Company Registration No. 07857938 (England and Wales)
FIRST UNDERWRITING LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
LB GROUP
Swift House
Ground Floor
18 Hoffmanns Way
Chelmsford
Essex
UK
CM1 1GU
FIRST UNDERWRITING LIMITED
COMPANY INFORMATION
Directors
J D Boast
S Toomey
Mr P Comley
(Appointed 1 April 2023)
M Castellucci
(Appointed 1 April 2023)
Mr J A Costello
(Appointed 1 April 2023)
Company number
07857938
Registered office
Level 15
30 St. Mary Axe
London
EC3A 8BF
Auditor
LB Group Limited (Chelmsford)
Swift House
Ground Floor
18 Hoffmanns Way
Chelmsford
Essex
UK
CM1 1GU
FIRST UNDERWRITING LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4
Directors' responsibilities statement
5
Independent auditor's report
6 - 9
Income statement
10
Statement of financial position
11
Statement of changes in equity
12
Notes to the financial statements
13 - 26
FIRST UNDERWRITING LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 1 -
The directors present the strategic report for the year ended 31 December 2022.
Strategic report for the year ended 31 December 2022
The Directors present their strategic report for First Underwriting Limited (the Company) for the year ended 31 December 2022.
Business Review
The Company’s principal activities as an Underwriting MGA are the provision of insurance products. The company has continued to develop its product offering and has launched a number of new products during the year.
The UK insurance market experienced high competition and regulatory changes, with the wider UK economy experiencing a cost-of-living crisis as a result of elevated inflation and increases in interest rate.
The company has seen good growth in turnover (£2.4m increase from 2021), this has been driven by increased premiums from Home and Motor lines of business as well as the new products that have been introduced during the year.
However, cost of sales have also increased, mostly driven by increased provisions due to increasing loss ratios from prior binder years driven by market conditions.
Admin expenses have also increased mainly in salaries, professional fees and IT expense as the company has invested in developing new products and technological capabilities.
As a result of the above the Company’s operating profit decreased from a profit of £336,451 to a loss of £1,353,541 for the year to 31 December 2022.
Key performance indicators
The results for the year and the financial position of the Company are as shown in the annexed financial statements.
Financial position at the reporting date
The statement of financial position shows that the Company’s net assets at the year-end have decreased from £1,797,970 to £381,540 due to the losses explained above.
Fair review of the business
Future developments
The company expects to continue to be impacted by difficult trading conditions in 2023. Management takes action to mitigate these risks as much as possible by continually reviewing the profitability of the lines of business that it operates in and makes appropriate business decisions.
FIRST UNDERWRITING LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
Principal risks and uncertainties
Management continually monitors the key risks facing the Company together with assessing the controls used for managing these risks. The board of Directors formally reviews and documents the principal risks facing the business at least annually.
The principal risks and uncertainties facing the Company are as follows:
Competitor pressure
The market in which the Company operates is competitive and could result in the loss of sales to competitors. Fortunately, the Company’s business is broadly based with strong client relationships and the Company also manages the risk by providing quality products and excellent customer service.
Economic downturn
As with most businesses there is a risk of an economic downturn adversely affecting performance and profitability but we consider our risk to be small due to its highly specialist nature. Any risks are monitored through our close working relationships with our main partners and associations.
Liquidity risk
The Company's cash requirements are managed centrally at a Group level to maximise liquid resources to meet the operating needs of the business. The Company has no external borrowing. Client money is held with approved banks and cleared funds have to be available before payment is made.
Inflation risk
The Company closely manages costs in relation to the business, inflationary increases are mitigated through ongoing negotiations with vendors. The Company’s income pricing structures are reviewed to ensure they remain aligned to the inflation rate environment, providing further mitigation.
Interest rate risk
The Company operations are subject to the risk of interest rate fluctuations only as it affects interest earning assets.
Regulatory risk
Changes to the regulatory environment or requirements may result in intervention and financial or reputational loss. The company mitigates these risks by ensuring that its governance and culture identify changes or issues at an early stage and allow the implementation of appropriate strategies to ensure compliance. A dedicated Group compliance function maintains open communication channels with the FCA.
Credit risk
All customers who wish to trade on credit terms are subject to credit verification procedures. Debtor balances are monitored on an on-going basis and provision is made for doubtful debts where necessary.
Profit clawback/Contingent income Risk
As well as opportunity for contingent incomes the Company has risk related to clawback of commissions and, therefore, recognition of contingent income. The Company monitors loss ratio performance closely and the Company’s income pricing structures are reviewed to ensure they remain aligned to the inflation rate environment, providing further mitigation. The Company will accrue the appropriate level of contingent income or clawback based on expected loss ratio performance.
FIRST UNDERWRITING LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 3 -
J D Boast
Director
19 October 2023
FIRST UNDERWRITING LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 4 -
The directors present their annual report and financial statements for the year ended 31 December 2022.
Principal activities
The Company's principal activities as an Underwriting MGA are the provision of insurance products.
Results and dividends
The results for the year are set out on page 10.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
W McKernan
(Resigned 1 April 2023)
J Corrigan-Stuart
(Resigned 1 April 2023)
G Mckernan
(Resigned 1 April 2023)
J D Boast
T Donachie
(Resigned 11 September 2023)
S Toomey
A Tailor
(Appointed 8 June 2022 and resigned 31 January 2023)
Mr P Comley
(Appointed 1 April 2023)
M Castellucci
(Appointed 1 April 2023)
Mr J A Costello
(Appointed 1 April 2023)
Auditor
The auditor, LB Group Limited (Chelmsford), is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
J D Boast
Director
19 October 2023
FIRST UNDERWRITING LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 5 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
FIRST UNDERWRITING LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF FIRST UNDERWRITING LIMITED
- 6 -
Opinion
We have audited the financial statements of First Underwriting Limited (the 'company') for the year ended 31 December 2022 which comprise the income statement, the statement of financial position, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 2022 and of its loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
FIRST UNDERWRITING LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF FIRST UNDERWRITING LIMITED
- 7 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit;
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, incorporated the following:
The engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
We identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the insurance sector;
We focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the the regulations set out by the Financial Conduct Authority, Companies Act 2006, taxation legislation, money laundering, and employment legislation;
We assessed the extent of compliance with the laws and regulations identified above through making enquiries of management, reviewing returns submitted to the FCA and inspecting legal correspondence;
Identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit
FIRST UNDERWRITING LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF FIRST UNDERWRITING LIMITED
- 8 -
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
Making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
Considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, our work included:
Performance of analytical procedures to identify any unusual or unexpected relationships;
Testing journal entries to identify unusual transactions.
Investigated the rationale behind significant or unusual transactions;
Assessing judgements and assumptions made in determining the accounting estimate to ensure they were not indicative of potential bias; and
Observation and identification of internal controls in place, specifically around payroll and bank transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
Agreeing financial statement disclosures to underlying supporting evidence;
Enquiring of management as to actual and potential litigation and claims; and
Reviewing correspondence with the Financial Conduct Authority, submitted FCA returns and the company's compliance advisors
Reviewing correspondence with HMRC and reviewing for evidence of correspondence with legal advisors.
Reviewing minutes of those charged with governance
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
FIRST UNDERWRITING LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF FIRST UNDERWRITING LIMITED
- 9 -
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Michael Warman (Senior Statutory Auditor)
For and on behalf of LB Group Limited (Chelmsford)
19 October 2023
Chartered Accountants
Statutory Auditor
Swift House
Ground Floor
18 Hoffmanns Way
Chelmsford
Essex
UK
CM1 1GU
FIRST UNDERWRITING LIMITED
INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 10 -
2022
2021
Notes
£
£
Turnover
3
13,467,224
11,034,381
Cost of sales
(5,821,826)
(3,133,572)
Gross profit
7,645,398
7,900,809
Administrative expenses
(8,998,939)
(7,564,358)
Operating (loss)/profit
5
(1,353,541)
336,451
Interest receivable and similar income
9
14,179
231
Interest payable and similar expenses
10
(2)
(419)
Intercompany loan wavied
(314,833)
(Loss)/profit before taxation
(1,339,364)
21,430
Tax on (loss)/profit
11
(29,089)
Loss for the financial year
(1,339,364)
(7,659)
The income statement has been prepared on the basis that all operations are continuing operations.
FIRST UNDERWRITING LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2022
31 December 2022
- 11 -
2022
2021
Notes
£
£
£
£
Fixed assets
Goodwill
12
135,000
Other intangible assets
12
459,891
805,968
Total intangible assets
459,891
940,968
Tangible assets
13
8,508
7,058
468,399
948,026
Current assets
Debtors falling due after more than one year
14
624,382
100,000
Debtors falling due within one year
14
12,941,772
9,306,030
Cash at bank and in hand
16,749,162
16,275,580
30,315,316
25,681,610
Creditors: amounts falling due within one year
15
(24,949,884)
(21,806,590)
Net current assets
5,365,432
3,875,020
Total assets less current liabilities
5,833,831
4,823,046
Provisions for liabilities
Provisions
18
5,375,225
3,025,076
(5,375,225)
(3,025,076)
Net assets
458,606
1,797,970
Capital and reserves
Called up share capital
20
1,176
1,176
Share premium account
1,863,891
1,863,891
Capital redemption reserve
7
7
Profit and loss reserves
(1,406,468)
(67,104)
Total equity
458,606
1,797,970
The financial statements were approved by the board of directors and authorised for issue on 19 October 2023 and are signed on its behalf by:
J D Boast
Director
Company Registration No. 07857938
FIRST UNDERWRITING LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
- 12 -
Share capital
Share premium account
Capital redemption reserve
Profit and loss reserves
Total
£
£
£
£
£
Balance at 1 January 2021
1,176
1,863,891
7
(59,445)
1,805,629
Year ended 31 December 2021:
Loss and total comprehensive income for the year
-
-
-
(7,659)
(7,659)
Balance at 31 December 2021
1,176
1,863,891
7
(67,104)
1,797,970
Year ended 31 December 2022:
Loss and total comprehensive income for the year
-
-
-
(1,339,364)
(1,339,364)
Balance at 31 December 2022
1,176
1,863,891
7
(1,406,468)
458,606
FIRST UNDERWRITING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 13 -
1
Accounting policies
Company information
First Underwriting Limited is a private company limited by shares incorporated in England and Wales. The registered office is Level 15, 30 St. Mary Axe, London, EC3A 8BF.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and comprehensive income of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
- Section 7 'Statement of Cash Flows': Presentation of a statement of cash flow and related notes and disclosures.
- Section 33 'Related Party Disclosures': Compensation for key management personnel.
The company is a wholly-owned subsidiary of Riser Holdings LP, a company registered in Delaware, USA, and is included in the consolidated financial statements of this company, which are publicly available. Consequently, the company has taken advantage of the exemption from preparing consolidated financial statements under the terms of section 401 of the Companies Act 2006. The accounts for Riser Holdings LP are available at; 520 Madison Avenue, New York, NY 10019.
As a wholly-owned subsidiary of Riser Holdings LP, and a qualifying entity, the Company has taken advantage of the exemption offered by FRS 102 "Related Party Disclosures" not to disclose transactions with wholly owned subsidiary undertakings.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
The wider group has agreed to provide the necessary financial support for a suitable period enabling the directors to continue to adopt the going concern assumption.
1.3
Turnover
Turnover represents underwriting commissions and fees received and receivable and are accounted for once the contractual right to the income is confirmed. Turnover is subject to a deferral in respect of policy administration services required to be undertaken in accordance with the contract.
Income received from bank interest is shown separately from turnover
FIRST UNDERWRITING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 14 -
1.4
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of the book of business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 5 years.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
1.5
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Software
3 & 5 years straight line
1.6
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Equipment
3 years straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.7
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
1.8
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
FIRST UNDERWRITING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 15 -
1.9
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
FIRST UNDERWRITING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 16 -
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.10
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.11
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
FIRST UNDERWRITING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 17 -
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.12
Provisions
Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
1.13
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.15
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.16
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
1.17
Insurance premium debtors and creditors
The company acts as an agent in underwriting insurance policies of its clients and generally is not liable as a principal for premiums due to insurers or for claims payable to clients. Premium debts are not recognised in relation to the insurance business where both the premiums due to and due from the entity are outstanding.
FIRST UNDERWRITING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 18 -
1.18
Accrued income representing commission earned on underwriting activities is included in the balance sheet as an amount due in less than a year.
1.19
Where income relates to periods after the year end, the portion relating to future periods is deferred in the financial statements and recognised in the respective year.
1.20
Non statutory trust accounts
Cash for settlement for insurance transactions is held in Non statutory trust (NST) accounts operated in accordance with FCA regulations. The cash balances are recognised as assets of the company with the corresponding liabilities recognised within the creditors.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The key judgements and sources of estimation uncertainty that have significant effect on the amounts recognised in the financial statements are described below:
Capitalisation of research and development
The company capitalises a proportion of the research and development annual expense. This is based on management's judgement that these relate to expenses incurred to produce or substantiality improves products and systems, rather than pure and applied research costs.
Impairment of intangible assets
The company tests annually whether intangible assets have suffered any impairment in accordance with the accounting policy stated. The recoverable amounts have been determined based on value in use calculations.
FIRST UNDERWRITING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
2
Judgements and key sources of estimation uncertainty
(Continued)
- 19 -
Impairment of group loans
The Company makes an estimate of the recoverable value of the group loans. When assessing the impairment of the group loans management considers whether there is objective evidence of impairment including:
economic or legal reasons to the debtors financial difficult; and
observable data including that there has been a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets.
Deferred Income
The company defers a proportion of the commission income earned against any costs of administering those policies. Deferment is over a 15 month period from the effective start date of policy. This is based on the assumption that policies are 12 months in length but any claims in process can have a 3 month run off. The deferral rate used for each binder is based upon an estimate of the claims costs in proportion to the costs of administering policies.
Provisions
The company includes a provision for the clawback of commission if it is deemed probable a particular binder's loss ratio will exceed that stated in the business producer agreement. A reliable estimate can be calculated in accordance with the terms of that agreement.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2022
2021
£
£
Turnover analysed by class of business
Insurance Underwriting
13,467,224
11,034,381
2022
2021
£
£
Other revenue
Interest income
14,179
231
4
Exceptional items
Intercompany Waiver
During the prior year the company agreed to the waiver of amounts due from a fellow subsidiary company of £314,833 . The amount is deemed material to the extent that it is disclosed separately on the face of the profit and loss account.
FIRST UNDERWRITING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 20 -
5
Operating (loss)/profit
2022
2021
Operating (loss)/profit for the year is stated after charging:
£
£
Exchange losses
885
879
Depreciation of owned tangible fixed assets
4,835
14,757
Amortisation of intangible assets
377,335
476,368
Operating lease charges
431,488
348,041
6
Auditor's remuneration
2022
2021
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
37,500
30,000
For other services
All other non-audit services
3,750
3,500
7
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Directors
2
2
Underwriting staff
48
45
Total
50
47
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
4,245,963
3,537,448
Social security costs
498,605
367,623
Pension costs
17,955
12,809
4,762,523
3,917,880
FIRST UNDERWRITING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 21 -
8
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
587,404
231,640
Company pension contributions to defined contribution schemes
17,955
12,809
605,359
244,449
Remuneration disclosed above include the following amounts paid to the highest paid director:
2022
2021
£
£
Remuneration for qualifying services
546,246
192,590
Company pension contributions to defined contribution schemes
9,097
8,515
9
Interest receivable and similar income
2022
2021
£
£
Interest income
Interest on bank deposits
14,179
231
10
Interest payable and similar expenses
2022
2021
£
£
Interest on bank overdrafts and loans
2
419
11
Taxation
2022
2021
£
£
Deferred tax
Origination and reversal of timing differences
29,089
FIRST UNDERWRITING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
11
Taxation
(Continued)
- 22 -
The actual charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:
2022
2021
£
£
(Loss)/profit before taxation
(1,339,364)
21,430
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
(254,479)
4,072
Tax effect of expenses that are not deductible in determining taxable profit
6,036
11,399
Unutilised tax losses carried forward
39,246
Other permanent differences
(320)
(15,471)
Deferred tax adjustments in respect of prior years
47,454
29,089
Group relief surrendered
328,342
Hybrid and other mismatches adjustment
(166,279)
Taxation charge for the year
-
29,089
12
Intangible fixed assets
Goodwill
Software
Total
£
£
£
Cost
At 1 January 2022
300,000
1,767,699
2,067,699
Additions
31,258
31,258
Transfers
(300,000)
(300,000)
At 31 December 2022
1,798,957
1,798,957
Amortisation and impairment
At 1 January 2022
165,000
961,731
1,126,731
Amortisation charged for the year
377,335
377,335
Transfers
(165,000)
(165,000)
At 31 December 2022
1,339,066
1,339,066
Carrying amount
At 31 December 2022
459,891
459,891
At 31 December 2021
135,000
805,968
940,968
During the period, the carrying value of the goodwill was transferred to a related group entity at book value.
FIRST UNDERWRITING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 23 -
13
Tangible fixed assets
Equipment
£
Cost
At 1 January 2022
67,569
Additions
8,012
Disposals
(1,727)
At 31 December 2022
73,854
Depreciation and impairment
At 1 January 2022
60,511
Depreciation charged in the year
4,835
At 31 December 2022
65,346
Carrying amount
At 31 December 2022
8,508
At 31 December 2021
7,058
14
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
2,915,416
3,606,603
Other debtors
9,328,263
5,378,666
Prepayments and accrued income
698,093
320,761
12,941,772
9,306,030
2022
2021
Amounts falling due after more than one year:
£
£
Prepayments and accrued income
624,382
100,000
Total debtors
13,566,154
9,406,030
FIRST UNDERWRITING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 24 -
15
Creditors: amounts falling due within one year
2022
2021
£
£
Trade creditors
71,758
79,918
Taxation and social security
126,489
101,408
Other creditors
23,368,494
20,608,848
Accruals and deferred income
1,383,143
1,016,416
24,949,884
21,806,590
16
Financial instruments
2022
2021
£
£
Carrying amount of financial assets
Debt instruments measured at amortised cost
12,243,679
8,985,269
Carrying amount of financial liabilities
Measured at amortised cost
24,823,395
21,705,182
17
Cash at bank
Cash for settlement of insurance transactions is held in Non Statutory Trust accounts, operated in accordance with FCA regulations. The cash balances are recognised as assets of the company with the corresponding insurance liabilities recognised in creditors.
The amounts recognised in cash at bank in respect of the non statutory trust accounts total £16,749,420 (2021: £15,873,293).
18
Provisions for liabilities
2022
2021
£
£
Commission Clawback
5,375,225
3,025,076
Movements on provisions:
Commission Clawback
£
At 1 January 2022
3,025,076
Additional provisions in the year
2,350,149
At 31 December 2022
5,375,225
FIRST UNDERWRITING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 25 -
19
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
17,955
12,809
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
20
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
1,162
1,162
1,162
1,162
Ordinary B shares of £1 each
1
1
1
1
Ordinary C shares of £1 each
1
1
1
1
Ordinary D shares of £1 each
1
1
1
1
Ordinary E shares of £1 each
8
8
8
8
Ordinary F shares of £1 each
1
1
1
1
Ordinary G shares of £1 each
1
1
1
1
Ordinary H shares of £1 each
1
1
1
1
1,176
1,176
1,176
1,176
21
Financial commitments, guarantees and contingent liabilities
Following the year end the company made a voluntary disclosure to HMRC in respect of the application of the Hybrids and Other Mismatches legislation. The disclosure has led to a payment on account by the immediate parent against historical tax liabilities already recorded in these financial statements. With the matter ongoing there is the potential for further liabilities to arise which are not recorded in these financial statements. As at the date of sign off of these financial statements further liabilities are contingent upon HMRC’s assessment of the disclosures made.
22
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2022
2021
£
£
Within one year
26,084
23,552
Between two and five years
21,600
1,963
47,684
25,515
FIRST UNDERWRITING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 26 -
23
Related party transactions
The company has taken advantage of the exemption in FRS 102 from the requirement to disclose transactions with group companies that are wholly owned.
24
Ultimate controlling party
At the reporting date control of the company is held by Kingfisher UK Holdings Limited, a company registered in England & Wales.
At the reporting date the Company's ultimate parent undertaking is Carlyle Partners VIII Holdings III, L.P. (Delaware Partnership).
The financial statements of the company are consolidated in the financial statements of Riser Holdings L.P. These consolidated accounts are available from its register office.
At the reporting date the largest group of undertakings for which group financial statements are drawn up is Carlyle Partners VIII Holdings III, L.P. (Delaware Partnership), and the smallest is Riser Holdings L.P.
2022-12-312022-01-01falseCCH SoftwareCCH Accounts Production 2023.300W McKernanJ Corrigan-StuartG MckernanJ D BoastT DonachieS ToomeyA TailorMr P ComleyM CastellucciMr J A Costellofalse078579382022-01-012022-12-3107857938bus:Director42022-01-012022-12-3107857938bus:Director62022-01-012022-12-3107857938bus:Director82022-01-012022-12-3107857938bus:Director92022-01-012022-12-3107857938bus:Director102022-01-012022-12-3107857938bus:Director12022-01-012022-12-3107857938bus:Director22022-01-012022-12-3107857938bus:Director32022-01-012022-12-3107857938bus:Director52022-01-012022-12-3107857938bus:Director72022-01-012022-12-3107857938bus:RegisteredOffice2022-01-012022-12-31078579382022-12-31078579382021-01-012021-12-3107857938core:RetainedEarningsAccumulatedLosses2021-01-012021-12-3107857938core:RetainedEarningsAccumulatedLosses2022-01-012022-12-3107857938core:Goodwill2022-12-3107857938core:Goodwill2021-12-3107857938core:OtherResidualIntangibleAssets2022-12-3107857938core:OtherResidualIntangibleAssets2021-12-31078579382021-12-3107857938core:ComputerSoftware2022-12-3107857938core:ComputerSoftware2021-12-3107857938core:ComputerEquipment2022-12-3107857938core:ComputerEquipment2021-12-3107857938core:Non-currentFinancialInstrumentscore:AfterOneYear2022-12-3107857938core:Non-currentFinancialInstrumentscore:AfterOneYear2021-12-3107857938core:CurrentFinancialInstruments2022-12-3107857938core:CurrentFinancialInstruments2021-12-3107857938core:CurrentFinancialInstrumentscore:WithinOneYear2022-12-3107857938core:CurrentFinancialInstrumentscore:WithinOneYear2021-12-3107857938core:ShareCapital2022-12-3107857938core:ShareCapital2021-12-3107857938core:SharePremium2022-12-3107857938core:SharePremium2021-12-3107857938core:CapitalRedemptionReserve2022-12-3107857938core:CapitalRedemptionReserve2021-12-3107857938core:RetainedEarningsAccumulatedLosses2022-12-3107857938core:RetainedEarningsAccumulatedLosses2021-12-3107857938core:ShareCapital2020-12-3107857938core:SharePremium2020-12-3107857938core:CapitalRedemptionReserve2020-12-3107857938core:RetainedEarningsAccumulatedLosses2020-12-31078579382020-12-3107857938core:ShareCapitalOrdinaryShares2022-12-3107857938core:ShareCapitalOrdinaryShares2021-12-3107857938core:Goodwill2022-01-012022-12-3107857938core:IntangibleAssetsOtherThanGoodwill2022-01-012022-12-3107857938core:ComputerSoftware2022-01-012022-12-3107857938core:ComputerEquipment2022-01-012022-12-3107857938core:UKTax2022-01-012022-12-3107857938core:UKTax2021-01-012021-12-310785793812022-01-012022-12-310785793812021-01-012021-12-310785793822022-01-012022-12-310785793822021-01-012021-12-310785793832022-01-012022-12-310785793832021-01-012021-12-3107857938core:Goodwill2021-12-3107857938core:ComputerSoftware2021-12-31078579382021-12-3107857938core:Goodwillcore:ExternallyAcquiredIntangibleAssets2022-01-012022-12-3107857938core:ComputerSoftwarecore:ExternallyAcquiredIntangibleAssets2022-01-012022-12-3107857938core:ExternallyAcquiredIntangibleAssets2022-01-012022-12-3107857938core:ComputerEquipment2021-12-3107857938core:Non-currentFinancialInstruments2022-12-3107857938core:WithinOneYear2022-12-3107857938core:WithinOneYear2021-12-3107857938core:BetweenTwoFiveYears2022-12-3107857938core:BetweenTwoFiveYears2021-12-3107857938bus:PrivateLimitedCompanyLtd2022-01-012022-12-3107857938bus:FRS1022022-01-012022-12-3107857938bus:Audited2022-01-012022-12-3107857938bus:FullAccounts2022-01-012022-12-31xbrli:purexbrli:sharesiso4217:GBP