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HMRC internal manual

Lloyd's Manual

HM Revenue & Customs
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Corporate members: accounts: the technical account

The technical account shows the sum of all of the syndicate participations of the corporate member, including underwriting income, syndicate level investment return, and syndicate expenses. It includes the member’s share of the income and other items, for each syndicate in which it participated for the period covered by the accounts, including open and run-off years. The results of individual syndicates are not shown, only a total figure for all participations.


An example of a technical account is shown below. The format of the accounts varies slightly between companies, but they all have the same general features.

Technical Account - year ended 31 December 2006    
  2006 2005
  £’000 £’000
Gross premiums written 55,729 44,268
Reinsurance to close received from earlier years 12,927 15,439
  68,656 59,707
Outward reinsurance premiums (21,170) (14,824)
Reinsurance to close paid to subsequent years (11,059) (13,395)
Earned premiums, net of reinsurance 36,427 31,488
Investment income – syndicate participations 3,222 2,839
Claims paid:    
Gross amount (32,223) (27,726)
Reinsurer’s share 12,218 8,764
Net claims paid (20,005) (18,962)
Change in the provision for claims    
Gross amount (22,369) (2,182)
Reinsurer’s share 20,332 512
  (2,038) (1,670)
Claims incurred, net of reinsurance (22,043) (20,632)
Operating expenses:    
Administrative expenses (2,390) (1,834)
Exchange adjustment (201) 534
Acquisition costs (6,528) (6,440)
Personal expenses (2,908) (2,867)
Provision for losses foreseen on open years (1,444) (163)
Technical account balance 4,135 2,925

Years included in technical account

In the above example, the corporate member writes on Syndicates 1, 2 and 3 for the calendar year 2004. In 2005 it also underwrites on Syndicate 4, and in 2006, it also underwrites on Syndicate 5. These accounts will include its share of the syndicate profits, syndicate level investment income, and syndicate expenses from syndicates 1-5.

The technical account will include:

2004 Syndicates 1, 2 & 3 Share of Year 3 result
2005 Syndicates 1, 2, 3 & 4 Share of Year 2 result
2006 Syndicates 1, 2, 3, 4 & 5 Share of Year 1 result

The figure of £55,729,000 shown in the technical account above includes the member’s share of premiums written by all of these syndicates in the above years, and all the other figures shown will include the member’s share of that item of income or expenditure for all of the above years. In practice, relatively few corporate members now underwrite on a wide spread of syndicates as in this example.

Difference between accounts profits and taxable profits

In the above example, the corporate member makes up accounts for the year ended 31 December 2006. These accounts include results from 2004, 2005 and 2006 syndicates.

Corporate members are assessed on a declaration basis (see LLM4060), which means that the corporate member is assessed on the profits or losses which were declared by syndicates in that year. The use of the declaration basis means that the taxable profits will be based mainly on the 2003 accounts. Some figures from run-off accounts may also be included.