The directors present their annual report and financial statements for the year ended 31 December 2023.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The result for the period, after taxation, amounted to a loss of £19,295 (2022: profit £793). The directors do not propose any dividend for the period.
The company has various financial assets and liabilities, such as trade receivables and trade payables, arising directly from its operations. These assets and operating cash arising are actively managed to avoid unnecessary currency exposure. The company has not undertaken hedging activity but may do so if such arrangements appear to be a suitable solution to minimising any currency exposures, especially for earnings in currencies other than sterling.
The company manages its own cash and borrowings to maximise interest income and minimise interest expense, whilst ensuring that sufficient liquid resources are available to meet operating needs. The company does not hold client money while insurers’ funds are held with approved banks in currencies appropriate to the settlement requirements of the business.
The company could become exposed to interest rate risk on bank deposits if interest rates recover.
The company’s principal foreign currency exposure risk potential could arise from income earned on trading operations with customers and suppliers in non sterling currency. Current and anticipated insurance business is predominantly denominated in sterling.
The company acts as an agent for insurers; while suitable vetting arrangements are operated to verify the credit worthiness of insurance brokers from whom business predominantly comes, the risk of non-payment rests largely with others. Investment of cash surpluses are made with banks which are considered by the Board to have adequate credit ratings to achieve the prudential standards applicable in our business.
LB Group Limited (Chelmsford) were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.
Basis for 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.
Other information
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 directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the directors’ report have been prepared in accordance with applicable legal requirements.
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.
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, was as follows:
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 from our commercial knowledge and experience of the insurance industry;
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 Companies Act 2006, FCA compliance and taxation legislation;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management, reviewing correspondence with the FCA and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
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.
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, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and
investigated the rationale behind significant or unusual transactions; and
observed and identified internal controls in place.
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 documentation;
enquiring of management as to actual and potential litigation and claims; and
reviewing correspondence with laws and regulations.
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 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.
Use of our report
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.
Resolution Underwriting Partnership Limited is a private company limited by shares incorporated in England and Wales. The registered office is 1 Vicarage Lane, Stratford, London, England, E15 4HF.
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 Company is a managing general agent (“MGA”) underwriting insurance on behalf of major insurance companies and Lloyd’s syndicates (“Carriers”). The business of insurance underwriting is conducted through Appointed Representatives (“AR(s)”) of the Company, for which it acts as the regulated entity.
The Company is a wholly owned subsidiary of Resolution Underwriting Holdings Limited (“RUHL”).
As a regulated entity, the Company is required to report its regulatory capital surplus or deficit to the UK Financial Conduct Authority (“FCA”) quarterly to confirm the solvency position of the Company. The Company has a capital surplus at the year-end and this position is monitored regularly through the review of monthly management accounts and the assessment of future profit and loss, and cash flow forecasts.
The directors have considered the outlook for the Company, which they consider to be positive and the budgets prepared for the periods to 31 December 2025 have been prepared on a prudent basis and indicate that no further funding will be required by other group entities from RUPL.
Based on the budgets, the Directors have considered the outlook for the Company and believe that the Company will be profitable during these periods. Accordingly, the financial statements of the Company as at 31 December 2023 have been prepared on a going concern basis. Additionally, the Company has received confirmation from its parent company RUHL that it will continue to support the Company’s operations for the foreseeable future.
The directors are confident about the Company's prospects but, notwithstanding the prudent forecasts, they recognise that the success or otherwise of it being able to meet its forecasts is inevitably uncertain.
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.
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.
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.
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.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
Insurance assets and liabilities
In accordance with the Statement of Accounting Principles, the company recognises insurance debtors and fiduciary cash balances only to the extent that the company has a material economic interest in those balances. Accordingly, where insurance debtors and fiduciary cash are not recognised in the company's balance sheet, insurance creditors relating to those insurance debtors and fiduciary cash are also not included in the company's balance sheet. The net amount that will be receivable by the company from the fiduciary accounts, representing only that element of the insurance debtors and fiduciary cash that is commissions, fees or interest due to the company, is shown under debtors.
Taxation
Current tax, including UK corporation tax, is provided at amounts expected to be paid or recovered using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. |
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.
There were no critical accounting judgements that would have a significant effect on the amounts recognised in the Company's financial statements or key sources of estimation uncertainty at the balance sheet date that would have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year other than those discussed below:
Provision for commission adjustment
Dependent on loss ratios, commission earned from a capacity provider during 2023 may have to be refunded. Until such time as the loss ratios can be ascertained with reasonable certainty the full amount of this potential refund has been provided for. The directors use their experience in arriving at the best estimate in such matters.
The company would pass the obligation to refund this commission to its Appointed Representative.
The average monthly number of persons (including directors) employed by the company during the year was:
There is uncertainty surrounding the future profitability and cash flow generation of the Company’s fellow group company, Trinity General Agency LLC (TGALLC), which writes motor insurance business in Texas USA. As such the Director’s have decided to make a provision of £23,419 against its outstanding loans with TGALLC as at 31 December 2023.
The company owns 10,000 shares at a par value of £0.000001 in Holdsure Limited, representing 100% of the share capital.
In addition to the bank balance shown on the balance sheet there is a balance of £222,196 (2022: £500,147) held in a separate bank account maintained for insurer monies. This balance is considered to be monies where the benefit does not belong to the company and is therefore excluded from the balance sheet.
Loans due within one year includes bank loans of £10,013 (2022: £9,768) from the government business bounce back loan scheme.
Amounts owed to group undertakings are unsecured, have no fixed date of repayment and are repayable on demand.
As at 31 December 2023, subordinated loans of £748,373 (2022: £748,373) were due to the parent company, Resolution Underwriting Holdings Limited.
These amounts can only be repaid dependent upon the regulatory solvency position of the company. Of this, £440,000 (2022: £440,000) could be payable within one year if the company's solvency position permitted.
Loans due after one year includes bank loans of £19,908 (2022: £29,921) from the government business bounce back loan scheme.
Mr C G Harman and Mr R C Hayes are also directors in Falcon MGA Services Limited, an Appointed Representative of the company and a subsidiary of the parent company, Resolution Underwriting Holdings Limited. During the year, the Company incurred commission of £201,083 (2022: £86,286) relating to this agreement. As at 31 December 2023, the Company owed £98,376 (2022: £25,748) to Falcon MGA Services Limited in respect of this agreement. In addition, a trade debt of £111,479 (2022: £28,609) is due from Falcon MGA Services on 31 December 2023.
Mr C G Harman is also a director in Milestone Risk Solutions Limited, formerly Trilogy Managing General Agents Limited, an Authorised Representative of the Company and who were a subsidiary of the parent company Resolution Underwriting Holdings Limited up until 15 June 2023. During the year, the Company incurred commission of £Nil (2022: £168,754) relating to this agreement. As at 31 December 2023 the Company owed £Nil (2022: £249,475) to Milestone Risk Solutions Limited in respect of this agreement.
Mr R C Hayes is also a director of Anansi Technology Limited an Authorised Representative of the Company. During the year the Company earned commission from the agreement of £25,000 (2022: £25,000). As at 31 December 2023 the Company owed £1,654 (2022: £1,654) in respect of this agreement.
Mr C G Harman, Mr N H Topche and Mr R C Hayes are also directors in Resolution Group Services Limited and Trinity General Agency Holdings Inc, both of which are fellow subsidiaries of the parent company, Resolution Underwriting Holdings Limited.
As at 31 December 2023, the Company was owed £176,837 (2022: £338,587) by Resolution Group Services Limited and £23,419 (2022: £7,700) by Trinity General Agency Holdings Inc. As a result of the recent trading performance of Trinity General Agency LLC and the potential restructuring of that entity the £23,419 loan has been fully impaired as disclosed in note 5 (2022: nil impairment).
Mr C G Harman, Mr N H Topche and Mr R C Hayes are also directors in Trilogy Underwriting Limited which was a fellow subsidiary of the parent company, Resolution Underwriting Holdings Limited, on 31 December 2023.
As at 31 December 2023, the Company was owed £531,074 (2022: £391,525) by Trilogy Underwriting Limited.
Interest was not charged on these loans.