclosureOfNetInvestmentIncomeTextBlock", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-288": { "value": "
5. Other income
For the year ended 31 December
2025
$m
2024
$m
Lancashire Capital Management
Profit commission
1.0
0.8
Lancashire Syndicates
Managing agency fees
0.7
1.0
Consortium fees
1.3
2.0
Consortium profit commission
1.0
1.0
Coverholder commission income
0.3
0.2
Managing agency profit commission
3.0
5.4
Total other income
7.3
10.4
As at 31 December 2025, contract assets in relation to other income amounted to $6.8 million
(31 December 2024 \u2013 $6.4 million). These contract assets are presented within other
receivables in the consolidated statement of financial position.
6. Expenses
Expenses incurred by the Group in the reporting period are outlined in the table below:
2025
2024
For the year ended 31 December
Other
operating
expenses
$m
Directly
attributable
expenses\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Total\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
expenses\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Other\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
operating\u00a0
expenses\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Directly
attributable
expenses\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Total\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
expenses\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Employee remuneration costs
91.1
67.5
158.6
70.5
61.2
131.7
Operating expenses
55.1
51.8
106.9
45.4
44.1
89.5
Total
146.2
119.3
265.5
115.9
105.3
221.2
Directly attributable expenses comprise fixed and variable expenses incurred by the Group in
the reporting period that relate directly to fulfilling insurance contracts issued, and have been
allocated to insurance service expenses within the consolidated statement of comprehensive
income.
Auditor's remuneration included within other operating expenses incurred by the Group in the
reporting period is outlined in the table below:
For the year ended 31 December
2025
$m
2024
$m
Group audit fees
4.8
4.4
Other services
0.7
0.6
Total
5.5
5.0
During the years ended 31 December 2025 and 31 December 2024, KPMG LLP provided
non-audit services in relation to the Group's half-year reporting review, Solvency II reporting
and regulatory reporting. Fees for non-audit services provided in 2025 totalled $0.7 million
(2024 \u2013 $0.6 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExpenseExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-287": { "value": "
5. Other income
For the year ended 31 December
2025
$m
2024
$m
Lancashire Capital Management
Profit commission
1.0
0.8
Lancashire Syndicates
Managing agency fees
0.7
1.0
Consortium fees
1.3
2.0
Consortium profit commission
1.0
1.0
Coverholder commission income
0.3
0.2
Managing agency profit commission
3.0
5.4
Total other income
7.3
10.4
As at 31 December 2025, contract assets in relation to other income amounted to $6.8 million
(31 December 2024 \u2013 $6.4 million). These contract assets are presented within other
receivables in the consolidated statement of financial position.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-291": { "value": "
6. Expenses
Expenses incurred by the Group in the reporting period are outlined in the table below:
2025
2024
For the year ended 31 December
Other
operating
expenses
$m
Directly
attributable
expenses\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Total\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
expenses\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Other\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
operating\u00a0
expenses\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Directly
attributable
expenses\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Total\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
expenses\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Employee remuneration costs
91.1
67.5
158.6
70.5
61.2
131.7
Operating expenses
55.1
51.8
106.9
45.4
44.1
89.5
Total
146.2
119.3
265.5
115.9
105.3
221.2
Directly attributable expenses comprise fixed and variable expenses incurred by the Group in
the reporting period that relate directly to fulfilling insurance contracts issued, and have been
allocated to insurance service expenses within the consolidated statement of comprehensive
income.
Auditor's remuneration included within other operating expenses incurred by the Group in the
reporting period is outlined in the table below:
For the year ended 31 December
2025
$m
2024
$m
Group audit fees
4.8
4.4
Other services
0.7
0.6
Total
5.5
5.0
During the years ended 31 December 2025 and 31 December 2024, KPMG LLP provided
non-audit services in relation to the Group's half-year reporting review, Solvency II reporting
and regulatory reporting. Fees for non-audit services provided in 2025 totalled $0.7 million
(2024 \u2013 $0.6 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-290": { "value": "
6. Expenses
Expenses incurred by the Group in the reporting period are outlined in the table below:
2025
2024
For the year ended 31 December
Other
operating
expenses
$m
Directly
attributable
expenses\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Total\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
expenses\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Other\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
operating\u00a0
expenses\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Directly
attributable
expenses\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Total\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
expenses\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Employee remuneration costs
91.1
67.5
158.6
70.5
61.2
131.7
Operating expenses
55.1
51.8
106.9
45.4
44.1
89.5
Total
146.2
119.3
265.5
115.9
105.3
221.2
Directly attributable expenses comprise fixed and variable expenses incurred by the Group in
the reporting period that relate directly to fulfilling insurance contracts issued, and have been
allocated to insurance service expenses within the consolidated statement of comprehensive
income.
Auditor's remuneration included within other operating expenses incurred by the Group in the
reporting period is outlined in the table below:
For the year ended 31 December
2025
$m
2024
$m
Group audit fees
4.8
4.4
Other services
0.7
0.6
Total
5.5
5.0
During the years ended 31 December 2025 and 31 December 2024, KPMG LLP provided
non-audit services in relation to the Group's half-year reporting review, Solvency II reporting
and regulatory reporting. Fees for non-audit services provided in 2025 totalled $0.7 million
(2024 \u2013 $0.6 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesByNatureExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-289": { "value": "
6. Expenses
Expenses incurred by the Group in the reporting period are outlined in the table below:
2025
2024
For the year ended 31 December
Other
operating
expenses
$m
Directly
attributable
expenses\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Total\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
expenses\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Other\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
operating\u00a0
expenses\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Directly
attributable
expenses\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Total\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
expenses\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Employee remuneration costs
91.1
67.5
158.6
70.5
61.2
131.7
Operating expenses
55.1
51.8
106.9
45.4
44.1
89.5
Total
146.2
119.3
265.5
115.9
105.3
221.2
Directly attributable expenses comprise fixed and variable expenses incurred by the Group in
the reporting period that relate directly to fulfilling insurance contracts issued, and have been
allocated to insurance service expenses within the consolidated statement of comprehensive
income.
Auditor's remuneration included within other operating expenses incurred by the Group in the
reporting period is outlined in the table below:
For the year ended 31 December
2025
$m
2024
$m
Group audit fees
4.8
4.4
Other services
0.7
0.6
Total
5.5
5.0
During the years ended 31 December 2025 and 31 December 2024, KPMG LLP provided
non-audit services in relation to the Group's half-year reporting review, Solvency II reporting
and regulatory reporting. Fees for non-audit services provided in 2025 totalled $0.7 million
(2024 \u2013 $0.6 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-292": { "value": "
Auditor's remuneration included within other operating expenses incurred by the Group in the
reporting period is outlined in the table below:
For the year ended 31 December
2025
$m
2024
$m
Group audit fees
4.8
4.4
Other services
0.7
0.6
Total
5.5
5.0
During the years ended 31 December 2025 and 31 December 2024, KPMG LLP provided
non-audit services in relation to the Group's half-year reporting review, Solvency II reporting
and regulatory reporting. Fees for non-audit services provided in 2025 totalled $0.7 million
(2024 \u2013 $0.6 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-293": { "value": "
7. Employee benefits
2025
2024
For the year ended 31 December
Other\u00a0 \u00a0 \u00a0 \u00a0
operating\u00a0
expenses\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Directly
attributable
expenses\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Total\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
expenses\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Other\u00a0 \u00a0 \u00a0
operating\u00a0
expenses\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Directly
attributable
expenses\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Total\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
expenses\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Employee remuneration costs
91.1
67.5
158.6
70.5
61.2
131.7
Total cash compensation
91.1
67.5
158.6
70.5
61.2
131.7
RSS \u2013 performance
6.2
\u2014
6.2
5.4
\u2014
5.4
RSS \u2013 ordinary
14.4
\u2014
14.4
11.7
\u2014
11.7
RSS \u2013 bonus deferral
2.9
\u2014
2.9
1.9
\u2014
1.9
Total equity based compensation
23.5
\u2014
23.5
19.0
\u2014
19.0
Total employee benefits
114.6
67.5
182.1
89.5
61.2
150.7
Equity based compensation
The Group's equity based compensation scheme is its RSS. All outstanding and future RSS
grants have an exercise price of $nil.
The fair value of any TSR component of the nil-cost options is estimated using a stochastic
model. For all other components, the Black-Scholes model is used to estimate the fair value.
The following table lists the assumptions used in the stochastic model for the RSS awards
granted during the years ended 31 December 2025 and 31 December 2024:
Assumptions
2025
2024
Expected volatility1
30.0%
31.2%
Risk-free interest rate 2
4.1%
4.1%
Expected average life of options
2.9 years
2.9 years
Share price
$7.34
$8.29
1. The expected volatility of the LHL share prices are calculated based on the movement in the share prices over a
period prior to the grant date, equal in length to the expected life of the award.
2. The risk-free interest rate is consistent with three-year UK government bond yields on the date of grant.
The calculation of the equity based compensation expense assumes forfeitures due to
employee turnover of 10.0% (2024 \u2013 10.0%) per annum prior to vesting, with subsequent
adjustments to reflect actual experience.
RSS \u2013 Performance
The performance RSS options vest after a three-year period and are dependent on certain
performance criteria. A maximum of 85.0% (2024 \u2013 85.0%) of the performance RSS options will
vest only on the achievement of a change in DBVS in excess of a required amount. A maximum
of 15.0% (2024 \u2013 15.0%) of the performance RSS options will vest only on the achievement of
an absolute TSR in excess of a required amount. An amount equivalent to the dividends paid
between the grant date and the exercise date accrues and is paid at the time of exercise,
pro-rata according to the number of RSS options that vest. The exercise period is ten years
from the grant date.
2025
2024
Opening total number of nil-cost options as of 31 December
3,178,894
3,502,144
Granted
1,141,985
1,014,535
Exercised
(605,686)
(432,310)
Forfeited
\u2014
(43,565)
Lapsed
(331,537)
(861,910)
Closing total number of nil-cost options as of 31 December
3,383,656
3,178,894
Exercisable
335,087
102,053
Weighted average remaining contractual life
8.0 years
8.0 years
Weighted average fair value at date of grant during the year
$5.62
$7.02
Weighted average share price at date of exercise during the year
$7.30
$8.04
RSS \u2013 Ordinary
The ordinary RSS options vest three years from the date of grant and do not have associated
performance criteria. An amount equivalent to the dividends paid between the grant date and
the exercise date accrues and is paid at the time of exercise. The exercise periods range from
three to ten years from the grant date.
2025
2024
Opening total number of nil-cost options as of 31 December
6,347,114
5,502,042
Granted
2,501,411
2,220,400
Exercised
(1,243,764)
(981,396)
Forfeited
(260,378)
(393,932)
Closing total number of nil-cost options as of 31 December
7,344,383
6,347,114
Exercisable
1,145,696
892,331
Weighted average remaining contractual life
7.3 years
7.9 years
Weighted average fair value at date of grant during the year
$7.34
$8.29
Weighted average share price at date of exercise during the year
$8.00
$8.12
RSS \u2013 Bonus deferral
The vesting periods of the bonus deferral RSS options range from one to three years from the
date of grant and do not have associated performance criteria. An amount equivalent to the
dividends paid between the grant date and the exercise date accrues and is paid at the time
of\u00a0exercise. The exercise period is ten years from the grant date.
2025
2024
Opening total number of nil-cost options as of 31 December
484,373
230,672
Granted
457,463
395,179
Exercised
(125,476)
(141,478)
Closing total number of nil-cost options as of 31 December
816,360
484,373
Exercisable
79,273
41,300
Weighted average remaining contractual life
8.6 years
8.8 years
Weighted average fair value at date of grant during the year
$7.34
$8.29
Weighted average share price at date of exercise during the year
$7.43
$7.99
", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-294": { "value": "
Equity based compensation
The Group's equity based compensation scheme is its RSS. All outstanding and future RSS
grants have an exercise price of $nil.
The fair value of any TSR component of the nil-cost options is estimated using a stochastic
model. For all other components, the Black-Scholes model is used to estimate the fair value.
The following table lists the assumptions used in the stochastic model for the RSS awards
granted during the years ended 31 December 2025 and 31 December 2024:
Assumptions
2025
2024
Expected volatility1
30.0%
31.2%
Risk-free interest rate 2
4.1%
4.1%
Expected average life of options
2.9 years
2.9 years
Share price
$7.34
$8.29
1. The expected volatility of the LHL share prices are calculated based on the movement in the share prices over a
period prior to the grant date, equal in length to the expected life of the award.
2. The risk-free interest rate is consistent with three-year UK government bond yields on the date of grant.
The calculation of the equity based compensation expense assumes forfeitures due to
employee turnover of 10.0% (2024 \u2013 10.0%) per annum prior to vesting, with subsequent
adjustments to reflect actual experience.
RSS \u2013 Performance
The performance RSS options vest after a three-year period and are dependent on certain
performance criteria. A maximum of 85.0% (2024 \u2013 85.0%) of the performance RSS options will
vest only on the achievement of a change in DBVS in excess of a required amount. A maximum
of 15.0% (2024 \u2013 15.0%) of the performance RSS options will vest only on the achievement of
an absolute TSR in excess of a required amount. An amount equivalent to the dividends paid
between the grant date and the exercise date accrues and is paid at the time of exercise,
pro-rata according to the number of RSS options that vest. The exercise period is ten years
from the grant date.
2025
2024
Opening total number of nil-cost options as of 31 December
3,178,894
3,502,144
Granted
1,141,985
1,014,535
Exercised
(605,686)
(432,310)
Forfeited
\u2014
(43,565)
Lapsed
(331,537)
(861,910)
Closing total number of nil-cost options as of 31 December
3,383,656
3,178,894
Exercisable
335,087
102,053
Weighted average remaining contractual life
8.0 years
8.0 years
Weighted average fair value at date of grant during the year
$5.62
$7.02
Weighted average share price at date of exercise during the year
$7.30
$8.04
RSS \u2013 Ordinary
The ordinary RSS options vest three years from the date of grant and do not have associated
performance criteria. An amount equivalent to the dividends paid between the grant date and
the exercise date accrues and is paid at the time of exercise. The exercise periods range from
three to ten years from the grant date.
2025
2024
Opening total number of nil-cost options as of 31 December
6,347,114
5,502,042
Granted
2,501,411
2,220,400
Exercised
(1,243,764)
(981,396)
Forfeited
(260,378)
(393,932)
Closing total number of nil-cost options as of 31 December
7,344,383
6,347,114
Exercisable
1,145,696
892,331
Weighted average remaining contractual life
7.3 years
7.9 years
Weighted average fair value at date of grant during the year
$7.34
$8.29
Weighted average share price at date of exercise during the year
$8.00
$8.12
RSS \u2013 Bonus deferral
The vesting periods of the bonus deferral RSS options range from one to three years from the
date of grant and do not have associated performance criteria. An amount equivalent to the
dividends paid between the grant date and the exercise date accrues and is paid at the time
of\u00a0exercise. The exercise period is ten years from the grant date.
2025
2024
Opening total number of nil-cost options as of 31 December
484,373
230,672
Granted
457,463
395,179
Exercised
(125,476)
(141,478)
Closing total number of nil-cost options as of 31 December
816,360
484,373
Exercisable
79,273
41,300
Weighted average remaining contractual life
8.6 years
8.8 years
Weighted average fair value at date of grant during the year
$7.34
$8.29
Weighted average share price at date of exercise during the year
$7.43
$7.99
", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-298": { "value": "
8. Financing costs
For the year ended 31 December
2025
$m
2024
$m
Interest expense on long-term debt
25.8
25.8
Interest expense on lease liabilities
1.4
1.3
Other financing costs
6.6
5.9
Total financing costs
33.8
33.0
Refer to note 18 for details of long-term debt and financing arrangements, and to note 16 for
details of lease liabilities.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExpenseExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-297": { "value": "
8. Financing costs
For the year ended 31 December
2025
$m
2024
$m
Interest expense on long-term debt
25.8
25.8
Interest expense on lease liabilities
1.4
1.3
Other financing costs
6.6
5.9
Total financing costs
33.8
33.0
Refer to note 18 for details of long-term debt and financing arrangements, and to note 16 for
details of lease liabilities.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-296": { "value": "
8. Financing costs
For the year ended 31 December
2025
$m
2024
$m
Interest expense on long-term debt
25.8
25.8
Interest expense on lease liabilities
1.4
1.3
Other financing costs
6.6
5.9
Total financing costs
33.8
33.0
Refer to note 18 for details of long-term debt and financing arrangements, and to note 16 for
details of lease liabilities.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceCostExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-295": { "value": "
8. Financing costs
For the year ended 31 December
2025
$m
2024
$m
Interest expense on long-term debt
25.8
25.8
Interest expense on lease liabilities
1.4
1.3
Other financing costs
6.6
5.9
Total financing costs
33.8
33.0
Refer to note 18 for details of long-term debt and financing arrangements, and to note 16 for
details of lease liabilities.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestExpenseExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-299": { "value": "
9. Tax
For the year ended 31 December
2025
$m
2024
$m
Corporation tax charge for the period
18.7
9.0
Adjustments in respect of prior period corporation tax
(0.8)
(0.5)
Deferred tax (credit) charge for the period (see note 14)
(7.2)
5.8
Adjustment in respect of prior period deferred tax (see note 14)
0.8
1.1
Total tax charge
11.5
15.4
Tax reconciliation1
2025
$m
2024
$m
Profit before tax
304.9
336.7
Tax calculated at the standard corporation tax rate applicable in
Bermuda 15% (2024: 0%)
45.7
\u2014
Effect of income taxed at a higher rate
4.6
14.1
Effect of income taxed at lower rate for Bermuda entities currently
out of scope
(39.7)
\u2014
Adjustments in respect of prior period
\u2014
0.6
Differences related to equity based compensation
0.3
0.1
Other expense permanent differences
0.6
0.6
Total tax charge
11.5
15.4
1. All tax reconciling balances have been classified as recurring items.
The total tax charge as a percentage of the Group\u2019s profit before tax is 3.8% ( 2024 \u2013 4.6%).
The UK, US and Australia subsidiaries of LHL are subject to corporation tax on all their taxable
profits. Refer to note 14 for details of OECD global minimum tax and Bermuda corporate
income tax developments.
14. Provision for deferred tax
As at 31 December
2025
$m
2024
$m
Equity based compensation
(14.3)
(11.1)
Syndicate underwriting profits
11.4
11.8
Syndicate participation rights
18.8
18.8
Other temporary differences
(0.3)
2.8
Net deferred tax liability
15.6
22.3
Deferred tax assets are recognised to the extent that realising the related tax benefit through
future taxable profits is probable. It is anticipated that sufficient taxable profits will be available
within the Group in 2026 and subsequent years to utilise the deferred tax assets recognised
when the underlying temporary differences reverse, and the tax losses carried forward.
For the years ended 31 December 2025 and 31 December 2024, the Group had no uncertain
tax positions (see note 9). The table below reconciles the movements within the net deferred
tax liability. All deferred tax assets and liabilities are classified as non-current.
As at 31 December
2025
$m
2024
$m
Opening net deferred tax liability
22.3
16.2
Deferred tax (credit) charge for the period
(7.2)
5.8
Adjustment in respect of prior period deferred tax
0.8
1.1
Deferred tax in equity
(0.3)
(0.8)
Closing net deferred tax liability
15.6
22.3
OECD global minimum tax and Bermuda corporate income tax
Subsidiary companies in a number of jurisdictions in which the Group operates are subject to a global
minimum tax of 15% from 1 January 2024. The legislation brings into effect the Income Inclusion Rule
and Qualified Domestic Minimum Top-up Tax, although these have not had any impact on the Group.
As a response to the Pillar Two reform, legislation was passed in Bermuda to implement a Bermuda
Corporate Income Tax of 15% from 1 January 2025. To the extent the Bermuda CIT results in an effective
tax rate of less than 15%, the shortfall in tax will be collected by applying the Pillar Two undertaxed
payments rule, which was implemented on 1 January 2025. Any shortfall in tax will be collected in a
jurisdiction that has implemented the undertaxed payments rule and in which the Group has operating
subsidiaries. For Lancashire this is likely to be the UK; however, based on its limited international presence
and provided it continues to meet the relevant conditions, Lancashire expects to benefit from exclusion
from the undertaxed payment rule for a period of five years, from 2025 to 2029.
The Group is also not expected to become subject to Bermuda CIT until 1 January 2030, provided it
continues to meet the relevant conditions within the Bermuda CIT rules which allows groups with a
limited international presence to be excluded from scope for a period of up to five years.
The Lancashire Group has not established any deferred tax assets under the ETA rules of the
Bermuda CIT Act and expects to opt out of the ETA rules.", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-300": { "value": "
10. Cash and cash equivalents
As at 31 December
2025
$m
2024
$m
Cash at bank and in hand
243.0
267.5
Cash equivalents
318.4
416.8
Total cash and cash equivalents
561.4
684.3
Cash equivalents have an original maturity of three months or less. The carrying amount of
these assets approximates their fair value. Refer to note 18 for the cash and cash equivalent
balances on deposit as collateral. Cash and cash equivalents include managed cash and cash
equivalents of $161.2 million (31 December 2024 \u2013 $294.4 million).", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-303": { "value": "
11. Investments
The Group determines the fair value of each individual security utilising the highest-level inputs
of the fair value hierarchy, as defined below. The fair value of fixed maturity investments is
determined from quotations received from third-party recognised pricing services. The Group
receives independent assurance reports to assess the design and operating effectiveness of
controls over these processes. The fair value of private investment funds is estimated based on
the most recently available NAV as advised by the external fund manager or third-party
administrator.
The pricing sources use bid prices where available, otherwise indicative prices are quoted based
on observable market trade data. The prices provided are compared to the investment
managers' own pricing.
The Group has not made any adjustments to the pricing provided by its third-party investment
managers for either the year ending 31 December 2025 or the year ending 31 December 2024.
The fair values of securities within the Group\u2019s investment portfolio are estimated using the
following valuation techniques in accordance with the fair value hierarchy:
Level (i)
Level (i) investments are securities with quoted prices in active markets. A financial instrument is
regarded as quoted in an active market if quoted prices are readily and regularly available from
an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those
prices represent actual and regularly occurring market transactions, on an arm's length basis.
Level (ii)
Level (ii) investments are securities with quoted prices in active markets for similar assets or liabilities,
or securities valued using other valuation techniques for which all significant inputs are based on
observable market data. Instruments included in Level (ii) are valued through independent external
sources using directly observable inputs to models or other valuation methods. The valuation
methods used are typically of an industry-accepted standard and include broker-dealer quotes and
pricing models, including present values and future cash flows, together with inputs such as yield
curves, interest rates, prepayment profiles, and default rates.
Level (iii)
Level (iii) investments are securities for which valuation techniques are not based on observable
market data, and therefore require management judgement to determine an appropriate fair value.
The Group determines securities classified as Level (iii) to include private investment funds, hedge
funds, and loans made by the Group's Lloyd's syndicate platforms to the Lloyd's central fund.
The fair value of the Group's private investment funds and hedge fund are determined using
statements received from each fund's investment managers on either a monthly or quarterly in
arrears basis. In addition, these valuations will be compared with benchmarks or other indices to
assess the reasonableness of the estimated fair value of each fund. Given the Group\u2019s knowledge of
the underlying investments and the size of the Group\u2019s investment therein, the Group would not
anticipate any material variance between the statements and the final actual NAVs reported by the
investment managers.
The fair value hierarchy of the Group\u2019s investment holdings is as follows:
As at 31 December 2025
Level (i)\u00a0
$m
Level (ii)\u00a0
$m
Level (iii)\u00a0
$m
Total\u00a0
$m
Short-term investments
7.8
7.2
\u2014
15.0
Fixed maturity funds
\u2014
30.4
\u2014
30.4
US treasuries
392.9
\u2014
\u2014
392.9
Other government bonds
24.6
96.3
\u2014
120.9
US municipal bonds
2.3
8.8
\u2014
11.1
US government agency debt
2.3
1.7
\u2014
4.0
Asset backed securities
1.6
301.8
\u2014
303.4
US government agency MBS
15.0
391.0
\u2014
406.0
Non-agency MBS
\u2014
97.8
\u2014
97.8
US government agency CMBS
\u2014
1.1
\u2014
1.1
Non-agency CMBS
\u2014
54.6
\u2014
54.6
Bank loans
\u2014
153.7
\u2014
153.7
Corporate bonds
1,051.5
167.8
\u2014
1,219.3
Other fixed maturities
\u2014
\u2014
\u2014
\u2014
Total fixed maturity securities1
1,498.0
1,312.2
\u2014
2,810.2
Private investment funds
\u2014
\u2014
291.2
291.2
Hedge funds
\u2014
\u2014
8.8
8.8
Other investments
\u2014
(0.3)
\u2014
(0.3)
Total investments
1,498.0
1,311.9
300.0
3,109.9
1. The nature of our fixed maturity securities are presented in the investment risk disclosures.
As at 31 December 2024
Level (i)\u00a0
$m
Level (ii)\u00a0
$m
Level (iii)\u00a0
$m
Total\u00a0
$m
Short-term investments
27.9
4.6
\u2014
32.5
Fixed maturity funds
3.8
19.3
\u2014
23.1
US treasuries
509.9
\u2014
\u2014
509.9
Other government bonds
19.6
45.7
\u2014
65.3
US municipal bonds
3.7
12.1
\u2014
15.8
US government agency debt
7.2
10.0
\u2014
17.2
Asset backed securities
8.5
263.2
\u2014
271.7
US government agency MBS
122.1
204.4
\u2014
326.5
Non-agency MBS
\u2014
55.5
\u2014
55.5
US government agency CMBS
\u2014
\u2014
\u2014
\u2014
Non-agency CMBS
\u2014
20.5
\u2014
20.5
Bank loans
\u2014
153.4
\u2014
153.4
Corporate bonds
1,012.6
95.4
\u2014
1,108.0
Other fixed maturities
\u2014
2.3
2.1
4.4
Total fixed maturity securities
1,715.3
886.4
2.1
2,603.8
Private investment funds
\u2014
\u2014
253.1
253.1
Hedge funds
\u2014
\u2014
7.9
7.9
Other investments
\u2014
0.1
\u2014
0.1
Total investments
1,715.3
886.5
263.1
2,864.9
The table below analyses the movements in investments classified as Level (iii) investments:
Private
investment
funds
$m
Hedge funds
$m
Other fixed
maturities1
$m
Total
$m
As at 31 December 2023
165.6
9.9
3.2
178.7
Purchases and capital contributions
84.6
\u2014
\u2014
84.6
Sales and return of capital
\u2014
(3.2)
(1.0)
(4.2)
Net realised gains
\u2014
0.5
\u2014
0.5
Net unrealised gains (losses)
4.1
0.7
(0.1)
4.7
Net unrealised foreign exchange (losses)
(1.2)
\u2014
\u2014
(1.2)
As at 31 December 2024
253.1
7.9
2.1
263.1
Transfers into level (iii)
2.1
\u2014
\u2014
2.1
Purchases and capital contributions
38.7
\u2014
\u2014
38.7
Sales and return of capital
(19.5)
(0.2)
(4.2)
(23.9)
Net realised gains (losses)
0.2
\u2014
(0.1)
0.1
Net unrealised gains
11.4
1.1
2.2
14.7
Net unrealised foreign exchange gains
5.2
\u2014
\u2014
5.2
As at 31 December 2025
291.2
8.8
\u2014
300.0
1. Included within other fixed maturity securities are the Lloyd's Central Fund loans which are classified at Level (iii)
within the fair value hierarchy. The loans to the Lloyd's Central Fund were fully repaid by Lloyds in Q4.
The Group determines whether transfers have occurred between levels of the fair value
hierarchy by reassessing the categorisation at the end of each reporting period. Transfers to
Level (iii) securities amounted to $2.1 million during the year ended 31 December 2025.
The\u00a0transfer to Level (iii) resulted from a change in valuation technique following the repayment
of the senior secured portion of the investment. The fair value of the remaining interest is based
on NAV statements received from the administrator on a quarterly in arrears basis.
Transfers between Level (i) to Level (ii) securities amounted to $148.9 million, and transfers from
Level (ii) to Level (i) securities amounted to $6.9 million during the year ended 31 December 2025.
Included within net unrealised gains (losses) recognised in profit or loss as shown in the table
above, are net unrealised gains related to Level (iii) investments still held as at 31 December 2025
of $12.5 million (31 December 2024 \u2013 $5.0 million).
12. Interest in structured entities
Unconsolidated structured entities in which the Group has an interest
The Group provides capital contributions to the EBT to enable it to meet its obligations to
employees under the various Group equity based compensation plans (see note 7). The Group
has a contractual agreement which may require it to provide financial support to the EBT
(see\u00a0note 19 and note 22).
As at 31 December 2025 the Company held $16.0 million (31 December 2024 \u2013 $14.1 million)
of\u00a0private investment funds through LICL Investments Holdings Limited, a wholly owned
subsidiary of LICL.
As part of its investment activities, the Group invests in unconsolidated structured entities.
The\u00a0Group does not sponsor any of the unconsolidated structured entities.
A summary of the Group\u2019s interest in unconsolidated structured entities is as follows:
2025
2024
As at 31 December
Investments\u00a0
$m
Interest in
associate
$m
Total\u00a0
$m
Investments\u00a0
$m
Interest in
associate
$m
Total\u00a0
$m
Fixed maturity securities
Asset backed securities
303.4
\u2014
303.4
271.7
\u2014
271.7
US gov agency MBS
406.0
\u2014
406.0
326.5
\u2014
326.5
Non-agency MBS
97.8
\u2014
97.8
55.5
\u2014
55.5
U.S. gov agency CMBS
1.1
\u2014
1.1
\u2014
\u2014
\u2014
Non-agency CMBS
54.6
\u2014
54.6
20.5
\u2014
20.5
Total fixed maturity securities
862.9
\u2014
862.9
674.2
\u2014
674.2
Investment funds
Private investment funds
275.2
\u2014
275.2
239.0
\u2014
239.0
Hedge funds
8.8
\u2014
8.8
7.9
\u2014
7.9
Total investment funds
284.0
\u2014
284.0
246.9
\u2014
246.9
Specialised investment vehicle
KHL (note 15)
\u2014
4.8
4.8
\u2014
9.1
9.1
Total
1,146.9
4.8
1,151.7
921.1
9.1
930.2
Fixed maturity structured entities are typically created to meet specific investment needs of
borrowers and investors which cannot be met from standardised financial instruments available
in the capital markets. As such, they provide liquidity to the borrowers in these markets and
provide investors with an opportunity to diversify risk away from standard fixed maturity
securities. Whilst individual securities may differ in structure, the principles of the instruments
are broadly the same, and it is considered appropriate to aggregate the investments into the
categories detailed above.
The primary risks that the Group faces in respect of its investments in structured entities are
similar to the risks it faces in respect of other financial investments held on the consolidated
statement of financial position, in that the fair value is determined by market supply and
demand. This is in turn driven by investor evaluation of the credit risk of the structure, and
changes in the term structure of interest rates, which change investors\u2019 expectation of the
cash\u00a0flows associated with the instrument, and therefore its value in the market. The total assets
of these structured entities are not considered meaningful for the purpose of understanding the
related risks, and therefore have not been presented.
The maximum potential exposure to loss in respect of these structured entities is the carrying
value of the instruments that the Group holds as at 31 December 2025. Generally, default rates
would have to increase substantially from their current level before the Group would suffer a
loss on maturity, and this assessment is made prior to investing, and regularly through the
holding period for the security. The Group has not provided any financial or other support in
addition to that described above as at either the current or prior reporting date, and there is no
intention to provide support in relation to any other unconsolidated structured entities in the
foreseeable future.
As at 31 December 2025, the Group has a commitment of $50.0 million (31 December 2024 \u2013
$50.0 million) with respect to one credit facility fund. The Group, through the fund, provided
collateral for revolving credit facilities purchased at a discount from financial institutions,
and\u00a0was at risk for its portion of any defaults on those revolving credit facilities. There are no
assets or liabilities remaining in the fund as at 31 December 2025 and the fund will be
liquidated\u00a0in 2026.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestsInOtherEntitiesExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-302": { "value": "
11. Investments
The Group determines the fair value of each individual security utilising the highest-level inputs
of the fair value hierarchy, as defined below. The fair value of fixed maturity investments is
determined from quotations received from third-party recognised pricing services. The Group
receives independent assurance reports to assess the design and operating effectiveness of
controls over these processes. The fair value of private investment funds is estimated based on
the most recently available NAV as advised by the external fund manager or third-party
administrator.
The pricing sources use bid prices where available, otherwise indicative prices are quoted based
on observable market trade data. The prices provided are compared to the investment
managers' own pricing.
The Group has not made any adjustments to the pricing provided by its third-party investment
managers for either the year ending 31 December 2025 or the year ending 31 December 2024.
The fair values of securities within the Group\u2019s investment portfolio are estimated using the
following valuation techniques in accordance with the fair value hierarchy:
Level (i)
Level (i) investments are securities with quoted prices in active markets. A financial instrument is
regarded as quoted in an active market if quoted prices are readily and regularly available from
an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those
prices represent actual and regularly occurring market transactions, on an arm's length basis.
Level (ii)
Level (ii) investments are securities with quoted prices in active markets for similar assets or liabilities,
or securities valued using other valuation techniques for which all significant inputs are based on
observable market data. Instruments included in Level (ii) are valued through independent external
sources using directly observable inputs to models or other valuation methods. The valuation
methods used are typically of an industry-accepted standard and include broker-dealer quotes and
pricing models, including present values and future cash flows, together with inputs such as yield
curves, interest rates, prepayment profiles, and default rates.
Level (iii)
Level (iii) investments are securities for which valuation techniques are not based on observable
market data, and therefore require management judgement to determine an appropriate fair value.
The Group determines securities classified as Level (iii) to include private investment funds, hedge
funds, and loans made by the Group's Lloyd's syndicate platforms to the Lloyd's central fund.
The fair value of the Group's private investment funds and hedge fund are determined using
statements received from each fund's investment managers on either a monthly or quarterly in
arrears basis. In addition, these valuations will be compared with benchmarks or other indices to
assess the reasonableness of the estimated fair value of each fund. Given the Group\u2019s knowledge of
the underlying investments and the size of the Group\u2019s investment therein, the Group would not
anticipate any material variance between the statements and the final actual NAVs reported by the
investment managers.
The fair value hierarchy of the Group\u2019s investment holdings is as follows:
As at 31 December 2025
Level (i)\u00a0
$m
Level (ii)\u00a0
$m
Level (iii)\u00a0
$m
Total\u00a0
$m
Short-term investments
7.8
7.2
\u2014
15.0
Fixed maturity funds
\u2014
30.4
\u2014
30.4
US treasuries
392.9
\u2014
\u2014
392.9
Other government bonds
24.6
96.3
\u2014
120.9
US municipal bonds
2.3
8.8
\u2014
11.1
US government agency debt
2.3
1.7
\u2014
4.0
Asset backed securities
1.6
301.8
\u2014
303.4
US government agency MBS
15.0
391.0
\u2014
406.0
Non-agency MBS
\u2014
97.8
\u2014
97.8
US government agency CMBS
\u2014
1.1
\u2014
1.1
Non-agency CMBS
\u2014
54.6
\u2014
54.6
Bank loans
\u2014
153.7
\u2014
153.7
Corporate bonds
1,051.5
167.8
\u2014
1,219.3
Other fixed maturities
\u2014
\u2014
\u2014
\u2014
Total fixed maturity securities1
1,498.0
1,312.2
\u2014
2,810.2
Private investment funds
\u2014
\u2014
291.2
291.2
Hedge funds
\u2014
\u2014
8.8
8.8
Other investments
\u2014
(0.3)
\u2014
(0.3)
Total investments
1,498.0
1,311.9
300.0
3,109.9
1. The nature of our fixed maturity securities are presented in the investment risk disclosures.
As at 31 December 2024
Level (i)\u00a0
$m
Level (ii)\u00a0
$m
Level (iii)\u00a0
$m
Total\u00a0
$m
Short-term investments
27.9
4.6
\u2014
32.5
Fixed maturity funds
3.8
19.3
\u2014
23.1
US treasuries
509.9
\u2014
\u2014
509.9
Other government bonds
19.6
45.7
\u2014
65.3
US municipal bonds
3.7
12.1
\u2014
15.8
US government agency debt
7.2
10.0
\u2014
17.2
Asset backed securities
8.5
263.2
\u2014
271.7
US government agency MBS
122.1
204.4
\u2014
326.5
Non-agency MBS
\u2014
55.5
\u2014
55.5
US government agency CMBS
\u2014
\u2014
\u2014
\u2014
Non-agency CMBS
\u2014
20.5
\u2014
20.5
Bank loans
\u2014
153.4
\u2014
153.4
Corporate bonds
1,012.6
95.4
\u2014
1,108.0
Other fixed maturities
\u2014
2.3
2.1
4.4
Total fixed maturity securities
1,715.3
886.4
2.1
2,603.8
Private investment funds
\u2014
\u2014
253.1
253.1
Hedge funds
\u2014
\u2014
7.9
7.9
Other investments
\u2014
0.1
\u2014
0.1
Total investments
1,715.3
886.5
263.1
2,864.9
The table below analyses the movements in investments classified as Level (iii) investments:
Private
investment
funds
$m
Hedge funds
$m
Other fixed
maturities1
$m
Total
$m
As at 31 December 2023
165.6
9.9
3.2
178.7
Purchases and capital contributions
84.6
\u2014
\u2014
84.6
Sales and return of capital
\u2014
(3.2)
(1.0)
(4.2)
Net realised gains
\u2014
0.5
\u2014
0.5
Net unrealised gains (losses)
4.1
0.7
(0.1)
4.7
Net unrealised foreign exchange (losses)
(1.2)
\u2014
\u2014
(1.2)
As at 31 December 2024
253.1
7.9
2.1
263.1
Transfers into level (iii)
2.1
\u2014
\u2014
2.1
Purchases and capital contributions
38.7
\u2014
\u2014
38.7
Sales and return of capital
(19.5)
(0.2)
(4.2)
(23.9)
Net realised gains (losses)
0.2
\u2014
(0.1)
0.1
Net unrealised gains
11.4
1.1
2.2
14.7
Net unrealised foreign exchange gains
5.2
\u2014
\u2014
5.2
As at 31 December 2025
291.2
8.8
\u2014
300.0
1. Included within other fixed maturity securities are the Lloyd's Central Fund loans which are classified at Level (iii)
within the fair value hierarchy. The loans to the Lloyd's Central Fund were fully repaid by Lloyds in Q4.
The Group determines whether transfers have occurred between levels of the fair value
hierarchy by reassessing the categorisation at the end of each reporting period. Transfers to
Level (iii) securities amounted to $2.1 million during the year ended 31 December 2025.
The\u00a0transfer to Level (iii) resulted from a change in valuation technique following the repayment
of the senior secured portion of the investment. The fair value of the remaining interest is based
on NAV statements received from the administrator on a quarterly in arrears basis.
Transfers between Level (i) to Level (ii) securities amounted to $148.9 million, and transfers from
Level (ii) to Level (i) securities amounted to $6.9 million during the year ended 31 December 2025.
Included within net unrealised gains (losses) recognised in profit or loss as shown in the table
above, are net unrealised gains related to Level (iii) investments still held as at 31 December 2025
of $12.5 million (31 December 2024 \u2013 $5.0 million).", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-301": { "value": "
11. Investments
The Group determines the fair value of each individual security utilising the highest-level inputs
of the fair value hierarchy, as defined below. The fair value of fixed maturity investments is
determined from quotations received from third-party recognised pricing services. The Group
receives independent assurance reports to assess the design and operating effectiveness of
controls over these processes. The fair value of private investment funds is estimated based on
the most recently available NAV as advised by the external fund manager or third-party
administrator.
The pricing sources use bid prices where available, otherwise indicative prices are quoted based
on observable market trade data. The prices provided are compared to the investment
managers' own pricing.
The Group has not made any adjustments to the pricing provided by its third-party investment
managers for either the year ending 31 December 2025 or the year ending 31 December 2024.
The fair values of securities within the Group\u2019s investment portfolio are estimated using the
following valuation techniques in accordance with the fair value hierarchy:
Level (i)
Level (i) investments are securities with quoted prices in active markets. A financial instrument is
regarded as quoted in an active market if quoted prices are readily and regularly available from
an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those
prices represent actual and regularly occurring market transactions, on an arm's length basis.
Level (ii)
Level (ii) investments are securities with quoted prices in active markets for similar assets or liabilities,
or securities valued using other valuation techniques for which all significant inputs are based on
observable market data. Instruments included in Level (ii) are valued through independent external
sources using directly observable inputs to models or other valuation methods. The valuation
methods used are typically of an industry-accepted standard and include broker-dealer quotes and
pricing models, including present values and future cash flows, together with inputs such as yield
curves, interest rates, prepayment profiles, and default rates.
Level (iii)
Level (iii) investments are securities for which valuation techniques are not based on observable
market data, and therefore require management judgement to determine an appropriate fair value.
The Group determines securities classified as Level (iii) to include private investment funds, hedge
funds, and loans made by the Group's Lloyd's syndicate platforms to the Lloyd's central fund.
The fair value of the Group's private investment funds and hedge fund are determined using
statements received from each fund's investment managers on either a monthly or quarterly in
arrears basis. In addition, these valuations will be compared with benchmarks or other indices to
assess the reasonableness of the estimated fair value of each fund. Given the Group\u2019s knowledge of
the underlying investments and the size of the Group\u2019s investment therein, the Group would not
anticipate any material variance between the statements and the final actual NAVs reported by the
investment managers.
The fair value hierarchy of the Group\u2019s investment holdings is as follows:
As at 31 December 2025
Level (i)\u00a0
$m
Level (ii)\u00a0
$m
Level (iii)\u00a0
$m
Total\u00a0
$m
Short-term investments
7.8
7.2
\u2014
15.0
Fixed maturity funds
\u2014
30.4
\u2014
30.4
US treasuries
392.9
\u2014
\u2014
392.9
Other government bonds
24.6
96.3
\u2014
120.9
US municipal bonds
2.3
8.8
\u2014
11.1
US government agency debt
2.3
1.7
\u2014
4.0
Asset backed securities
1.6
301.8
\u2014
303.4
US government agency MBS
15.0
391.0
\u2014
406.0
Non-agency MBS
\u2014
97.8
\u2014
97.8
US government agency CMBS
\u2014
1.1
\u2014
1.1
Non-agency CMBS
\u2014
54.6
\u2014
54.6
Bank loans
\u2014
153.7
\u2014
153.7
Corporate bonds
1,051.5
167.8
\u2014
1,219.3
Other fixed maturities
\u2014
\u2014
\u2014
\u2014
Total fixed maturity securities1
1,498.0
1,312.2
\u2014
2,810.2
Private investment funds
\u2014
\u2014
291.2
291.2
Hedge funds
\u2014
\u2014
8.8
8.8
Other investments
\u2014
(0.3)
\u2014
(0.3)
Total investments
1,498.0
1,311.9
300.0
3,109.9
1. The nature of our fixed maturity securities are presented in the investment risk disclosures.
As at 31 December 2024
Level (i)\u00a0
$m
Level (ii)\u00a0
$m
Level (iii)\u00a0
$m
Total\u00a0
$m
Short-term investments
27.9
4.6
\u2014
32.5
Fixed maturity funds
3.8
19.3
\u2014
23.1
US treasuries
509.9
\u2014
\u2014
509.9
Other government bonds
19.6
45.7
\u2014
65.3
US municipal bonds
3.7
12.1
\u2014
15.8
US government agency debt
7.2
10.0
\u2014
17.2
Asset backed securities
8.5
263.2
\u2014
271.7
US government agency MBS
122.1
204.4
\u2014
326.5
Non-agency MBS
\u2014
55.5
\u2014
55.5
US government agency CMBS
\u2014
\u2014
\u2014
\u2014
Non-agency CMBS
\u2014
20.5
\u2014
20.5
Bank loans
\u2014
153.4
\u2014
153.4
Corporate bonds
1,012.6
95.4
\u2014
1,108.0
Other fixed maturities
\u2014
2.3
2.1
4.4
Total fixed maturity securities
1,715.3
886.4
2.1
2,603.8
Private investment funds
\u2014
\u2014
253.1
253.1
Hedge funds
\u2014
\u2014
7.9
7.9
Other investments
\u2014
0.1
\u2014
0.1
Total investments
1,715.3
886.5
263.1
2,864.9
The table below analyses the movements in investments classified as Level (iii) investments:
Private
investment
funds
$m
Hedge funds
$m
Other fixed
maturities1
$m
Total
$m
As at 31 December 2023
165.6
9.9
3.2
178.7
Purchases and capital contributions
84.6
\u2014
\u2014
84.6
Sales and return of capital
\u2014
(3.2)
(1.0)
(4.2)
Net realised gains
\u2014
0.5
\u2014
0.5
Net unrealised gains (losses)
4.1
0.7
(0.1)
4.7
Net unrealised foreign exchange (losses)
(1.2)
\u2014
\u2014
(1.2)
As at 31 December 2024
253.1
7.9
2.1
263.1
Transfers into level (iii)
2.1
\u2014
\u2014
2.1
Purchases and capital contributions
38.7
\u2014
\u2014
38.7
Sales and return of capital
(19.5)
(0.2)
(4.2)
(23.9)
Net realised gains (losses)
0.2
\u2014
(0.1)
0.1
Net unrealised gains
11.4
1.1
2.2
14.7
Net unrealised foreign exchange gains
5.2
\u2014
\u2014
5.2
As at 31 December 2025
291.2
8.8
\u2014
300.0
1. Included within other fixed maturity securities are the Lloyd's Central Fund loans which are classified at Level (iii)
within the fair value hierarchy. The loans to the Lloyd's Central Fund were fully repaid by Lloyds in Q4.
The Group determines whether transfers have occurred between levels of the fair value
hierarchy by reassessing the categorisation at the end of each reporting period. Transfers to
Level (iii) securities amounted to $2.1 million during the year ended 31 December 2025.
The\u00a0transfer to Level (iii) resulted from a change in valuation technique following the repayment
of the senior secured portion of the investment. The fair value of the remaining interest is based
on NAV statements received from the administrator on a quarterly in arrears basis.
Transfers between Level (i) to Level (ii) securities amounted to $148.9 million, and transfers from
Level (ii) to Level (i) securities amounted to $6.9 million during the year ended 31 December 2025.
Included within net unrealised gains (losses) recognised in profit or loss as shown in the table
above, are net unrealised gains related to Level (iii) investments still held as at 31 December 2025
of $12.5 million (31 December 2024 \u2013 $5.0 million).", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsOtherThanInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-304": { "value": "
12. Interest in structured entities
Unconsolidated structured entities in which the Group has an interest
The Group provides capital contributions to the EBT to enable it to meet its obligations to
employees under the various Group equity based compensation plans (see note 7). The Group
has a contractual agreement which may require it to provide financial support to the EBT
(see\u00a0note 19 and note 22).
As at 31 December 2025 the Company held $16.0 million (31 December 2024 \u2013 $14.1 million)
of\u00a0private investment funds through LICL Investments Holdings Limited, a wholly owned
subsidiary of LICL.
As part of its investment activities, the Group invests in unconsolidated structured entities.
The\u00a0Group does not sponsor any of the unconsolidated structured entities.
A summary of the Group\u2019s interest in unconsolidated structured entities is as follows:
2025
2024
As at 31 December
Investments\u00a0
$m
Interest in
associate
$m
Total\u00a0
$m
Investments\u00a0
$m
Interest in
associate
$m
Total\u00a0
$m
Fixed maturity securities
Asset backed securities
303.4
\u2014
303.4
271.7
\u2014
271.7
US gov agency MBS
406.0
\u2014
406.0
326.5
\u2014
326.5
Non-agency MBS
97.8
\u2014
97.8
55.5
\u2014
55.5
U.S. gov agency CMBS
1.1
\u2014
1.1
\u2014
\u2014
\u2014
Non-agency CMBS
54.6
\u2014
54.6
20.5
\u2014
20.5
Total fixed maturity securities
862.9
\u2014
862.9
674.2
\u2014
674.2
Investment funds
Private investment funds
275.2
\u2014
275.2
239.0
\u2014
239.0
Hedge funds
8.8
\u2014
8.8
7.9
\u2014
7.9
Total investment funds
284.0
\u2014
284.0
246.9
\u2014
246.9
Specialised investment vehicle
KHL (note 15)
\u2014
4.8
4.8
\u2014
9.1
9.1
Total
1,146.9
4.8
1,151.7
921.1
9.1
930.2
Fixed maturity structured entities are typically created to meet specific investment needs of
borrowers and investors which cannot be met from standardised financial instruments available
in the capital markets. As such, they provide liquidity to the borrowers in these markets and
provide investors with an opportunity to diversify risk away from standard fixed maturity
securities. Whilst individual securities may differ in structure, the principles of the instruments
are broadly the same, and it is considered appropriate to aggregate the investments into the
categories detailed above.
The primary risks that the Group faces in respect of its investments in structured entities are
similar to the risks it faces in respect of other financial investments held on the consolidated
statement of financial position, in that the fair value is determined by market supply and
demand. This is in turn driven by investor evaluation of the credit risk of the structure, and
changes in the term structure of interest rates, which change investors\u2019 expectation of the
cash\u00a0flows associated with the instrument, and therefore its value in the market. The total assets
of these structured entities are not considered meaningful for the purpose of understanding the
related risks, and therefore have not been presented.
The maximum potential exposure to loss in respect of these structured entities is the carrying
value of the instruments that the Group holds as at 31 December 2025. Generally, default rates
would have to increase substantially from their current level before the Group would suffer a
loss on maturity, and this assessment is made prior to investing, and regularly through the
holding period for the security. The Group has not provided any financial or other support in
addition to that described above as at either the current or prior reporting date, and there is no
intention to provide support in relation to any other unconsolidated structured entities in the
foreseeable future.
As at 31 December 2025, the Group has a commitment of $50.0 million (31 December 2024 \u2013
$50.0 million) with respect to one credit facility fund. The Group, through the fund, provided
collateral for revolving credit facilities purchased at a discount from financial institutions,
and\u00a0was at risk for its portion of any defaults on those revolving credit facilities. There are no
assets or liabilities remaining in the fund as at 31 December 2025 and the fund will be
liquidated\u00a0in 2026.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutConsolidatedStructuredEntitiesExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-305": { "value": "
13. Insurance contracts issued and reinsurance contracts held
A. Movements in the carrying amount - Insurance contract liabilities
The table below shows how the net carrying amounts of insurance contracts issued changed
during the year ended 31 December 2025:
Liability for
remaining coverage
Liability for incurred claims
Total
$m
Including loss
component\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Estimates of the
present value of
future cash flows\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
$m
Risk adjustment
$m
Net insurance contract liabilities
(assets) as at 31 December 2024
62.7
1,914.2
323.5
2,300.4
Insurance revenue
(1,860.4)
\u2014
\u2014
(1,860.4)
Insurance service expenses:
Incurred claims and other insurance
service expenses
\u2014
1,121.6
113.3
1,234.9
Changes in liability for incurred claims
\u2014
74.6
(86.4)
(11.8)
Losses and reversals of losses on
onerous underlying contracts
8.2
\u2014
\u2014
8.2
Amortisation of insurance acquisition
cash flows
219.9
\u2014
\u2014
219.9
Insurance service result before
reinsurance contracts held
(1,632.3)
1,196.2
26.9
(409.2)
Finance expense from insurance
contracts issued
\u2014
114.0
19.6
133.6
Effects of movements in exchange rates
10.9
35.8
2.0
48.7
Total changes in comprehensive
income
(1,621.4)
1,346.0
48.5
(226.9)
Investment components
(62.5)
62.5
\u2014
\u2014
Other1
0.1
24.3
(0.2)
24.2
Other changes
(62.4)
86.8
(0.2)
24.2
Premiums received net of insurance
acquisition cash flows
1,688.4
\u2014
\u2014
1,688.4
Claims and other expenses paid
\u2014
(1,074.0)
\u2014
(1,074.0)
Total cash flows
1,688.4
(1,074.0)
\u2014
614.4
Net insurance contract liabilities
(assets) as at 31 December 2025
67.3
2,273.0
371.8
2,712.1
1. Other includes the effect of the 2022 and prior underwriting years of account losses and loss adjustment
expenses, and reinsurance recoveries, being reinsured to close into the 2023 underwriting year of account, to the
extent where the Group's syndicate participation has changed between those years of account.
2. The liability for remaining coverage as at 31 December 2025 includes an onerous loss component of $11.5 million.
The table below shows how the net carrying amounts of insurance contracts issued changed
during the year ended 31 December 2024:
Liability for
remaining coverage
Liability for incurred claims
Total
$m
Including loss
component
$m
Estimates of the
present value of
future cash flows
$m
Risk adjustment
$m
Net insurance contract liabilities
(assets) as at 31 December 2023
57.8
1,411.5
354.4
1,823.7
Insurance revenue
(1,765.1)
\u2014
\u2014
(1,765.1)
Insurance service expenses:
Incurred claims and other insurance
service expenses
\u2014
897.4
120.8
1,018.2
Changes in liability for incurred claims
\u2014
122.8
(166.5)
(43.7)
Losses and reversals of losses on
onerous underlying contracts
2.3
\u2014
\u2014
2.3
Amortisation of insurance acquisition
cash flows
209.3
\u2014
\u2014
209.3
Insurance service result before
reinsurance contracts held
(1,553.5)
1,020.2
(45.7)
(579.0)
Finance expense from insurance
contracts issued
\u2014
63.2
14.7
77.9
Effects of movements in exchange rates
(7.7)
(7.6)
(0.9)
(16.2)
Total changes in comprehensive
income
(1,561.2)
1,075.8
(31.9)
(517.3)
Investment components
(57.0)
57.0
\u2014
\u2014
Other1
\u2014
0.1
1.0
1.1
Other changes
(57.0)
57.1
1.0
1.1
Premiums received net of insurance
acquisition cash flows
1,623.1
\u2014
\u2014
1,623.1
Claims and other expenses paid
\u2014
(630.2)
\u2014
(630.2)
Total cash flows
1,623.1
(630.2)
\u2014
992.9
Net insurance contract liabilities
(assets) as at 31 December 2024
62.7
1,914.2
323.5
2,300.4
1. Other includes the effect of the 2021 and prior underwriting years of account losses and loss adjustment
expenses, and reinsurance recoveries, being reinsured to close into the 2022 underwriting year of account, to the
extent where the Group's syndicate participation has changed between those years of account.
2. The liability for remaining coverage as at 31 December 2024 includes an onerous loss component of $3.3 million.
B. Movements in the carrying amount - Reinsurance contracts held
The table below shows how the net carrying amounts of reinsurance contracts held changed
during the year ended 31 December 2025:
Asset for remaining
coverage
Asset for incurred claims
Total
$m
Including loss
component
$m
Estimates of
the present
value of future
cash flows
$m
Risk\u00a0
adjustment
$m
Net reinsurance contract (assets) liabilities as at 31
December 2024
51.3
(541.8)
(66.7)
(557.2)
Allocation of reinsurance premium paid
423.5
\u2014
\u2014
423.5
Amounts recoverable from reinsurers:
Recoveries of incurred claims and other
insurance service expenses
\u2014
(186.7)
(21.8)
(208.5)
Change in assets for incurred claims in relation
to past service
\u2014
(171.7)
5.0
(166.7)
Reinsurance expenses
(17.0)
\u2014
\u2014
(17.0)
Recoveries and reversals of recoveries of losses
on onerous underlying contracts
(4.0)
\u2014
\u2014
(4.0)
Effect of changes in non-performing risk of
reinsurers
\u2014
0.8
\u2014
0.8
Net expenses from reinsurance contracts held
402.5
(357.6)
(16.8)
28.1
Finance income from reinsurance contracts held
\u2014
(27.0)
(3.7)
(30.7)
Effects of movements in exchange rates
(13.0)
(6.0)
(0.1)
(19.1)
Total changes in comprehensive income
389.5
(390.6)
(20.6)
(21.7)
Other1
(0.1)
(13.2)
\u2014
(13.3)
Other changes
(0.1)
(13.2)
\u2014
(13.3)
Reinsurance premiums paid net of ceding
commissions and other directly attributable expenses
(401.5)
\u2014
\u2014
(401.5)
Recoveries from reinsurance
\u2014
275.9
\u2014
275.9
Total cash flows
(401.5)
275.9
\u2014
(125.6)
Net reinsurance contract (assets) liabilities as at 31
December 2025
39.2
(669.7)
(87.3)
(717.8)
1. Other includes the effect of the 2022 and prior underwriting years of account losses and loss adjustment
expenses, and reinsurance recoveries, being reinsured to close into the 2023 underwriting year of account, to the
extent where the Group's syndicate participation has changed between those years of account.
2. The asset for remaining coverage as at 31 December 2025 includes an onerous loss recovery component of
$5.4 million.
The table below shows how the net carrying amounts of reinsurance contracts held changed
during the year ended 31 December 2024:
Asset for remaining
coverage
Asset for incurred claims
Total
$m
Including loss
component
$m
Estimates of
the present
value of future
cash flows
$m
Risk
adjustment
$m
Net reinsurance contract (assets) liabilities as at 31
December 2023
42.5
(315.0)
(115.3)
(387.8)
Allocation of reinsurance premium paid
439.4
\u2014
\u2014
439.4
Amounts recoverable from reinsurers:
Recoveries of incurred claims and other
insurance service expenses
\u2014
(107.0)
(13.5)
(120.5)
Change in assets for incurred claims in relation
to past service
\u2014
(165.8)
67.2
(98.6)
Reinsurance expenses
(16.6)
\u2014
\u2014
(16.6)
Recoveries and reversals of recoveries of losses
on onerous underlying contracts
(1.3)
\u2014
\u2014
(1.3)
Effect of changes in non-performing risk of
reinsurers
\u2014
(3.3)
\u2014
(3.3)
Net expenses from reinsurance contracts held
421.5
(276.1)
53.7
199.1
Finance income from reinsurance contracts held
\u2014
(19.1)
(4.9)
(24.0)
Effects of movements in exchange rates
3.9
2.0
0.1
6.0
Total changes in comprehensive income
425.4
(293.2)
48.9
181.1
Other1
\u2014
(0.2)
(0.3)
(0.5)
Other changes
\u2014
(0.2)
(0.3)
(0.5)
Reinsurance premiums paid net of ceding
commissions and other directly attributable expenses
(416.6)
\u2014
\u2014
(416.6)
Recoveries from reinsurance
\u2014
66.6
\u2014
66.6
Total cash flows
(416.6)
66.6
\u2014
(350.0)
Net reinsurance contract (assets) liabilities as at 31
December 2024
51.3
(541.8)
(66.7)
(557.2)
1. Other includes the effect of the 2021 and prior underwriting years of account losses and loss adjustment
expenses, and reinsurance recoveries, being reinsured to close into the 2022 underwriting year of account, to the
extent where the Group's syndicate participation has changed between those years of account.
2. The asset for remaining coverage as at 31 December 2024 includes an onerous loss recovery component of
$1.4 million.
C. Claims development
The development of claims in respect of insurance contracts issued, net of reinsurance contracts held, is indicative of the Group's ability to accurately estimate the ultimate value of its net liability
for incurred claims. Actual claim payments are compared with previous estimates within the claims development disclosures below for both the undiscounted liability for incurred claims, and the
undiscounted asset for incurred claims, as at 31 December 2025.
Accident year
2018
$m
2019
$m
2020
$m
2021
$m
2022
$m
2023
$m
2024
$m
2025
$m
Total\u00a0
$m
Liability for incurred claims - undiscounted
Estimate of ultimate liability1
At end of accident year
456.2
357.9
475.5
828.4
1,137.4
815.0
1,145.6
1,409.1
One year later
479.0
353.5
435.6
759.5
1,046.0
773.8
1,075.6
Two years later
445.7
320.8
388.0
727.7
1,143.0
710.2
Three years later
429.3
308.1
387.6
677.9
1,375.0
Four years later
403.0
312.3
384.2
656.7
Five years later
394.5
317.2
376.8
Six years later
391.6
316.4
Seven years later
381.9
Cumulative claims and other directly attributable expense paid
(367.9)
(284.1)
(323.1)
(581.1)
(853.8)
(405.5)
(381.9)
(354.9)
Liability for incurred claims - undiscounted
14.0
32.3
53.7
75.6
521.2
304.7
693.7
1,054.2
2,749.4
Liability for incurred claims - undiscounted - prior years
84.7
Effect of discounting
(272.2)
Non-distinct investment components
82.9
Liability for incurred claims
2,644.8
Accident year
2018
$m
2019
$m
2020
$m
2021
$m
2022
$m
2023
$m
2024
$m
2025
$m
Total\u00a0
$m
Asset for incurred claims - undiscounted
Estimate of ultimate asset1
At end of accident year
123.7
102.9
83.4
185.8
349.8
69.2
128.6
229.8
One year later
164.3
104.2
79.4
165.4
285.3
64.1
137.6
Two years later
157.6
92.0
72.1
151.0
415.9
64.5
Three years later
149.0
94.4
72.6
140.7
628.0
Four years later
140.1
98.3
71.7
124.6
Five years later
136.4
99.1
70.6
Six years later
138.3
97.6
Seven years later
128.6
Cumulative claim recoveries and other directly attributable expenses paid
(122.7)
(76.3)
(55.1)
(75.4)
(290.2)
(36.8)
(23.3)
(21.7)
Asset for incurred claims - undiscounted
5.9
21.3
15.5
49.2
337.8
27.7
114.3
208.1
779.8
Asset for incurred claims - undiscounted - prior years
20.3
Effect of discounting
(43.1)
Asset for incurred claims
757.0
1. Adjusted for the revaluation of foreign currencies as at 31 December 2025 exchange rates.
During 2025, the Group experienced net losses (undiscounted, excluding reinstatement
premiums) from catastrophe, weather and large loss events totalling $277.0 million.
Catastrophe and weather losses were $184.7 million. The net loss impact of the California
wildfires of $163.4 million, which is within the original range disclosed, represents the majority
of this figure. The Group also experienced net losses (undiscounted, excluding reinstatement
premiums) from large risk events totalling $92.3 million. None of the large risk event losses were
individually material for the Group.
In comparison, during 2024, the Group experienced net losses (undiscounted, excluding
reinstatement premiums) from catastrophe, weather and large loss events totalling $215.2 million.
Favourable prior accident year loss development for the undiscounted net movement in loss
reserves was $122.8 million during 2025. This was primarily due to general IBNR, catastrophe
and large loss reserve releases on the 2024 and 2023 accident years and a further strengthening
in reserves of $32.9 million relating to direct and indirect losses from the Ukraine conflict.
In comparison, the favourable prior accident year undiscounted net movement in loss reserves
during 2024 was $93.3 million.
The estimation of the ultimate loss and loss adjustment expense liability is a complex process
which incorporates a significant amount of judgement. The Ukraine conflict has caused
significant disruption to worldwide economies, both directly through the invasion and indirectly
through sanctions being imposed on Russia by the UK, EU and US. Reserves have been set on a
case by case basis for the Contingent War exposure and on a probability basis for Operator
policy exposure and Aviation XoL exposures.
Loss information after these catastrophe and large risk loss type of events can take some time
to emerge. As additional information becomes available, the Group\u2019s actual ultimate net losses
may vary, perhaps materially, from current estimates. It is reasonably possible that uncertainties
inherent in the reserving process, delays in insureds or ceding companies reporting losses to
the Group, together with the potential for unforeseen adverse developments, could lead to
a\u00a0material change in estimated losses and loss adjustment expenses. Furthermore, the
recoverability of associated reinsurance balances is also subject to uncertainty. Current loss
estimates and reinsurance recoveries are based on information available at the reporting date.
There were no other individually significant net loss events for the years ended 31 December
2025 and 31 December 2024.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInsuranceContractsExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-306": { "value": "
B. Movements in the carrying amount - Reinsurance contracts held
The table below shows how the net carrying amounts of reinsurance contracts held changed
during the year ended 31 December 2025:
Asset for remaining
coverage
Asset for incurred claims
Total
$m
Including loss
component
$m
Estimates of
the present
value of future
cash flows
$m
Risk\u00a0
adjustment
$m
Net reinsurance contract (assets) liabilities as at 31
December 2024
51.3
(541.8)
(66.7)
(557.2)
Allocation of reinsurance premium paid
423.5
\u2014
\u2014
423.5
Amounts recoverable from reinsurers:
Recoveries of incurred claims and other
insurance service expenses
\u2014
(186.7)
(21.8)
(208.5)
Change in assets for incurred claims in relation
to past service
\u2014
(171.7)
5.0
(166.7)
Reinsurance expenses
(17.0)
\u2014
\u2014
(17.0)
Recoveries and reversals of recoveries of losses
on onerous underlying contracts
(4.0)
\u2014
\u2014
(4.0)
Effect of changes in non-performing risk of
reinsurers
\u2014
0.8
\u2014
0.8
Net expenses from reinsurance contracts held
402.5
(357.6)
(16.8)
28.1
Finance income from reinsurance contracts held
\u2014
(27.0)
(3.7)
(30.7)
Effects of movements in exchange rates
(13.0)
(6.0)
(0.1)
(19.1)
Total changes in comprehensive income
389.5
(390.6)
(20.6)
(21.7)
Other1
(0.1)
(13.2)
\u2014
(13.3)
Other changes
(0.1)
(13.2)
\u2014
(13.3)
Reinsurance premiums paid net of ceding
commissions and other directly attributable expenses
(401.5)
\u2014
\u2014
(401.5)
Recoveries from reinsurance
\u2014
275.9
\u2014
275.9
Total cash flows
(401.5)
275.9
\u2014
(125.6)
Net reinsurance contract (assets) liabilities as at 31
December 2025
39.2
(669.7)
(87.3)
(717.8)
1. Other includes the effect of the 2022 and prior underwriting years of account losses and loss adjustment
expenses, and reinsurance recoveries, being reinsured to close into the 2023 underwriting year of account, to the
extent where the Group's syndicate participation has changed between those years of account.
2. The asset for remaining coverage as at 31 December 2025 includes an onerous loss recovery component of
$5.4 million.
The table below shows how the net carrying amounts of reinsurance contracts held changed
during the year ended 31 December 2024:
Asset for remaining
coverage
Asset for incurred claims
Total
$m
Including loss
component
$m
Estimates of
the present
value of future
cash flows
$m
Risk
adjustment
$m
Net reinsurance contract (assets) liabilities as at 31
December 2023
42.5
(315.0)
(115.3)
(387.8)
Allocation of reinsurance premium paid
439.4
\u2014
\u2014
439.4
Amounts recoverable from reinsurers:
Recoveries of incurred claims and other
insurance service expenses
\u2014
(107.0)
(13.5)
(120.5)
Change in assets for incurred claims in relation
to past service
\u2014
(165.8)
67.2
(98.6)
Reinsurance expenses
(16.6)
\u2014
\u2014
(16.6)
Recoveries and reversals of recoveries of losses
on onerous underlying contracts
(1.3)
\u2014
\u2014
(1.3)
Effect of changes in non-performing risk of
reinsurers
\u2014
(3.3)
\u2014
(3.3)
Net expenses from reinsurance contracts held
421.5
(276.1)
53.7
199.1
Finance income from reinsurance contracts held
\u2014
(19.1)
(4.9)
(24.0)
Effects of movements in exchange rates
3.9
2.0
0.1
6.0
Total changes in comprehensive income
425.4
(293.2)
48.9
181.1
Other1
\u2014
(0.2)
(0.3)
(0.5)
Other changes
\u2014
(0.2)
(0.3)
(0.5)
Reinsurance premiums paid net of ceding
commissions and other directly attributable expenses
(416.6)
\u2014
\u2014
(416.6)
Recoveries from reinsurance
\u2014
66.6
\u2014
66.6
Total cash flows
(416.6)
66.6
\u2014
(350.0)
Net reinsurance contract (assets) liabilities as at 31
December 2024
51.3
(541.8)
(66.7)
(557.2)
1. Other includes the effect of the 2021 and prior underwriting years of account losses and loss adjustment
expenses, and reinsurance recoveries, being reinsured to close into the 2022 underwriting year of account, to the
extent where the Group's syndicate participation has changed between those years of account.
2. The asset for remaining coverage as at 31 December 2024 includes an onerous loss recovery component of
$1.4 million.
", "dimensions": { "concept": "ifrs-full:DisclosureOfReinsuranceExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-307": { "value": "
14. Provision for deferred tax
As at 31 December
2025
$m
2024
$m
Equity based compensation
(14.3)
(11.1)
Syndicate underwriting profits
11.4
11.8
Syndicate participation rights
18.8
18.8
Other temporary differences
(0.3)
2.8
Net deferred tax liability
15.6
22.3
Deferred tax assets are recognised to the extent that realising the related tax benefit through
future taxable profits is probable. It is anticipated that sufficient taxable profits will be available
within the Group in 2026 and subsequent years to utilise the deferred tax assets recognised
when the underlying temporary differences reverse, and the tax losses carried forward.
For the years ended 31 December 2025 and 31 December 2024, the Group had no uncertain
tax positions (see note 9). The table below reconciles the movements within the net deferred
tax liability. All deferred tax assets and liabilities are classified as non-current.
As at 31 December
2025
$m
2024
$m
Opening net deferred tax liability
22.3
16.2
Deferred tax (credit) charge for the period
(7.2)
5.8
Adjustment in respect of prior period deferred tax
0.8
1.1
Deferred tax in equity
(0.3)
(0.8)
Closing net deferred tax liability
15.6
22.3
OECD global minimum tax and Bermuda corporate income tax
Subsidiary companies in a number of jurisdictions in which the Group operates are subject to a global
minimum tax of 15% from 1 January 2024. The legislation brings into effect the Income Inclusion Rule
and Qualified Domestic Minimum Top-up Tax, although these have not had any impact on the Group.
As a response to the Pillar Two reform, legislation was passed in Bermuda to implement a Bermuda
Corporate Income Tax of 15% from 1 January 2025. To the extent the Bermuda CIT results in an effective
tax rate of less than 15%, the shortfall in tax will be collected by applying the Pillar Two undertaxed
payments rule, which was implemented on 1 January 2025. Any shortfall in tax will be collected in a
jurisdiction that has implemented the undertaxed payments rule and in which the Group has operating
subsidiaries. For Lancashire this is likely to be the UK; however, based on its limited international presence
and provided it continues to meet the relevant conditions, Lancashire expects to benefit from exclusion
from the undertaxed payment rule for a period of five years, from 2025 to 2029.
The Group is also not expected to become subject to Bermuda CIT until 1 January 2030, provided it
continues to meet the relevant conditions within the Bermuda CIT rules which allows groups with a
limited international presence to be excluded from scope for a period of up to five years.
The Lancashire Group has not established any deferred tax assets under the ETA rules of the
Bermuda CIT Act and expects to opt out of the ETA rules.", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-308": { "value": "
15. Investment in associate
The Group holds an interest in the preference shares of each segregated account of KHL. KHL is
a company incorporated in Bermuda and its operating subsidiary, KRL, is authorised by the BMA
as a Special Purpose Insurer. KRL commenced writing insurance business on 1 January 2014. As
at 31 December 2025 , the carrying value of the Group\u2019s investment in KHL was $4.8 million
(31 December 2024 \u2013 $9.1 million). The Group\u2019s share of profit for KHL for 2025 was
$3.2 million (2024 \u2013 $8.6 million).
Key financial information for KHL is as follows:
2025
$m
2024
$m
Assets
137.2
230.6
Liabilities
108.7
159.1
Shareholders' equity
28.5
71.5
Insurance revenue
\u2014
(1.2)
Comprehensive income
23.4
37.0
The Group has the power to participate in the operational and financial policy decisions of KHL
and KRL, and has therefore classified its investment in KHL as an investment in associate.
Refer to note 22 for details of transactions between the Group and its associate.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInAssociatesExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-309": { "value": "
16. Leases
As at 31 December 2025, the Group leases nine ( 31 December 2024 \u2013 seven) properties and
various items of office equipment.
Right-of-use assets
The Group had the following right-of-use assets in relation to the leases it has entered into:
Property
Equipment
Total
$m
$m
$m
Net book value as at 31 December 2023
19.2
0.1
19.3
Additions
0.2
0.3
0.5
Modifications
0.2
\u2014
0.2
Depreciation charge
(3.7)
(0.1)
(3.8)
Net book value as at 31 December 2024
15.9
0.3
16.2
Additions
6.1
\u2014
6.1
Modifications
4.9
\u2014
4.9
Depreciation charge
(4.4)
(0.1)
(4.5)
Net book value as at 31 December 2025
22.5
0.2
22.7
Lease liabilities
As at 31 December
2025
$m
2024
$m
Due in less than one year
6.0
5.8
Due between one and five years
22.9
14.6
Due in more than five years
6.7
5.8
Total undiscounted lease liabilities
35.6
26.2
Total discounted lease liabilities
29.7
22.3
Current
4.7
4.9
Non-current
25.0
17.4
During the year ended 31 December 2025, the Group recognised a net non-cash increase of
$13.4 million (31 December 2024 \u2013 $1.6 million) in respect of its lease liabilities. The Group does
not face a significant liquidity risk regarding its lease liabilities.
Amounts recognised in the consolidated statement of comprehensive income
For the year ended 31 December
2025
$m
2024
$m
Depreciation of right-of-use assets
4.5
3.8
Interest expense on lease liabilities
1.4
1.3
Expenses relating to short-term leases and variable leases
2.6
1.5
Total
8.5
6.6
Total lease payments amounted to $6.0 million for the year ended 31 December 2025
(31 December 2024 \u2013 $4.0 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-310": { "value": "
Right-of-use assets
The Group had the following right-of-use assets in relation to the leases it has entered into:
Property
Equipment
Total
$m
$m
$m
Net book value as at 31 December 2023
19.2
0.1
19.3
Additions
0.2
0.3
0.5
Modifications
0.2
\u2014
0.2
Depreciation charge
(3.7)
(0.1)
(3.8)
Net book value as at 31 December 2024
15.9
0.3
16.2
Additions
6.1
\u2014
6.1
Modifications
4.9
\u2014
4.9
Depreciation charge
(4.4)
(0.1)
(4.5)
Net book value as at 31 December 2025
22.5
0.2
22.7
Amounts recognised in the consolidated statement of comprehensive income
For the year ended 31 December
2025
$m
2024
$m
Depreciation of right-of-use assets
4.5
3.8
Interest expense on lease liabilities
1.4
1.3
Expenses relating to short-term leases and variable leases
2.6
1.5
Total
8.5
6.6
", "dimensions": { "concept": "ifrs-full:DisclosureOfQuantitativeInformationAboutRightofuseAssetsExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-313": { "value": "
17. Intangible assets
Syndicate
participation
rights\u00a0
$m
Goodwill\u00a0
$m
Internally
generated
intangible
assets
$m
Total\u00a0
$m
Net book value as at 31 December 2023
91.0
71.2
18.9
181.1
Additions
11.2
\u2014
5.9
17.1
Amortisation
\u2014
\u2014
(1.2)
(1.2)
Net book value as at 31 December 2024
102.2
71.2
23.6
197.0
Additions
68.0
\u2014
1.3
69.3
Amortisation
\u2014
\u2014
(3.0)
(3.0)
Impairment
\u2014
\u2014
(10.3)
(10.3)
Net book value as at 31 December 2025
170.2
71.2
11.6
253.0
Syndicate participation rights and goodwill
As a result of acquiring capacity in the 2024 capacity auctions, CCL 1998 had greater than 75%
of\u00a0the allocated capacity of managed Syndicate 2010 for the 2025 underwriting year of account.
It\u00a0was therefore required, under Paragraph 2 of the Mandatory Offer Byelaw, to make a
mandatory offer to the remaining members of the syndicate to acquire all of the unaligned
prospective participations of Syndicate 2010 for the 2026 and each subsequent underwriting year.
On 26 June 2025, CCL 1998 made a formal offer of 62p in cash for \u00a31 of capacity to all other
members of Syndicate 2010. The offer closed on 25 July 2025 and CCL 1998 increased its
allocated capacity on Syndicate 2010 for the 2026 underwriting year of account to 99.4%.\u00a0
A\u00a0subsequent application was then made to, and approved by, the Council of Lloyd\u2019s for
permission to effect a minority buy-out in respect of the remaining 0.6% of capacity on
Syndicate 2010. CCL 1998 has therefore secured 100% of the allocated capacity on the 2026
underwriting year of account for Syndicate 2010 (2025 underwriting year of account: 79.7%).
Indefinite life intangible assets are tested annually for impairment. For the purpose of impairment
testing, the syndicate participation rights and goodwill have been allocated to the LSL CGU.
The recoverable amount of the LSL CGU is determined based on its value in use. Value in use is
calculated using the projected cash flows of the LSL CGU. These are approved by management
and cover a three-year period. The most significant assumptions used to derive the projected
cash flows include an assessment of business prospects, business plans approved by Lloyd's,
expected future market conditions, premium growth rates, outwards reinsurance expenditure,
projected loss ratios, investment returns, and where applicable, consideration of the potential
impact of climate change. The Group accepts insurance risk for periods primarily of one year.
This provides the Group with the ability to re-evaluate the impact of climate risk on its
insurance portfolio on an annual basis. The Group can reprice the relevant elements of risk,
and\u00a0also reset exposure levels to consider new data regarding the frequency and severity of
elemental catastrophe events, where appropriate.
A pre-tax discount rate of 8.8% (2024 \u2013 8.9%) has been used to discount the projected cash
flows. This discount rate reflects the current market assessment of the time value of money and
the risks specific to the asset for which the projected cash flow estimates have not been
adjusted. The discount rate is determined with reference to a combination of factors, including
the Group's expected weighted average cost of equity and cost of borrowing. This has been
calculated using independent measurements of the risk-free rate of return and is indicative of
the Group\u2019s risk profile relative to the market. This current pre-tax discount rate has remained
consistent with the prior period discount rate, and reflects a consistent overall cost of equity
and cost of borrowing within the Group's weighted average cost of capital calculation for both
periods. Within the cost of equity calculation there have been offsetting movements within the
risk-free rate, beta value, and equity risk premium rate assumptions. The growth rate used to
extrapolate the cash flows is 2.5% (2024 \u2013 2.5%) and is based on historical growth rates, as well
as management\u2019s best estimate of future growth rates, taking into account current economic
market conditions.
Sensitivity testing has been performed to model the impact of reasonably possible changes in
input assumptions to the base case impairment analysis and headroom. The discount rate has
been flexed to 100 basis points above the central assumption (resulting in a 18% reduction in
headroom), the growth rate has been flexed to 100 basis points below the central assumption
(resulting in a 16% reduction in headroom), and the pre-tax projected cash flows have been
flexed to 500 basis points below the central assumption (resulting in a 6% reduction in
headroom). Within these ranges, the recoverable amount remains supportable.
No impairment loss has been recognised in respect of either the syndicate participation rights
or the goodwill intangible assets for the years ended 31 December 2025 and
31 December 2024.
Internally generated intangible assets
Internally generated intangible assets represent directly attributable costs incurred in the
development phase of implementing cloud-based software to support the Group's target
operating model. As at 31 December 2025, the internally generated intangible assets are
available for use and have commenced amortisation. During the year ended 31 December 2025,
management considered the relevant indicators of impairment at an individual intangible asset
level and performed an impairment review where it was determined appropriate. Following the
completion of this review, an impairment loss of $10.3 million has been recognised for the year
ended 31 December 2025 (2024 \u2013 nil).
", "dimensions": { "concept": "ifrs-full:DisclosureOfGoodwillExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-312": { "value": "
17. Intangible assets
Syndicate
participation
rights\u00a0
$m
Goodwill\u00a0
$m
Internally
generated
intangible
assets
$m
Total\u00a0
$m
Net book value as at 31 December 2023
91.0
71.2
18.9
181.1
Additions
11.2
\u2014
5.9
17.1
Amortisation
\u2014
\u2014
(1.2)
(1.2)
Net book value as at 31 December 2024
102.2
71.2
23.6
197.0
Additions
68.0
\u2014
1.3
69.3
Amortisation
\u2014
\u2014
(3.0)
(3.0)
Impairment
\u2014
\u2014
(10.3)
(10.3)
Net book value as at 31 December 2025
170.2
71.2
11.6
253.0
Syndicate participation rights and goodwill
As a result of acquiring capacity in the 2024 capacity auctions, CCL 1998 had greater than 75%
of\u00a0the allocated capacity of managed Syndicate 2010 for the 2025 underwriting year of account.
It\u00a0was therefore required, under Paragraph 2 of the Mandatory Offer Byelaw, to make a
mandatory offer to the remaining members of the syndicate to acquire all of the unaligned
prospective participations of Syndicate 2010 for the 2026 and each subsequent underwriting year.
On 26 June 2025, CCL 1998 made a formal offer of 62p in cash for \u00a31 of capacity to all other
members of Syndicate 2010. The offer closed on 25 July 2025 and CCL 1998 increased its
allocated capacity on Syndicate 2010 for the 2026 underwriting year of account to 99.4%.\u00a0
A\u00a0subsequent application was then made to, and approved by, the Council of Lloyd\u2019s for
permission to effect a minority buy-out in respect of the remaining 0.6% of capacity on
Syndicate 2010. CCL 1998 has therefore secured 100% of the allocated capacity on the 2026
underwriting year of account for Syndicate 2010 (2025 underwriting year of account: 79.7%).
Indefinite life intangible assets are tested annually for impairment. For the purpose of impairment
testing, the syndicate participation rights and goodwill have been allocated to the LSL CGU.
The recoverable amount of the LSL CGU is determined based on its value in use. Value in use is
calculated using the projected cash flows of the LSL CGU. These are approved by management
and cover a three-year period. The most significant assumptions used to derive the projected
cash flows include an assessment of business prospects, business plans approved by Lloyd's,
expected future market conditions, premium growth rates, outwards reinsurance expenditure,
projected loss ratios, investment returns, and where applicable, consideration of the potential
impact of climate change. The Group accepts insurance risk for periods primarily of one year.
This provides the Group with the ability to re-evaluate the impact of climate risk on its
insurance portfolio on an annual basis. The Group can reprice the relevant elements of risk,
and\u00a0also reset exposure levels to consider new data regarding the frequency and severity of
elemental catastrophe events, where appropriate.
A pre-tax discount rate of 8.8% (2024 \u2013 8.9%) has been used to discount the projected cash
flows. This discount rate reflects the current market assessment of the time value of money and
the risks specific to the asset for which the projected cash flow estimates have not been
adjusted. The discount rate is determined with reference to a combination of factors, including
the Group's expected weighted average cost of equity and cost of borrowing. This has been
calculated using independent measurements of the risk-free rate of return and is indicative of
the Group\u2019s risk profile relative to the market. This current pre-tax discount rate has remained
consistent with the prior period discount rate, and reflects a consistent overall cost of equity
and cost of borrowing within the Group's weighted average cost of capital calculation for both
periods. Within the cost of equity calculation there have been offsetting movements within the
risk-free rate, beta value, and equity risk premium rate assumptions. The growth rate used to
extrapolate the cash flows is 2.5% (2024 \u2013 2.5%) and is based on historical growth rates, as well
as management\u2019s best estimate of future growth rates, taking into account current economic
market conditions.
Sensitivity testing has been performed to model the impact of reasonably possible changes in
input assumptions to the base case impairment analysis and headroom. The discount rate has
been flexed to 100 basis points above the central assumption (resulting in a 18% reduction in
headroom), the growth rate has been flexed to 100 basis points below the central assumption
(resulting in a 16% reduction in headroom), and the pre-tax projected cash flows have been
flexed to 500 basis points below the central assumption (resulting in a 6% reduction in
headroom). Within these ranges, the recoverable amount remains supportable.
No impairment loss has been recognised in respect of either the syndicate participation rights
or the goodwill intangible assets for the years ended 31 December 2025 and
31 December 2024.
Internally generated intangible assets
Internally generated intangible assets represent directly attributable costs incurred in the
development phase of implementing cloud-based software to support the Group's target
operating model. As at 31 December 2025, the internally generated intangible assets are
available for use and have commenced amortisation. During the year ended 31 December 2025,
management considered the relevant indicators of impairment at an individual intangible asset
level and performed an impairment review where it was determined appropriate. Following the
completion of this review, an impairment loss of $10.3 million has been recognised for the year
ended 31 December 2025 (2024 \u2013 nil).
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-311": { "value": "
17. Intangible assets
Syndicate
participation
rights\u00a0
$m
Goodwill\u00a0
$m
Internally
generated
intangible
assets
$m
Total\u00a0
$m
Net book value as at 31 December 2023
91.0
71.2
18.9
181.1
Additions
11.2
\u2014
5.9
17.1
Amortisation
\u2014
\u2014
(1.2)
(1.2)
Net book value as at 31 December 2024
102.2
71.2
23.6
197.0
Additions
68.0
\u2014
1.3
69.3
Amortisation
\u2014
\u2014
(3.0)
(3.0)
Impairment
\u2014
\u2014
(10.3)
(10.3)
Net book value as at 31 December 2025
170.2
71.2
11.6
253.0
Syndicate participation rights and goodwill
As a result of acquiring capacity in the 2024 capacity auctions, CCL 1998 had greater than 75%
of\u00a0the allocated capacity of managed Syndicate 2010 for the 2025 underwriting year of account.
It\u00a0was therefore required, under Paragraph 2 of the Mandatory Offer Byelaw, to make a
mandatory offer to the remaining members of the syndicate to acquire all of the unaligned
prospective participations of Syndicate 2010 for the 2026 and each subsequent underwriting year.
On 26 June 2025, CCL 1998 made a formal offer of 62p in cash for \u00a31 of capacity to all other
members of Syndicate 2010. The offer closed on 25 July 2025 and CCL 1998 increased its
allocated capacity on Syndicate 2010 for the 2026 underwriting year of account to 99.4%.\u00a0
A\u00a0subsequent application was then made to, and approved by, the Council of Lloyd\u2019s for
permission to effect a minority buy-out in respect of the remaining 0.6% of capacity on
Syndicate 2010. CCL 1998 has therefore secured 100% of the allocated capacity on the 2026
underwriting year of account for Syndicate 2010 (2025 underwriting year of account: 79.7%).
Indefinite life intangible assets are tested annually for impairment. For the purpose of impairment
testing, the syndicate participation rights and goodwill have been allocated to the LSL CGU.
The recoverable amount of the LSL CGU is determined based on its value in use. Value in use is
calculated using the projected cash flows of the LSL CGU. These are approved by management
and cover a three-year period. The most significant assumptions used to derive the projected
cash flows include an assessment of business prospects, business plans approved by Lloyd's,
expected future market conditions, premium growth rates, outwards reinsurance expenditure,
projected loss ratios, investment returns, and where applicable, consideration of the potential
impact of climate change. The Group accepts insurance risk for periods primarily of one year.
This provides the Group with the ability to re-evaluate the impact of climate risk on its
insurance portfolio on an annual basis. The Group can reprice the relevant elements of risk,
and\u00a0also reset exposure levels to consider new data regarding the frequency and severity of
elemental catastrophe events, where appropriate.
A pre-tax discount rate of 8.8% (2024 \u2013 8.9%) has been used to discount the projected cash
flows. This discount rate reflects the current market assessment of the time value of money and
the risks specific to the asset for which the projected cash flow estimates have not been
adjusted. The discount rate is determined with reference to a combination of factors, including
the Group's expected weighted average cost of equity and cost of borrowing. This has been
calculated using independent measurements of the risk-free rate of return and is indicative of
the Group\u2019s risk profile relative to the market. This current pre-tax discount rate has remained
consistent with the prior period discount rate, and reflects a consistent overall cost of equity
and cost of borrowing within the Group's weighted average cost of capital calculation for both
periods. Within the cost of equity calculation there have been offsetting movements within the
risk-free rate, beta value, and equity risk premium rate assumptions. The growth rate used to
extrapolate the cash flows is 2.5% (2024 \u2013 2.5%) and is based on historical growth rates, as well
as management\u2019s best estimate of future growth rates, taking into account current economic
market conditions.
Sensitivity testing has been performed to model the impact of reasonably possible changes in
input assumptions to the base case impairment analysis and headroom. The discount rate has
been flexed to 100 basis points above the central assumption (resulting in a 18% reduction in
headroom), the growth rate has been flexed to 100 basis points below the central assumption
(resulting in a 16% reduction in headroom), and the pre-tax projected cash flows have been
flexed to 500 basis points below the central assumption (resulting in a 6% reduction in
headroom). Within these ranges, the recoverable amount remains supportable.
No impairment loss has been recognised in respect of either the syndicate participation rights
or the goodwill intangible assets for the years ended 31 December 2025 and
31 December 2024.
Internally generated intangible assets
Internally generated intangible assets represent directly attributable costs incurred in the
development phase of implementing cloud-based software to support the Group's target
operating model. As at 31 December 2025, the internally generated intangible assets are
available for use and have commenced amortisation. During the year ended 31 December 2025,
management considered the relevant indicators of impairment at an individual intangible asset
level and performed an impairment review where it was determined appropriate. Following the
completion of this review, an impairment loss of $10.3 million has been recognised for the year
ended 31 December 2025 (2024 \u2013 nil).
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-314": { "value": "
Indefinite life intangible assets are tested annually for impairment. For the purpose of impairment
testing, the syndicate participation rights and goodwill have been allocated to the LSL CGU.
The recoverable amount of the LSL CGU is determined based on its value in use. Value in use is
calculated using the projected cash flows of the LSL CGU. These are approved by management
and cover a three-year period. The most significant assumptions used to derive the projected
cash flows include an assessment of business prospects, business plans approved by Lloyd's,
expected future market conditions, premium growth rates, outwards reinsurance expenditure,
projected loss ratios, investment returns, and where applicable, consideration of the potential
impact of climate change. The Group accepts insurance risk for periods primarily of one year.
This provides the Group with the ability to re-evaluate the impact of climate risk on its
insurance portfolio on an annual basis. The Group can reprice the relevant elements of risk,
and\u00a0also reset exposure levels to consider new data regarding the frequency and severity of
elemental catastrophe events, where appropriate.
A pre-tax discount rate of 8.8% (2024 \u2013 8.9%) has been used to discount the projected cash
flows. This discount rate reflects the current market assessment of the time value of money and
the risks specific to the asset for which the projected cash flow estimates have not been
adjusted. The discount rate is determined with reference to a combination of factors, including
the Group's expected weighted average cost of equity and cost of borrowing. This has been
calculated using independent measurements of the risk-free rate of return and is indicative of
the Group\u2019s risk profile relative to the market. This current pre-tax discount rate has remained
consistent with the prior period discount rate, and reflects a consistent overall cost of equity
and cost of borrowing within the Group's weighted average cost of capital calculation for both
periods. Within the cost of equity calculation there have been offsetting movements within the
risk-free rate, beta value, and equity risk premium rate assumptions. The growth rate used to
extrapolate the cash flows is 2.5% (2024 \u2013 2.5%) and is based on historical growth rates, as well
as management\u2019s best estimate of future growth rates, taking into account current economic
market conditions.
Sensitivity testing has been performed to model the impact of reasonably possible changes in
input assumptions to the base case impairment analysis and headroom. The discount rate has
been flexed to 100 basis points above the central assumption (resulting in a 18% reduction in
headroom), the growth rate has been flexed to 100 basis points below the central assumption
(resulting in a 16% reduction in headroom), and the pre-tax projected cash flows have been
flexed to 500 basis points below the central assumption (resulting in a 6% reduction in
headroom). Within these ranges, the recoverable amount remains supportable.
No impairment loss has been recognised in respect of either the syndicate participation rights
or the goodwill intangible assets for the years ended 31 December 2025 and
31 December 2024.
During the year ended 31 December 2025,
management considered the relevant indicators of impairment at an individual intangible asset
level and performed an impairment review where it was determined appropriate. Following the
completion of this review, an impairment loss of $10.3 million has been recognised for the year
ended 31 December 2025 (2024 \u2013 nil).
", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-315": { "value": "
18. Long-term debt and financing arrangements
Long-term debt
In 2021, LHL issued $450.0 million (being the aggregate principal amount) of 5.625% fixed-rate
reset junior subordinated notes, repayable on 18 September 2041. The long-term debt was
issued in two tranches forming part of the same series of notes, with $400.0 million issued on
18 March 2021, and $50.0 million issued on 31 March 2021. Interest is payable semi-annually in
arrears on 18 March and 18 September of each year. The fixed interest rate will reset on
18 September 2031 and each reset date thereafter, at a rate per annum equal to the prevailing
five-year treasury rate, plus a credit spread of 4.08% and a 100 basis point step-up.
The carrying value of the Company's issued $450.0 million junior subordinated notes are
shown\u00a0below:
As at 31 December
2025
$m
2024
$m
Carrying value in the consolidated statement of financial position
447.5
447.0
Fair value (classified within Level (ii) of fair value hierarchy)
446.1
417.9
Accrued interest (included within other payables)
7.2
7.2
LHL has the option to redeem some or all of the junior subordinated notes prior to the maturity
date. There are no negative or financial covenants attached to the issued junior subordinated notes.
Refer to note 8 for details of the interest expense for the year included within financing costs.
Letters of credit
As both LICL and LUK are non-admitted (re)insurers throughout the US, the terms of certain
contracts require them to provide LOCs to policyholders as collateral. These LOCs are required
to be fully collateralised.
LICL has a $150.0 million (31 December 2024 - $150.0 million) syndicated collateralised credit
facility, which is guaranteed by LHL. The credit facility was renewed in 2024 and the expiry
date\u00a0extended to 28 March 2028. The facility is available for the issue of LOCs to ceding
companies. The facility is also available for LICL to issue LOCs to LUK to collateralise certain
insurance obligations.
The terms of the $150.0 million syndicated collateralised credit facility include standard default
and cross-default provisions, which require certain covenants to be adhered to. These include
the following:
\u2022 an A.M. Best financial strength rating of at least B++;
\u2022 a maximum debt to capital ratio of 30.0%, where the junior subordinated notes are excluded
as debt from this calculation;
\u2022 unsecured indebtedness incurred by LHL or LICL must be subordinated in right of payment to
the obligations and liabilities of LHL and LICL under the facility; and
\u2022 a maximum aggregated indebtedness incurred by CCL 1998, LHL or LICL in the ordinary
course of business in connection with coming into line requirements of $450.0 million.
The following LOCs have been issued by the Group:
As at 31 December
2025
$m
2024
$m
Issued to third parties
26.8
3.5
As at 31 December 2025, there is a syndicated uncollateralised LOC facility of $335.5 million
(31 December 2024 - $265.5 million), and a $70.0 million collateral pledge facility
(31 December 2024 - $70.0 million). Both facilities are available for utilisation by LICL and
guaranteed by LHL for FAL purposes. As at 31 December 2025, a $335.5 million LOC was issued
under the syndicated uncollateralised LOC facility, due to expire on 31 December 2029, and $70.0
million of agreed collateral had been deposited with Lloyd's, due to expire on 31 December 2026.
The terms of these facilities include standard default and cross-default provisions, which require
certain covenants to be adhered to. These include the following:
\u2022 an A.M. Best financial strength rating of at least B++;
\u2022 a maximum debt to capital ratio of 30.0%, where the junior subordinated notes are excluded
as debt from this calculation; and
\u2022 maintenance of a minimum net worth requirement.
As at all reporting dates, the Group was in compliance with all covenants under these facilities.
Syndicate bank facilities
As at 31 December 2025 and 31 December 2024, Syndicate 2010 had in place a $60.0 million
LOC catastrophe facility. The facility is available to assist in paying claims and providing the
gross funding of catastrophes for Syndicate 2010. A separate uncommitted overdraft facility of
$20.0 million is also available to Syndicate 2010.
There are no balances outstanding under the syndicate bank facilities as at 31 December 2025 and
31 December 2024.
Trust and restricted balances
The Group has several trust arrangements in place in favour of policyholders and ceding
insurers in order to comply with the security requirements of certain reinsurance contracts and/
or the regulatory requirements of certain jurisdictions.
In 2012, LICL established an MBRT to collateralise certain reinsurance liabilities associated with
US domiciled clients. However, following LICL's approval as a reciprocal reinsurer in all relevant
US states and territories, the MBRT is no longer required for new business written with
policyholders domiciled in the US and its relevant territories where LICL has received reciprocal
reinsurer approval. LICL has now put in place alternative collateral arrangements with respect to
remaining reinsurance liabilities owed to US cedents that were formerly secured in the MBRT
and as at 31 December 2025 there are no remaining liabilities secured by the MBRT. LICL is in
the process of terminating the MBRT, however, in the interim the MBRT remains subject to the
relevant US state rules and regulations, and the respective deeds of trust. These rules and
regulations include minimum capital funding requirements, investment guidelines, capital
distribution restrictions, and regulatory reporting requirements.
The Group holds a portion of its assets as FAL to support the underwriting capacity of both
Syndicate 2010 and Syndicate 3010. FAL is restricted in its use and can only be drawn down
by\u00a0Lloyd's to pay cash calls to the syndicates supported by the Group. FAL requirements are
formally assessed and revised twice a year.
In addition to the FAL, certain cash and investments held by Syndicate 2010 and Syndicate 3010
are only available for paying the syndicates\u2019 claims and expenses. See the capital management
risk disclosures for more information regarding the capital requirements for Syndicate 2010
and\u00a0Syndicate 3010.
As at and for the years ended 31 December 2025 and 31 December 2024, the Group was in
compliance with all covenants under its trust facilities.
The following cash and cash equivalents, and investment balances are held in trust collateral
accounts in favour of third parties, or are otherwise restricted:
2025
2024
As at 31 December
Cash and
cash
equivalents\u00a0
$m
Fixed\u00a0
maturity
securities\u00a0
$m
Total
$m
Cash and\u00a0
cash
equivalents\u00a0
$m
Fixed maturity
securities\u00a0
$m
Total
$m
FAL
4.3
141.9
146.2
0.3
137.5
137.8
MBRT accounts
2.2
93.0
95.2
1.5
217.4
218.9
Syndicate accounts
71.5
137.4
208.9
57.8
111.9
169.7
In trust accounts for
policyholders
30.8
282.3
313.1
48.9
151.3
200.2
In favour of LOCs
8.9
28.6
37.5
2.6
6.4
9.0
Loan to Lloyd's Central Fund
\u2014
\u2014
\u2014
\u2014
2.1
2.1
Total
117.7
683.2
800.9
111.1
626.6
737.7
", "dimensions": { "concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-316": { "value": "
19. Share capital and other reserves
Authorised common shares of $0.50 each
Number
$m
As at 31 December 2025 and 2024
3,000,000,000
1,500.0
Allocated, called up and fully paid common shares of $0.50 each
Number
$m
As at 31 December 2025 and 2024
244,010,007
122.0
Own shares held in Trust
Total number
of own shares
$m
As at 31 December 2023
4,972,030
29.7
Shares distributed
(1,546,818)
(9.2)
As at 31 December 2024
3,425,212
20.5
Shares distributed
(1,974,926)
(11.8)
As at 31 December 2025
1,450,286
8.7
The number of common shares in issue with voting rights (allocated share capital, less shares
held in treasury or pursuant to a custody arrangement) as at 31 December 2025 was
244,010,007 (31 December 2024 \u2013 244,010,007). As at 31 December 2025 there were no
shares held in treasury (31 December 2024 \u2013 nil). Common shares in issue (other than shares
held in treasury) carry voting rights which rank pari passu, and the same rights to receive any
dividends and other distributions declared, made or paid by the Company.
Share repurchases
At the AGM held on 30 April 2025, LHL\u2019s shareholders approved a renewal of the Company's
Repurchase Programme authorising the repurchase of a maximum of 24,401,000 common
shares, with such authority to expire on the conclusion of the 2026 AGM of the Company or, if
earlier, 15 months from the date the resolution approving the Repurchase Programme was
passed.
During the year ended 31 December 2025, no shares were repurchased by the Company under
the Repurchase Programme (2024 - nil).
Dividends
The Board of Directors has authorised the following dividends:
Type
Per share amount
Record date
Payment date
$m
Special
$0.50
15 Mar 2024
12 Apr 2024
119.9
Final
$0.15
10 May 2024
7 Jun 2024
36.0
Interim
$0.075
16 Aug 2024
13 Sep 2024
18.0
Special
$0.75
15 Nov 2024
13 Dec 2024
180.3
Special
$0.25
14 Mar 2025
11 Apr 2025
60.2
Final
$0.15
16 May 2025
13 Jun 2025
36.3
Interim
$0.075
15 Aug 2025
15 Sep 2025
18.1
Special
$0.75
14 Nov 2025
12 Dec 2025
181.9
Other reserves
The Group's other reserves of $1,249.6 million (31 December 2024 \u2013 $1,242.3 million)
comprises contributed surplus and an equity based compensation reserve. The equity based
compensation reserve comprises $60.0 million (31 December 2024 \u2013 $49.1 million) of this
balance and relates to the Group's equity compensation plans (see note 7).
", "dimensions": { "concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-317": { "value": "
Authorised common shares of $0.50 each
Number
$m
As at 31 December 2025 and 2024
3,000,000,000
1,500.0
Allocated, called up and fully paid common shares of $0.50 each
Number
$m
As at 31 December 2025 and 2024
244,010,007
122.0
Own shares held in Trust
Total number
of own shares
$m
As at 31 December 2023
4,972,030
29.7
Shares distributed
(1,546,818)
(9.2)
As at 31 December 2024
3,425,212
20.5
Shares distributed
(1,974,926)
(11.8)
As at 31 December 2025
1,450,286
8.7
The number of common shares in issue with voting rights (allocated share capital, less shares
held in treasury or pursuant to a custody arrangement) as at 31 December 2025 was
244,010,007 (31 December 2024 \u2013 244,010,007). As at 31 December 2025 there were no
shares held in treasury (31 December 2024 \u2013 nil). Common shares in issue (other than shares
held in treasury) carry voting rights which rank pari passu, and the same rights to receive any
dividends and other distributions declared, made or paid by the Company.
Share repurchases
At the AGM held on 30 April 2025, LHL\u2019s shareholders approved a renewal of the Company's
Repurchase Programme authorising the repurchase of a maximum of 24,401,000 common
shares, with such authority to expire on the conclusion of the 2026 AGM of the Company or, if
earlier, 15 months from the date the resolution approving the Repurchase Programme was
passed.
During the year ended 31 December 2025, no shares were repurchased by the Company under
the Repurchase Programme (2024 - nil).", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-318": { "value": "
Dividends
The Board of Directors has authorised the following dividends:
Type
Per share amount
Record date
Payment date
$m
Special
$0.50
15 Mar 2024
12 Apr 2024
119.9
Final
$0.15
10 May 2024
7 Jun 2024
36.0
Interim
$0.075
16 Aug 2024
13 Sep 2024
18.0
Special
$0.75
15 Nov 2024
13 Dec 2024
180.3
Special
$0.25
14 Mar 2025
11 Apr 2025
60.2
Final
$0.15
16 May 2025
13 Jun 2025
36.3
Interim
$0.075
15 Aug 2025
15 Sep 2025
18.1
Special
$0.75
14 Nov 2025
12 Dec 2025
181.9
", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-319": { "value": "0.15", "decimals": 2, "dimensions": { "concept": "ifrs-full:DividendsRecognisedAsDistributionsToOwnersPerShare", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2024-05-05T00:00:00/2024-05-06T00:00:00", "unit": "iso4217:USD/xbrli:shares" } }, "f-320": { "value": "0.075", "decimals": 2, "dimensions": { "concept": "ifrs-full:DividendsRecognisedAsDistributionsToOwnersPerShare", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2024-08-18T00:00:00/2024-08-19T00:00:00", "unit": "iso4217:USD/xbrli:shares" } }, "f-321": { "value": "0.75", "decimals": 2, "dimensions": { "concept": "ifrs-full:DividendsRecognisedAsDistributionsToOwnersPerShare", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2024-11-17T00:00:00/2024-11-18T00:00:00", "unit": "iso4217:USD/xbrli:shares" } }, "f-322": { "value": "0.25", "decimals": 2, "dimensions": { "concept": "ifrs-full:DividendsRecognisedAsDistributionsToOwnersPerShare", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-03-15T00:00:00/2025-03-16T00:00:00", "unit": "iso4217:USD/xbrli:shares" } }, "f-323": { "value": "0.15", "decimals": 2, "dimensions": { "concept": "ifrs-full:DividendsRecognisedAsDistributionsToOwnersPerShare", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-05-10T00:00:00/2025-05-11T00:00:00", "unit": "iso4217:USD/xbrli:shares" } }, "f-324": { "value": "0.075", "decimals": 3, "dimensions": { "concept": "ifrs-full:DividendsRecognisedAsDistributionsToOwnersPerShare", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-08-16T00:00:00/2025-08-17T00:00:00", "unit": "iso4217:USD/xbrli:shares" } }, "f-325": { "value": "0.75", "decimals": 2, "dimensions": { "concept": "ifrs-full:DividendsRecognisedAsDistributionsToOwnersPerShare", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-11-15T00:00:00/2025-11-16T00:00:00", "unit": "iso4217:USD/xbrli:shares" } }, "f-326": { "value": "
Other reserves
The Group's other reserves of $1,249.6 million (31 December 2024 \u2013 $1,242.3 million)
comprises contributed surplus and an equity based compensation reserve. The equity based
compensation reserve comprises $60.0 million (31 December 2024 \u2013 $49.1 million) of this
balance and relates to the Group's equity compensation plans (see note 7).
", "dimensions": { "concept": "ifrs-full:DisclosureOfReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-327": { "value": "
20. Earnings per share
The following reflects the profit and share data used in the basic and diluted earnings per
share\u00a0computations:
For the year ended 31 December
2025
$m
2024
$m
Profit after tax
293.4
321.3
2025
Number
of shares
2024
Number
of shares
Basic weighted average number of shares
241,805,113
239,948,359
Dilutive effect of RSS
8,378,387
6,826,530
Diluted weighted average number of shares
250,183,500
246,774,889
Earnings per share
2025
2024
Basic
$1.21
$1.34
Diluted
$1.17
$1.30
Equity based compensation awards are only treated as dilutive when their conversion to
common shares would decrease the earnings per share, or increase the loss per share, from
continuing operations. Unvested restricted shares without performance criteria are therefore
included in the number of potentially dilutive shares. Incremental shares from ordinary
restricted share options, where relevant performance criteria have not been met, are not
included in the calculation of dilutive shares.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-330": { "value": "
21. Commitments and contingencies
Credit facility fund
As at 31 December 2025, the Group has a commitment of $50.0 million (31 December 2024 \u2013
$50.0 million) relating to one credit facility fund (refer to note 12).
Private investment funds
The table below shows the dates on which the Group committed to invest in six different
private investment funds and the amount of the total commitment that remains undrawn as at
31 December 2025.
Amount and date of commitment to invest in private investment fund
Undrawn
commitment
$m
GBP 50 million on 20 November 2024
33.0
USD 50 million on 31 July 2024
14.0
Euro 40 million on 11 January 2024
20.5
USD 34 million on 28 July 2021
8.5
USD 25 million on 9 December 2020
0.5
USD 25 million on 5 November 2019
1.0
Total commitment to invest in private investment fund
77.5
On 30 December 2025, the Company advanced $70.0 million toward a new private investment
fund, with the subscription becoming effective on 1 January 2026. As at 31 December 2025, this
amount is presented within other receivables in the consolidated statement of financial position
as the subscription had not yet been completed at the reporting date.
Legal proceedings and regulations
The Group operates in the insurance industry and is therefore, from time to time, subject to
legal proceedings in the normal course of business. While it is not practicable to estimate or
determine the final results of all pending or threatened legal proceedings, management does
not believe that such proceedings (including litigation) will have a material effect on the Group's
results and financial position.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-329": { "value": "
21. Commitments and contingencies
Credit facility fund
As at 31 December 2025, the Group has a commitment of $50.0 million (31 December 2024 \u2013
$50.0 million) relating to one credit facility fund (refer to note 12).
Private investment funds
The table below shows the dates on which the Group committed to invest in six different
private investment funds and the amount of the total commitment that remains undrawn as at
31 December 2025.
Amount and date of commitment to invest in private investment fund
Undrawn
commitment
$m
GBP 50 million on 20 November 2024
33.0
USD 50 million on 31 July 2024
14.0
Euro 40 million on 11 January 2024
20.5
USD 34 million on 28 July 2021
8.5
USD 25 million on 9 December 2020
0.5
USD 25 million on 5 November 2019
1.0
Total commitment to invest in private investment fund
77.5
On 30 December 2025, the Company advanced $70.0 million toward a new private investment
fund, with the subscription becoming effective on 1 January 2026. As at 31 December 2025, this
amount is presented within other receivables in the consolidated statement of financial position
as the subscription had not yet been completed at the reporting date.
Legal proceedings and regulations
The Group operates in the insurance industry and is therefore, from time to time, subject to
legal proceedings in the normal course of business. While it is not practicable to estimate or
determine the final results of all pending or threatened legal proceedings, management does
not believe that such proceedings (including litigation) will have a material effect on the Group's
results and financial position.
", "dimensions": { "concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-328": { "value": "
21. Commitments and contingencies
Credit facility fund
As at 31 December 2025, the Group has a commitment of $50.0 million (31 December 2024 \u2013
$50.0 million) relating to one credit facility fund (refer to note 12).
Private investment funds
The table below shows the dates on which the Group committed to invest in six different
private investment funds and the amount of the total commitment that remains undrawn as at
31 December 2025.
Amount and date of commitment to invest in private investment fund
Undrawn
commitment
$m
GBP 50 million on 20 November 2024
33.0
USD 50 million on 31 July 2024
14.0
Euro 40 million on 11 January 2024
20.5
USD 34 million on 28 July 2021
8.5
USD 25 million on 9 December 2020
0.5
USD 25 million on 5 November 2019
1.0
Total commitment to invest in private investment fund
77.5
On 30 December 2025, the Company advanced $70.0 million toward a new private investment
fund, with the subscription becoming effective on 1 January 2026. As at 31 December 2025, this
amount is presented within other receivables in the consolidated statement of financial position
as the subscription had not yet been completed at the reporting date.
Legal proceedings and regulations
The Group operates in the insurance industry and is therefore, from time to time, subject to
legal proceedings in the normal course of business. While it is not practicable to estimate or
determine the final results of all pending or threatened legal proceedings, management does
not believe that such proceedings (including litigation) will have a material effect on the Group's
results and financial position.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-331": { "value": "
22. Related party disclosures
The Group's consolidated financial statements include LHL and the entities listed below:
Name
Principal Business
Domicile
Subsidiaries1
CCHL
Holding company
United Kingdom
CCL2
Holding company
United Kingdom
CCL 19983
Lloyd\u2019s corporate member
United Kingdom
CCL 1999
Non-trading
United Kingdom
CUL
Non-trading
United Kingdom
LAPL
Non-trading
Australia
LICLIHL
Holding company
Bermuda
LCM
Insurance agent services
Bermuda
LCMMSL
Support services
United Kingdom
LICL
General insurance business
Bermuda
LUS
Surplus lines broker
United States of America
LIHL
Holding company
United Kingdom
LHUS
Holding company
United States of America
LIMSL
Insurance mediation activities
United Kingdom
LISL
Support services
United Kingdom
LHAPL
Holding company
Australia
LMSCL
Support services
Canada
LSL
Lloyd\u2019s managing agent
United Kingdom
LUAPL
Lloyd's service company
Australia
LUK
General insurance business
United Kingdom
Associate
KHL4 (and its subsidiary KRL)
Holding company / General
insurance business
Bermuda
Other controlled entities
EBT
Trust
Jersey
1. Unless otherwise stated, the Group owns 100% of the ordinary share capital and voting rights in its subsidiaries
listed above.
2. CCL was dissolved on 24 September 2024.
3. 79.7% participation on the 2025 year of account, and 100 % participation on the 2026 year of account,
for\u00a0Syndicate 2010.
4. The Group has a 16.7% holding through its interest in the preference shares of each segregated account of KHL.
The EBT was established to assist in the administration of the Group's employee equity based
compensation schemes. While the Group does not have legal ownership of the EBT, and the
ability of the Group to influence the actions of the EBT is limited by the trust deed in place,
the\u00a0EBT was set up by the Group with the sole purpose of assisting in the administration of
these schemes. It is therefore considered to be controlled by the Group, and is consolidated
within both the Group's consolidated statement of comprehensive income and consolidated
statement of financial position.
The Group has a loan facility agreement (the \u2018Facility\u2019) with JTC PLC, the trustee of the EBT.
The\u00a0Facility is an interest-free revolving credit facility under which the trustee can request
advances on demand, within the terms of the Facility, up to a maximum aggregate amount of
$80.0 million. The Facility may only be used by the trustee for the purpose of achieving the
objectives of the EBT. During the year ended 31 December 2025, the Group had made
advances of $nil (31 December 2024 \u2013 $nil) to the EBT under the terms of the Facility.
During the year ended 31 December 2025, no common shares were donated by the Company
to the EBT (2024 \u2013 nil). LHL did not issue any common shares to the EBT during the years
ended 31 December 2025 or 31 December 2024.
As at 31 December 2025, LICL holds $318.0 million (31 December 2024 \u2013 $266.4 million) of
cash and cash equivalents, fixed maturity securities, and accrued interest in trust for the benefit
of LUK relating to intra-group reinsurance agreements. In addition, LICL provides 100% of the
required FAL to support the underwriting activities of Syndicate 2010 and Syndicate 3010. LICL
holds $146.2 million (31 December 2024 \u2013 $137.8 million) of cash and cash equivalents and
fixed maturity securities in FAL, with the remaining FAL requirement covered by a LOC and a
collateral pledge facility (refer to note 18).
Mr Maloney and his spouse acquired 100% of the shares in Nameco on 7 November 2016.
Nameco provides capacity to a number of Lloyd's syndicates, including Syndicate 2010 which is
managed by LSL. Mr Maloney receives a proportionate share of the underwriting results of
Syndicate 2010 to which he is contractually entitled through his participation. As a result of the
mandatory offer and subsequent minority buy-out of Syndicate 2010 (see note 17), Nameco
received $0.2 million from the Group in respect of the acquisition of Nameco's prospective
participations on Syndicate 2010. These transactions occurred on an arm's length basis.
Nameco has not provided capacity to Syndicate 2010 for the 2026 year of account (2025 year
of account \u2013 $0.2 million),
Key management compensation
Remuneration for key management, the Group\u2019s Executive and Non-Executive Directors,
was\u00a0as\u00a0follows:
For the year ended 31 December
2025
$m
2024
$m
Short-term compensation
9.0
7.9
Equity based compensation
8.3
6.0
Directors' fees
2.7
2.6
Total
20.0
16.5
Non-Executive Directors do not receive any benefits in addition to their agreed fees, and do not
participate in any of the Group\u2019s incentive, performance or pension plans.
Transactions with the Group's associate and the associate's subsidiary
In 2013, LCM entered into an underwriting services agreement with KRL and KHL to provide
various insurance-related services. In the years ended 31 December 2025 and 31 December
2024, no new underwriting cycles were entered into, and LCM recognised profit commission of
$1.0 million (31 December 2024 \u2013 $0.8 million). During 2025, KHL returned $7.5 million (2024 \u2013
$15.7 million) of capital to the Group.
As at 31 December 2025, the consolidated financial statements includes reinsurance contract
assets of $10.9 million (31 December 2024 \u2013 $16.0 million) due from KRL, together with a
corresponding net expense of $5.0 million ( 2024 \u2013 $3.1 million).", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-332": { "value": "
The Group's consolidated financial statements include LHL and the entities listed below:
Name
Principal Business
Domicile
Subsidiaries1
CCHL
Holding company
United Kingdom
CCL2
Holding company
United Kingdom
CCL 19983
Lloyd\u2019s corporate member
United Kingdom
CCL 1999
Non-trading
United Kingdom
CUL
Non-trading
United Kingdom
LAPL
Non-trading
Australia
LICLIHL
Holding company
Bermuda
LCM
Insurance agent services
Bermuda
LCMMSL
Support services
United Kingdom
LICL
General insurance business
Bermuda
LUS
Surplus lines broker
United States of America
LIHL
Holding company
United Kingdom
LHUS
Holding company
United States of America
LIMSL
Insurance mediation activities
United Kingdom
LISL
Support services
United Kingdom
LHAPL
Holding company
Australia
LMSCL
Support services
Canada
LSL
Lloyd\u2019s managing agent
United Kingdom
LUAPL
Lloyd's service company
Australia
LUK
General insurance business
United Kingdom
Associate
KHL4 (and its subsidiary KRL)
Holding company / General
insurance business
Bermuda
Other controlled entities
EBT
Trust
Jersey
1. Unless otherwise stated, the Group owns 100% of the ordinary share capital and voting rights in its subsidiaries
listed above.
2. CCL was dissolved on 24 September 2024.
3. 79.7% participation on the 2025 year of account, and 100 % participation on the 2026 year of account,
for\u00a0Syndicate 2010.
4. The Group has a 16.7% holding through its interest in the preference shares of each segregated account of KHL.
The EBT was established to assist in the administration of the Group's employee equity based
compensation schemes. While the Group does not have legal ownership of the EBT, and the
ability of the Group to influence the actions of the EBT is limited by the trust deed in place,
the\u00a0EBT was set up by the Group with the sole purpose of assisting in the administration of
these schemes. It is therefore considered to be controlled by the Group, and is consolidated
within both the Group's consolidated statement of comprehensive income and consolidated
statement of financial position.
The Group has a loan facility agreement (the \u2018Facility\u2019) with JTC PLC, the trustee of the EBT.
The\u00a0Facility is an interest-free revolving credit facility under which the trustee can request
advances on demand, within the terms of the Facility, up to a maximum aggregate amount of
$80.0 million. The Facility may only be used by the trustee for the purpose of achieving the
objectives of the EBT. During the year ended 31 December 2025, the Group had made
advances of $nil (31 December 2024 \u2013 $nil) to the EBT under the terms of the Facility.
During the year ended 31 December 2025, no common shares were donated by the Company
to the EBT (2024 \u2013 nil). LHL did not issue any common shares to the EBT during the years
ended 31 December 2025 or 31 December 2024.
As at 31 December 2025, LICL holds $318.0 million (31 December 2024 \u2013 $266.4 million) of
cash and cash equivalents, fixed maturity securities, and accrued interest in trust for the benefit
of LUK relating to intra-group reinsurance agreements. In addition, LICL provides 100% of the
required FAL to support the underwriting activities of Syndicate 2010 and Syndicate 3010. LICL
holds $146.2 million (31 December 2024 \u2013 $137.8 million) of cash and cash equivalents and
fixed maturity securities in FAL, with the remaining FAL requirement covered by a LOC and a
collateral pledge facility (refer to note 18).
Mr Maloney and his spouse acquired 100% of the shares in Nameco on 7 November 2016.
Nameco provides capacity to a number of Lloyd's syndicates, including Syndicate 2010 which is
managed by LSL. Mr Maloney receives a proportionate share of the underwriting results of
Syndicate 2010 to which he is contractually entitled through his participation. As a result of the
mandatory offer and subsequent minority buy-out of Syndicate 2010 (see note 17), Nameco
received $0.2 million from the Group in respect of the acquisition of Nameco's prospective
participations on Syndicate 2010. These transactions occurred on an arm's length basis.
Nameco has not provided capacity to Syndicate 2010 for the 2026 year of account (2025 year
of account \u2013 $0.2 million),
Transactions with the Group's associate and the associate's subsidiary
In 2013, LCM entered into an underwriting services agreement with KRL and KHL to provide
various insurance-related services. In the years ended 31 December 2025 and 31 December
2024, no new underwriting cycles were entered into, and LCM recognised profit commission of
$1.0 million (31 December 2024 \u2013 $0.8 million). During 2025, KHL returned $7.5 million (2024 \u2013
$15.7 million) of capital to the Group.
As at 31 December 2025, the consolidated financial statements includes reinsurance contract
assets of $10.9 million (31 December 2024 \u2013 $16.0 million) due from KRL, together with a
corresponding net expense of $5.0 million ( 2024 \u2013 $3.1 million).", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInSubsidiariesExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-333": { "value": "
Key management compensation
Remuneration for key management, the Group\u2019s Executive and Non-Executive Directors,
was\u00a0as\u00a0follows:
For the year ended 31 December
2025
$m
2024
$m
Short-term compensation
9.0
7.9
Equity based compensation
8.3
6.0
Directors' fees
2.7
2.6
Total
20.0
16.5
Non-Executive Directors do not receive any benefits in addition to their agreed fees, and do not
participate in any of the Group\u2019s incentive, performance or pension plans.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-334": { "value": "
Transactions with the Group's associate and the associate's subsidiary
In 2013, LCM entered into an underwriting services agreement with KRL and KHL to provide
various insurance-related services. In the years ended 31 December 2025 and 31 December
2024, no new underwriting cycles were entered into, and LCM recognised profit commission of
$1.0 million (31 December 2024 \u2013 $0.8 million). During 2025, KHL returned $7.5 million (2024 \u2013
$15.7 million) of capital to the Group.
As at 31 December 2025, the consolidated financial statements includes reinsurance contract
assets of $10.9 million (31 December 2024 \u2013 $16.0 million) due from KRL, together with a
corresponding net expense of $5.0 million ( 2024 \u2013 $3.1 million).", "dimensions": { "concept": "ifrs-full:DisclosureOfTransactionsBetweenRelatedPartiesExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-335": { "value": "
23. Subsequent events
Dividends
On 4 March 2026, Lancashire\u2019s Board of Directors declared a final ordinary dividend of $0.15
(approximately \u00a30.12) per common share, subject to a shareholder vote of approval at the AGM
to be held on 29 April 2026, which will result in an aggregate payment of approximately $36.0
million. The dividend will be paid in pounds sterling on 12 June 2026 (the \"Dividend Payment
Date\") to shareholders of record on 15 May 2026 (the \u201cRecord Date\u201d) using the \u00a3 / $ spot market
exchange rate at 12 noon London time on the Record Date.
Lancashire's Board of Directors has declared a special dividend of $0.50 per common share
(approximately \u00a30.37 per common share at the current exchange rate), which will result in an
aggregate payment of approximately $121.0 million. The dividend will be paid in pounds sterling
on 17 April 2026 (the \"Dividend Payment Date\") to shareholders of record on 20 March 2026
(the\"Record Date\") using the \u00a3 / $ spot market exchange rate at 12 noon London time on the
Record Date.
Private investment fund commitment
See note 21 for details of a commitment to invest in a new private investment fund on
1 January 2026.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-336": { "value": "0.15", "decimals": 2, "dimensions": { "concept": "ifrs-full:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwnersPerShare", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00", "unit": "iso4217:USD/xbrli:shares" } }, "f-337": { "value": "0.12", "decimals": 2, "dimensions": { "concept": "ifrs-full:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwnersPerShare", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00", "unit": "iso4217:GBP/xbrli:shares" } }, "f-338": { "value": "36000000.0", "decimals": -5, "dimensions": { "concept": "ifrs-full:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwners", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00", "unit": "iso4217:USD" } }, "f-339": { "value": "Lancashire Holdings Limited", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-340": { "value": "Limited", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:5493002UNUYXLHOWF752", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } } } }