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"the 1985 Act" means the Companies Act 1985[3];

"the Authority" means the Financial Services Authority;

"the Council of Lloyd's" means the Council constituted by section 3 of the Lloyd's Act 1982;

"financial year" means the period of 12 months beginning on 1^st January;

"Lloyd's byelaws" means the byelaws made under the Lloyd's Acts 1871 to 1982;

"managing agent" means a person who is permitted by the Council of Lloyd's, in the conduct of his business as an underwriting agent, to perform, for a member of Lloyd's, one or more of the following functions - 

(a) underwriting contracts of insurance at Lloyd's;

(b) reinsuring such contracts in whole or in part;

(c) paying claims on such contracts;

"syndicate" means one or more persons, to whom a syndicate number has been assigned by or under the authority of the Council of Lloyd's, carrying out or effecting contracts of insurance written at Lloyd's.

    (2) In these Regulations any reference to the accounts required by or prepared under regulation 3 is a reference to the annual accounts, annual report and auditors' report required by or prepared under paragraph (2) of that regulation.

    (3) In these Regulations an underwriting year of account is closed - 

(a) at the time when a contract of reinsurance to close that year of account, which complies with the requirements in the Lloyd's byelaws, takes effect; or

(b) in the case of a syndicate which consists of a single corporate member, at the time when an amount representing the provision for all known and unknown liabilities attributable to the closing year of account, is included in the underwriting account for the following underwriting year.

    (4) Other expressions used in these Regulations have the meanings ascribed to them by the 1985 Act.

(a) sections 226(1) and (2)(a),226A, 231 to 234, 234A, 235 to 237, 240, 242B, 255[4];

(b) paragraphs 11 and 12 of Schedule 5;

(c) paragraph 6 of Schedule 7;

(d) Schedule 9A other than - 


(i) paragraphs 10(2), 61, 64, 65, 72(2), 73;

(ii) in paragraph 2(2) the words from "but the following" to the end of that paragraph; and

(iii) Part 2 of that Schedule.

    (5) For the purposes of the provisions listed in paragraph (4) as applied to accounts prepared under this regulation, these Regulations shall be regarded as part of the requirements of the 1985 Act.

    (6) Part 2 of the Companies Act 1989[5] (eligibility for appointment as auditors) applies to auditors appointed for the purposes of this regulation subject to any necessary modifications to take account of the fact that the syndicate is unincorporated.

    (7) The Schedule to these Regulations has effect for the purpose of modifying the provisions of the 1985 Act listed in paragraph (4), in their application to syndicates.

Preparation of syndicate underwriting year accounts
     4.  - (1) Managing agents must, in respect of each syndicate for which Regulation 3(1) requires them to ensure the preparation of accounts and reports, prepare or cause to be prepared underwriting year accounts in accordance with paragraph (2), unless - 

(a) no underwriting year of that syndicate has been closed in the preceding financial year or is being closed at the end of that financial year; or

(b) the members of the syndicate for each underwriting year included in the underwriting year accounts, agree unanimously, in writing, that no underwriting year accounts shall be prepared in respect of that syndicate.

    (2) The underwriting year accounts must be an account which - 

(a) is prepared on an underwriting year basis; and

(b) gives a true and fair view of the result of that underwriting year at closure.

    (3) The accounts required by this regulation must - 

(a) be prepared within a period of 3 months beginning immediately after the end of the syndicate's financial year; and

(b) state that they are prepared under this regulation.

    (4) Managing agents must cause to be prepared an auditors' report on the underwriting year accounts required by this regulation stating whether a true and fair view is given of the result of the underwriting year at closure.

    (5) Part 2 of the Companies Act 1989 (eligibility for appointment as auditors) applies to auditors appointed for the purposes of this regulation subject to any necessary modifications to take account of the fact that the syndicate is unincorporated.

Accounts to be sent to syndicate members, the Council and the Authority
     5.  - (1) The managing agent responsible for the preparation of the accounts of a syndicate must send a copy of the accounts prepared under regulations 3 and 4 to every member of Lloyd's who participates in that syndicate and to the Council of Lloyd's, within 3 months from the end of the financial year.

    (2) The managing agent responsible for the preparation of the accounts of a syndicate must send a copy of the accounts prepared under regulations 3 and 4 to the Authority within 6 months from the end of the financial year.

    (3) References in this regulation to sending, include references to using electronic communications for sending copies of those documents to such address as may for the time being be notified to the managing agent by that person for that purpose.

Publication of syndicate accounts
     6. Where a managing agent has sent accounts to the Council of Lloyd's under regulation 5, the Council must - 

(a) make available, on reasonable notice, those accounts for inspection by any person without charge and during business hours at the Council's head office for a period of three years from the date of signature of each document;

(b) supply to any person upon request a copy of those accounts (or such part of those accounts as may be requested) at a price not exceeding the administrative cost of making the copy, for a period of three years from the date of signature of each document.

Penalties for non-compliance
     7.  - (1) If the managing agent of a Lloyd's syndicate fails to comply with paragraph (1) of regulation 3, within the period referred to in paragraph (3) of that regulation, the managing agent and every person who was a director or partner of it immediately before the end of that period, is guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale.

    (2) If the managing agent of a Lloyd's syndicate fails to comply with paragraph (1) of regulation 4, within the period referred to in paragraph (3) of that regulation, the managing agent and every person who was a director or partner of it immediately before the end of that period, is guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale.

    (3) If accounts which are supplied under regulation 5, do not comply with the requirements of regulations 3 and 4, the managing agent of the Lloyd's syndicate and every person who was a director or partner of it at the time when the accounts were first made available for inspection or supplied, is guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale.

    (4) If a managing agent fails to comply with regulation 5(1), it and every person who was a director or partner of it at the time when the failure took place is guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale.

    (5) If a managing agent fails to comply with regulation 5(2), it and every person who was a director or partner of it at the time when the failure took place is guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale.

    (6) It is a defence for a person charged with an offence under this regulation to show that he took all reasonable steps for securing that the requirements in question would be complied with.

    (7) Section 731 of the 1985 Act applies to any offence under this regulation.

Approval and signing of aggregate accounts
     9.  - (1) The aggregate accounts must be approved by the Council of Lloyd's and signed on behalf of the Council by a member of the Council.

    (2) The signature must be on the aggregate balance sheet.

    (3) Every copy of the aggregate balance sheet which is circulated, published or issued must state the name of the person who signed it on behalf of the Council.

    (4) The copy of the aggregate balance sheet which is delivered to the Authority must be signed on behalf of the Council by a member of the Council.

Preparation of annual report by the Council of Lloyd's
     10.  - (1) The members of the Council of Lloyd's must prepare an annual report on the insurance business carried on by the members of Lloyd's containing - 

(a) a fair review of the insurance business carried on by the members of Lloyd's during the financial year, and of the position of the Lloyd's market at the end of it, consisting of a balanced and comprehensive analysis of the development and performance of the business of the members of Lloyd's; and

(b) a description of the principal risks and uncertainties facing the Lloyd's market.

    (2) The business review in the Council of Lloyd's' annual report must include, to the extent necessary for an understanding of the development, performance or position of the insurance business of the members of Lloyd's - 

(a) analysis using financial key performance indicators; and

(b) where appropriate, analysis using other key performance indicators.

    (3) The review must, where appropriate, include references to and additional explanations of amounts included in the aggregate accounts.

    (4) In this regulation "key performance indicators" means factors by reference to which the development, performance or position of the insurance business of the members of Lloyd's can be measured most effectively.

Approval and signing of annual report
     11.  - (1) The annual report prepared under regulation 10 above must be approved by the Council of Lloyd's and signed on behalf of the Council by a member of the Council.

    (2) Every copy of the annual report which is circulated, published or issued, must state the name of the person who signed it on behalf of the Council.

    (3) The copy of the annual report which is delivered to the Authority must be signed on behalf of the Council by a member of the Council.

Auditors' report
     12.  - (1) The members of the Council of Lloyd's must obtain an auditors' report on the aggregate accounts.

    (2) The auditors' report shall include - 

(a) an introduction identifying the aggregate accounts that are the subject of the report and the financial reporting framework that has been applied in their preparation;

(b) a description of the scope of the review carried out by the auditors and identifying the standards in accordance with which the review was conducted;

(c) a clear statement as to whether, in their opinion, the aggregate accounts have been properly prepared in accordance with the requirements of these Regulations and whether those accounts are correctly aggregated.

    (3) The auditors' report - 

(a) must be either unqualified or qualified; and

(b) must include a reference to any matters to which the auditors wish to draw attention by way of emphasis without qualifying the report.

    (4) The auditors' report must state whether, in their opinion, the annual report of the Council of Lloyd's - 

(a) is consistent with the aggregate accounts for the same financial year; and

(b) has been prepared in accordance with these Regulations.

Signature of auditors' report
     13.  - (1) The auditors' report must state the names of the auditors and be signed and dated by them.

    (2) Every copy of the auditors' report which is circulated, published or issued must state the names of the auditors.

    (3) The copy of the auditors' report which is delivered to the Authority must state the names of the auditors and be signed and dated by them.

    (4) References in this regulation to signature by the auditors are, where the office of auditor is held by a body corporate or partnership, to signature in the name of the body corporate or partnership by a person authorised to sign on its behalf.

Appointment of and duties of auditors
     14.  - (1) Part 2 of the Companies Act 1989 (eligibility for appointment as auditors) applies to auditors appointed by the Council of Lloyd's to report on the aggregate accounts.

    (2) The auditors of the aggregate accounts must, in preparing their report, carry out such investigations as will enable them to form an opinion as to whether the aggregate accounts are properly prepared and a correct aggregation of the syndicate accounts which have been cumulated to prepare them.

    (3) If those auditors are of the opinion that the aggregate accounts are not properly prepared or not a correct aggregation of the syndicate accounts which have been cumulated to prepare them, the auditors must state that fact in their report.

    (4) If those auditors fail to obtain all the information and explanations which, to the best of their knowledge and belief, are necessary for the purposes of their report, they must state that fact in their report.

Aggregate accounts and annual report of Council to be delivered to the Authority and published
     15.  - (1) The Council of Lloyd's must deliver to the Authority a copy of the aggregate accounts and its annual report on each financial year within a period of 6 months from the end of that year.

    (2) The Council of Lloyd's must - 

(a) make available, on reasonable notice, the latest aggregate accounts and its latest annual report for inspection by any person, without charge and during business hours, at the Council's head office; and

(b) supply to any person upon request a copy of those accounts or that report (or such part of them as may be requested) at a price not exceeding the administrative cost of making the copy.

    (3) In exercising its power to institute proceedings for an offence under these Regulations, the Authority must comply with any conditions or restrictions imposed in writing by the Treasury.

    (4) The Authority may increase any fee which it charges managing agents under the Financial Services and Markets Act 2000[6] to take account of the expenses incurred in carrying out its functions under these Regulations.

with respect to a financial year commencing on or before 31^st December 2004.

    (4) Nothing in this regulation exempts a managing agent or the Council of Lloyd's from any requirement to include corresponding amounts from previous financial years in syndicate or aggregate accounts prepared in accordance with these Regulations.

Consequential provisions
     18.  - (1) Regulations 4, 5(2), 6(1)(b), 6(2)(b) and 6(3)(b) of the Insurance Accounts Directive (Miscellaneous Insurance Undertakings) Regulations 1993[7] are revoked.

    (2) In regulations 6(1) and 6(3) of those regulations the following words are deleted - 

"or (as the case may be) a member of the Council".

    (3) In regulation 6(2) of those regulations the following words are deleted - 

"or (as the case may be) a member of the Council of Lloyd's".

Joan Ryan

Nick Ainger
Two of the Lords Commissioner of Her Majesty's Treasury

8th December 2004

(a) in subsection 226(2) for the word "may" substitute "must"; and

(b) at the end of subsection 226(2)(a), "or" is omitted;

     5. Section 231[9] (disclosure required in notes to accounts: related undertakings) is modified so that subsection (7) is omitted.

     6.  - (1) Section 232[10] (disclosure required in notes to accounts: emoluments and other benefits of directors and others) is modified as follows -

(a) For subsection (1) there shall be substituted the following - 

    " (1) The information specified in subsection (2) must be given in notes to the syndicate's annual accounts.";

(b) For subsection (2) substitute the following - 

    " (2) That information is - 


(a) the aggregate amount charged to a syndicate by its managing agent, in respect of emoluments paid to the managing agents' directors, the active underwriter and (where applicable) the run-off manager of the syndicate, in the last financial year;

(b) the specific amount charged to a syndicate by its managing agent in respect of emoluments paid to the syndicate's active underwriter and (where applicable) its run-off manager in the last financial year.";



(c) for subsection (3) substitute the following - 

    " (3) In this section "emoluments" - 


(a) includes salaries, fees and bonuses, sums paid by way of expenses allowance (so far as they are chargeable to United Kingdom income tax) and, subject to paragraph (b), the estimated money value of any other benefits received by him otherwise than in cash; but

(b) does not include any of the following, namely - 


(i) the value of any share options granted or the amount of any gains made on the exercise of any such options;

(ii) any contributions paid, or treated as paid, in respect of him under any pension scheme or any benefits to which he is entitled under any such scheme; or

(iii) any money or other assets paid, received or receivable under any long term incentive scheme."; and



(d) subsection (4) is omitted.

    (2) In this paragraph - 

"active underwriter" means, in relation to a syndicate, the individual at or deemed by the Council to be at, the underwriting box with principal authority to accept risks on behalf of the members of the syndicate;

"run-off manager" means, in relation to a run-off syndicate, the person who has principal authority to negotiate or place contracts of reinsurance or negotiate and settle the payment of claims on contracts of insurance or reinsurance on behalf of the members of a syndicate;

"run-off syndicate" means a syndicate which no longer accepts new or renewal insurance business (other than the variation or extension of risks previously underwritten, or reinsurance to close of an earlier year of account of that syndicate).

     7. Section 233[11] (approval and signing of accounts) is modified as follows - 

(a) for subsection (1) substitute the following - 

    " (1) A syndicate's accounts shall be approved and signed by the syndicate's managing agent and where the managing agent is a body corporate or a partnership the accounts must be signed by a director or partner of the managing agent, authorised to sign on its behalf.";

(b) for subsection (3) substitute the following - 

    " (3) Every copy of the balance sheet which is circulated published, issued or delivered to the Authority must state the name of the person who signed the balance sheet on behalf of the syndicate's managing agent."; and

(c) subsection (5) is omitted.

     8. Section 234[12] (duty to prepare directors' report) is modified as follows - 

(a) in subsection (1), omit paragraph (b);

(b) in subsection (2)omit "the names of the persons who, at any time during the financial year were directors of the company, and";

(c) subsections (5) and (6) are omitted.

     9. Section 234A[13] (approval and signing of directors' report) is modified as follows - 

(a) for subsection (1) substitute the following - 

    " (1) The directors' report shall be approved and signed by the syndicate's managing agent and where the managing agent is a body corporate or a partnership, the report shall be signed by a director or partner of the managing agent, authorised to sign on its behalf.";

(b) for subsection (2) there shall be substituted the following - 

    " (2) Every copy of the report which is circulated, published, issued or delivered to the Authority shall state the name of the person who signed the balance sheet on behalf of the syndicate's managing agent."; and

(c) subsections (3) and (4) are omitted.

     10. Section 235[14] (auditors' report) is modified so that subsection (1) is substituted as follows - 

    " (1) A syndicate's auditors shall make a report to the syndicate's members on all annual accounts of the syndicate of which copies are to be sent to the syndicate members during the auditors' tenure of office.".

     11. Section 236[15] (signature of auditors report) is modified as follows - 

(a) for subsection (2) substitute the following - 

    " (2) Every copy of the auditors' report which is circulated, published, issued or delivered to the Authority shall state the names of the auditors and be signed by them."; and

(b) subsections (3) and (4) are omitted.

     12. Section 240[16] (requirements in connections with publication of accounts) is modified as follows - 

(a) in subsection (5), for "as required to be delivered to the registrar under section 242" substitute "as required to be sent to the Authority under regulation 5(2) of the Insurance Accounts Directive (Lloyd's Syndicate and Aggregate Accounts) Regulations 2004";

(b) subsection (6) is omitted.

     13. Schedule 9A[17] (form and content of accounts of insurance companies and groups) is modified by the insertion of the following paragraph after paragraph 72 - 

     " 72A. A description, which need not include particulars of funds held by members of the syndicate, must be given of funds which members are required to hold at Lloyd's.".

[2] 1972 c. 68.back

[3] 1985 c. 6.back

[4] sections 226, 235, 236 and 240 were amended by and section 226A was inserted by the Companies Act 1985 (International Accounting Standards and Other Accounting Amendments) Regulations 2004 (S.I. 2004/2947)back

[5] 1989 c. 40.back

[6] 2000 c. 8.back

[7] S.I. 1993/3245.back

[8] Section 226 was substituted by S.I. 2004/2947back

[9] Inserted by the Companies Act 1989 and amended by S.I. 1993/1820 and S.I. 1996/189.back

[10] Inserted by the Companies Act 1989 and amended by S.I. 2002/1986back

[11] Inserted by the Companies Act 1989.back

[12] Inserted by the Companies Act 1989 and amended by the Companies (Audit, Investigations and Community Enterprise) Act 2004 (2004 c. ) and S.I. 1996/189.back

[13] Inserted by the Companies Act 1989.back

[14] Inserted by the Companies Act 1989 and amended by S.I. 2002/1986 and S.I. 2004/2947.back

[15] Inserted by the Companies Act 1989 and amended by S.I. 2004/2947.back

[16] Inserted by the Companies Act 1989 and amended by S.I. 1994/1935 and S.I. 2004/2947.back

[17] As substituted by SI 1993/3246 and amended by S.I. 2004/2947.back

  © Crown copyright 2004