Fairmead Insurance Limited: SFCR Compendium 2016

2016

Baseline year

The inaugural SFCR, filed as Legal & General Insurance Limited, the General Insurance division of Legal & General Group. A 1.3-million-customer household insurer (c. GBP 300m GWP) running a PRA-approved solo internal model: operating profit GBP 37m, own funds GBP 253m, SCR GBP 162m, stated ratio 156%.

The 2016 baseline reads like a scale model of the L&G group itself: a divisional description (“the General Insurance business division of the wider Legal and General Group Plc”, group AUM “£894bn (c.$1.1tn)”) [SFCR p.4]*, a mass-market product set led by household insurance “(c. £300m of gross written premium)” for “around 1.3 million UK customers” [SFCR p.4]*, and a capital chapter built on the group's internal-model machinery: “the Company’s SCR is based on a full ‘solo model’ for which the Company’s Board formally requested and received approval as part of the Group’s IMAP submission”, with “no capital add-ons applied by the PRA” [SFCR p.8]*. The headline metrics that anchor the decade: “Solvency II surplus of £91m” and “Solvency II coverage ratio of 156%”, stated identically on shareholder and regulatory bases [SFCR p.5]*, an SCR of “£162m” [SFCR p.8]*, and insurance risk at 81% of the requirement, the weather-dominated profile that 2018 would test. (No Summary connects the 2018 weather losses to the sale that followed in 2019; the link is this tracker’s reading of the series, not a statement of the reports.)

Introduction (SFCR pp. 4)

New: “This Solvency and Financial Condition Report (SFCR) is a regulatory document required under Solvency II … This is the first annual report since the Solvency II regime took effect, and as such no comparative figures are provided relating to the position during the previous Solvency regime.” [SFCR p.4]* standard text.

Business & Performance (SFCR pp. 4-5)

New: Identity and scale, the GI division of Legal & General Group (“one of the world’s largest insurance and investment management Groups”, AUM GBP 894bn); household “(c. £300m of gross written premium)”, short-term income protection c. GBP 20m, pet c. GBP 9m; “the seventh largest UK home insurer, with 5% market share” [SFCR p.4]*.

New: Performance measures: “IFRS Operating profit £37m”, “IFRS Profit before tax £52m”, “IFRS Profit for the period £42m” (footnoted “After tax.”), “Solvency II surplus of £91m” and “Solvency II coverage ratio of 156%”, the Solvency II measures stated on both shareholder and regulatory bases [SFCR p.5]* (standard text context).

System of Governance (SFCR pp. 5-6)

New: The risk-framework catalogue, three lines of defence, risk appetite cascaded through a ‘CEO Risk and Capital Mandate’, risk policies, identification and assessment, scenario planning, ORSA, risk MI, CRO oversight and the committee structure [SFCR p.5-6]* (standard text, standard text baseline).

Risk Profile (SFCR pp. 7)

New: The four-bullet material-risk list, weather-related catastrophe, insurance, investment and operational risks [SFCR p.7]* (standard text baseline).

New: Internal-model calibration: “sufficient capital to survive our assessment of a 1-in-200 year event, equivalent to a 99.5% value at risk confidence level over one year”; SCR mix led by insurance risk at 81%, on a five-category chart that also carries miscellaneous risk at 4% [SFCR p.7]*; the 2017 Summary later restates 2016 as 84% on four categories [Note 1] (standard text baseline).

Valuation (SFCR pp. 7)

New: Capital resources managed on a Solvency II basis from 1 January 2016, “as adopted by the Prudential Regulation Authority (PRA) at the balance sheet date” [SFCR p.7]*.

Capital Management (SFCR pp. 8)

New: The Summary capital table, own funds “253”, SCR “162”, surplus “91”, ratio “156%”; the buffer sentence (“able to more than meet our insurance obligations after a 1-in-200 year event”) that recurs through 2023 [SFCR p.8]* standard text.

New: Internal-model basis, solo model approval via the Group IMAP; “no capital add-ons applied by the PRA” [SFCR p.8]* (standard text baseline).

Headline metrics

SCR coverage (stated)156%first year of SII reporting

EOF / SCR / SurplusGBP 253.3m / 162.3m / 91.0mno comparatives

IFRS operating profit / PBT / profit for the periodGBP 37m / GBP 52m / GBP 42mno comparatives

SCR basisPRA-approved Internal Model (solo model within the Group partial internal model)no capital add-ons

New (4)

First SFCR under Solvency II: 'no comparative figures are provided relating to the position during the previous Solvency regime'.

Entity framing: the General Insurance business division of Legal & General Group Plc (Group AUM GBP 894bn; division 3% of Group operating profit).

Business profile: c. 1.3 million UK customers; household c. GBP 300m GWP, short-term income protection c. GBP 20m, pet c. GBP 9m; seventh largest UK home insurer with 5% share.

Internal model narrative: solo model approved through the Group's IMAP application; SCR by risk category led by insurance risk (81%); 1-in-200 year calibration.

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2017

Delta from 2016

⭳ SFCR PDF

A softer year within the L&G fold: operating profit falls from GBP 37m to GBP 7m on escape-of-water claims inflation and project spend, own funds drop GBP 34m to GBP 219m after the first dividend of the window, and the stated ratio edges down to 151%. The Summary gains its KPI table, MCR disclosure and the Tier 1/Tier 3 split.

2017 turns the inaugural report into a series. The Summary acquires the machinery of comparison, a KPI table showing operating profit of “7” against “37”, own funds “219” against “253” and the ratio “151%” against “156%” [SFCR p.5]*, plus a first 'Analysis of change in own funds' and, at the capital end, the first MCR disclosure and tiering split, with the deferred tax asset “categorised as Tier 3 Own Funds” [SFCR p.8]*. The story it tells is of margin pressure rather than shock: profits fell on “higher market-wide claims experience; mainly for escape of water … driven by higher claims inflation impacting repair and replacement costs”, lower reserve releases and project spend on the customer proposition [SFCR p.5]*, while own funds absorbed “a dividend payment to the Group in respect of the 2016 performance” [SFCR p.5]*, the only shareholder distribution disclosed in the L&G years. The internal-model narrative is unchanged: SCR “£145m”, “determined using the PRA-approved Internal Model, with no capital add-ons” [SFCR p.8]*.

Introduction (SFCR pp. 4)

Changed: The first-report caveat is dropped; values “as at 31 December 2017” standard text [SFCR p.4].

Business & Performance (SFCR pp. 4-5)

New: KPI table with comparatives, operating profit, own funds, regulatory surplus and coverage ratio (“151% 156%”) [SFCR p.5]*.

Changed: GWP by line restated: household “c. £338m of gross written premium (GWP)”, short-term income protection “c. £17m GWP” and pet insurance “c. £15m GWP” (2016: c. GBP 300m, c. GBP 20m and c. GBP 9m) [SFCR p.4]*.

Changed: “Operating profits reduced compared to prior year due to a number of items: a) higher market-wide claims experience; mainly for escape of water … b) lower reserve releases … c) a higher level of project costs” [SFCR p.5]*.

New: “ANALYSIS OF CHANGE IN OWN FUNDS”, own funds “decreased by £34m to £219m (2016: £253m) … mainly as a result of lower retained profits (net of a dividend payment to the Group in respect of the 2016 performance)” [SFCR p.5]*.

System of Governance (SFCR pp. 5-6)

Changed: Governance opens with Board accountability for “the long-term success of the Company” within the Group framework; the risk-committee detail of 2016 is condensed standard text [SFCR p.5-6]*.

Risk Profile (SFCR pp. 6-7)

Note: Four material-risk bullets and the 1-in-200 year calibration sentence carried over standard text standard text [SFCR p.6]; the SCR chart on the following page shows insurance risk at 78% of the requirement, restating 2016 as 84% against the 81% shown in the 2016 SFCR’s own five-category chart [Note 1] [SFCR p.7].

New: Stress-test paragraph, the Company “would be able to withstand moderate to severe stress scenarios, before any management actions” [SFCR p.7]*.

Valuation (SFCR pp. 7)

New: The arm's-length valuation principle enters the Summary: “the amount for which they could be exchanged, transferred or settled by knowledgeable and willing third parties in an arm’s length transaction” [SFCR p.7]* standard text; excess of assets over liabilities “£219m (2016: £253m) … £48m lower than the value under IFRS” [SFCR p.7]*.

Capital Management (SFCR pp. 7-8)

New: Capital table adds Tier 1 / Tier 3 own funds, the MCR (“40”) and MCR coverage (“5.43”); the deferred tax asset is “categorised as Tier 3 Own Funds” [SFCR p.8]* standard text.

Changed: Surplus “£74m of surplus own funds above the SCR requirement, representing a regulatory capital coverage ratio of 151%”; SCR “£145m at 31 December 2017” on the internal model [SFCR p.7-8]*. [QRT verified: EOF, SCR and ratio match]

Headline metrics

SCR coverage (stated)151%2016: 156%

EOF / SCR / SurplusGBP 219.1m / 145.5m / 73.7m2016: 253.3m / 162.3m / 91.0m

IFRS operating profitGBP 7m2016: GBP 37m

DividendPaid in respect of 2016 performance (amount not stated in Summary)2016: none stated

New (4)

Tabular KPI presentation (operating profit, own funds, surplus, ratio) with prior-year comparatives.

'Analysis of change in own funds' section.

MCR disclosure in the Summary capital table (MCR GBP 40m; MCR ratio 5.43x) and the Tier 1 / Tier 3 (deferred tax asset) split.

Stress-test comfort paragraph: the Company 'would be able to withstand moderate to severe stress scenarios'.

Changed (3)

Operating profit down GBP 30m to GBP 7m, higher market-wide escape-of-water claims inflation, lower reserve releases and higher project costs.

Own funds down GBP 34m to GBP 219m, 'mainly as a result of lower retained profits (net of a dividend payment to the Group in respect of the 2016 performance)'.

Group AUM updated to GBP 983bn; General Insurance division now 2% of Group operating profit (2016: 3%); Savings division noted as 'being sold to Swiss Re'.

Dropped (1)

The 'first annual report since the Solvency II regime took effect' framing and the no-comparatives caveat.

Notes this year (1)

Note 1 · The 2017 Summary restates the 2016 SCR risk mix on four categories (insurance risk 84%, market 12%, operational 4%, credit 0%); the 2016 SFCR's own chart shows five categories (insurance risk 81%, market 12%, operational 4%, miscellaneous 4%, credit 0%). Each card quotes its own document, so the 81% shown in the 2016 card and the 84% comparative shown in the 2017 card are both faithful to source.

Was this 2017 analysis useful or accurate?

2018

Delta from 2017

⭳ SFCR PDF

Weather breaks the account: the Q1 freeze, May flooding and the dry summer drive a GBP 37m operating loss, own funds fall GBP 43m to GBP 176m despite a GBP 30m parent injection, and the stated ratio slips to 133%. The response, a new intra-group quota share programme, reshapes the balance sheet (the Summary does not connect it to the sale that followed in 2019).

2018 is the stress year that explains everything after it. The operating account swings hard: “an Operating loss of £37m (2017: £7m profit), as a result of adverse claims experience caused by the freeze in Q1, flooding in May, as well as the long spell of dry weather resulting in higher fire and subsidence claims” [SFCR p.5]*, and the own-funds walk needs four legs: weather losses, investment losses “of (2.49%) in the year … considered to be a 1 in 6 year loss” [SFCR p.5]*, growing premium provisions, and, against them, “a £30m capital injection during the fourth quarter of 2018 from the Company’s parent, Legal & General Assurance Society Limited” [SFCR p.5]*. The structural answer appears in 'Any other information': a quota share programme ceding 10% to L&G Re (Bermuda) and ultimately 40% to LGAS [SFCR p.8]*, which cuts the SCR even as volumes grow, the start of the reinsurance-led de-risking that Allianz would inherit. The report also changes register: a “Public” marking on every page, a divisional table, and the first appearance of the social-purpose sentence: “we strive at all times to do the right thing, not just for our customers and shareholders, but for the broader economy and society at large” [SFCR p.4]*.

Introduction (SFCR pp. 4)

Changed: The required-by wording moves into the opening sentence (PRA Rulebook reporting and group supervision parts; Articles 51 and 256) and the identity paragraph shrinks to “a general insurance company authorised in the UK, whose ultimate controlling party is Legal and General Group Plc” [SFCR p.4]* standard text standard text.

Business & Performance (SFCR pp. 4-5)

Changed: “The Company made an Operating loss of £37m (2017: £7m profit) … Excluding these impacts, the operating loss would have been £11m allowing for long term weather expectations.” [SFCR p.5]*

Changed: GWP by line: household “c. £370m of gross written premium (GWP)”, short-term income protection “c. £16m GWP” and pet insurance “c. £24m GWP” (2017: c. GBP 338m, c. GBP 17m and c. GBP 15m) [SFCR p.4]*.

New: Own-funds bridge item: “a £30m capital injection during the fourth quarter of 2018 from the Company’s parent, Legal & General Assurance Society Limited” [SFCR p.5]*.

Note: The own-funds walk is mislabelled at source: “the Company’s own funds decreased by £43m to £176m (2016: £219m)”, where the comparative is the 2017 figure (2016: GBP 253m); the Summary’s own KPI table on the preceding page states 219 for 2017 [SFCR p.5]* [Note 2].

New: “Acquisition of Buddies Enterprises Limited … for an initial consideration of £5.5m”, increased to GBP 5.75m by a loan conversion [SFCR p.8]*.

New: Quota share arrangements, 10% L&G Re (Bermuda) from 01-04-2018; 30% LGAS from 01-07-2018, “subsequently increased to 40% with effect from the 1 October 2018” [SFCR p.8]*.

System of Governance (SFCR pp. 6)

Note: Board accountability, three-lines-of-defence and ORSA paragraphs carried over with house-style edits (“group board” lower-cased) standard text standard text [SFCR p.6].

Risk Profile (SFCR pp. 6-7)

Note: Four material-risk bullets unchanged standard text; insurance risk share of the SCR falls to 69% (2017: 78%) as market risk rises to 24% [SFCR p.7].

Valuation (SFCR pp. 7)

New: TP definition enters the Summary: “Technical provisions are calculated as the sum of Best Estimate Liabilities (BEL) plus Risk Margin (RM)” [SFCR p.7]* standard text.

Changed: Excess of assets over liabilities “£176m (2017: £219m) … £71m lower than the IFRS net asset position” [SFCR p.7]*.

Capital Management (SFCR pp. 7-8)

Changed: Surplus “£44m of surplus Own Funds above the SCR requirement, representing a regulatory capital coverage ratio of 133%”; SCR “£132m at 31 December 2018”, still on the PRA-approved internal model with no add-ons; Tier 1 except the deferred tax asset (Tier 3) [SFCR p.7-8]*. [QRT verified: EOF, SCR and ratio match]

Headline metrics

SCR coverage (stated)133%2017: 151%

EOF / SCR / SurplusGBP 176.1m / 132.3m / 43.9m2017: 219.1m / 145.5m / 73.7m

Operating lossGBP 37m2017: GBP 7m profit

Capital injectionGBP 30m from Legal & General Assurance Society (Q4 2018)2017: none

New (4)

Quota share reinsurance programme: 10% with Legal & General Reinsurance Company Limited (Bermuda) from 1 April 2018 and 30% with Legal & General Assurance Society from 1 July 2018, increased to 40% from 1 October 2018.

Acquisition of Buddies Enterprises Limited (5 January 2018) for GBP 5.5m initial consideration, increased to GBP 5.75m via a loan conversion.

GBP 30m capital injection from the parent, Legal & General Assurance Society Limited, in Q4 2018.

'Social purpose' sentence, the divisional 'OUR BUSINESS' table, and a 'Public' classification marking on every page (the upper-case headings were already in use in the 2017 report).

Changed (3)

Operating result swings from a GBP 7m profit to a GBP 37m loss, 'the freeze in Q1, flooding in May, as well as the long spell of dry weather resulting in higher fire and subsidence claims'; excluding these, a GBP 11m loss on long-term weather expectations.

Own funds down GBP 43m to GBP 176m; stated ratio 133% (2017: 151%); investment losses of about 2% described as a 1-in-6-year outcome.

Market share restated on the GlobalData source adopted in the 2017 report: 'the seventh largest UK home insurer, with 5.1% market share for calendar year 2017 (2016: 4.6%)'.

Dropped (1)

The strategy paragraph ('grow a diversified, digitised business…'), replaced by the balance-sheet-strengths and social-purpose framing.

Notes this year (1)

Note 2 · The 2018 Summary's analysis of change in own funds states 'own funds decreased by £43m to £176m (2016: £219m)'; the comparative labelled 2016 is the 2017 figure (2016 own funds were GBP 253m). The Summary's own KPI table on the preceding page states 219 against 2017.

Was this 2018 analysis useful or accurate?

2019

Delta from 2018

⭳ SFCR PDF

Ownership, name and model all change at once: Legal & General Insurance Limited becomes Fairmead Insurance Limited, is sold to Allianz Holdings plc on 31 December 2019, and swaps its PRA-approved internal model for the Standard Formula on completion. A GBP 23m operating loss and flood-hit year leave own funds at GBP 165m and the stated ratio at 128%, the low point of the decade.

2019 compresses three identity changes into one report. The cover introduces “FAIRMEAD INSURANCE LIMITED (FORMERLY LEGAL & GENERAL INSURANCE LIMITED)” [SFCR p.1]; the ownership section records that “On 31 December 2019, the Company was acquired by Allianz Holdings Plc and ownership subsequently transferred to … Liverpool Victoria General Insurance Group Limited (‘LV=GI’)” [SFCR p.4]*; and the capital basis changes with the keys: “Our regulatory SCR is based on the Standard Formula, following the Company’s application to the PRA to revoke its internal model approval as a result of its sale to Allianz. This was granted with effect from completion of the sale on 31 December 2019.” [SFCR p.6]* The footnote to the KPI table is unusually candid about comparability, noting the ratio is “on a standard formula basis at year end 2019, but an internal model basis at year end 2018” [SFCR p.4]*. Underneath, the operating account has its second loss year (“£23m in 2019 (2018: £37m loss)”), with 2019's floods costing an estimated “£18m before any quota share recovery” [SFCR p.5]*, and the stated ratio touches its decade low of “128%”, with the sale-driven de-risking (a liquidity-fund portfolio, layered quota shares and an ADC) already queued for 2020 [SFCR p.6-8]*.

Introduction (SFCR pp. 4)

Changed: Title and purpose updated for the rename; the required-by wording narrows to the reporting part of the PRA Rulebook and “(Solvency II Directive) Article 51” (2018: Articles 51 and 256) [SFCR p.4]* standard text.

Business & Performance (SFCR pp. 4-5)

New: “On 31 December 2019, the Company was acquired by Allianz Holdings Plc and ownership subsequently transferred to a subsidiary of Allianz Holdings plc, Liverpool Victoria General Insurance Group Limited (‘LV=GI’). The Company is now part of the wider Allianz Group of companies, whose ultimate parent company is Allianz SE.” [SFCR p.4]*

Changed: “The Company made an Operating loss of £23m in 2019 (2018: £37m loss), as a result of adverse claims inflation experience” [SFCR p.5]*; flooding in June, July and November 2019 “estimated to have cost £18m before any quota share recovery” [SFCR p.5]*.

Changed: GWP by line reaches its high point: household “c. £407m of gross written premium (‘GWP’)”, short-term income protection “c. £13m GWP” and pet insurance “c. £28m GWP” (2018: c. GBP 370m, c. GBP 16m and c. GBP 24m) [SFCR p.4]*.

New: Reinsurance restructuring, 100% quota share of the two main MGAs with LGAS (31-12-2019); catastrophe treaty terminated and the LGAS quota share commuted. Only the catastrophe cover is dated: “From 1 January 2020 the company has placed its weather catastrophe reinsurance with the Allianz Re.” The quota share follows as “In addition to the above the company has entered into a 50% Quota Share reinsurance with Allianz Re”, and “There is also an Adverse Development Cover in place which protects the level of Reserves for accidents occurring prior to 31 December 2018” [SFCR p.8]*.

System of Governance (SFCR pp. 5-6)

Changed: Group governance rewritten mid-transition: “The role of the Board of Allianz SE is to lead the group and oversee the governance of the group.” [SFCR p.5]* standard text.

Risk Profile (SFCR pp. 6)

Changed: The capital-model narrative is rebuilt around the Standard Formula, with the shift from market risk “driven by the changes in the investment portfolio with 100% being invested in a LGIM Sterling Liquidity Fund by the end of 2019 (a requirement of the Company’s sale to Allianz)” [SFCR p.6]* standard text standard text.

Valuation (SFCR pp. 7)

New: “The company does not use the transitional measures under Solvency II.” [SFCR p.7]* standard text.

Changed: Excess of assets over liabilities “£165m (2018: £176m) … £34m lower than the IFRS net asset position” [SFCR p.7]*.

Capital Management (SFCR pp. 7-8)

Changed: Surplus “£36m … representing a regulatory capital coverage ratio of 128%”; “remain well above our red risk appetite level of 110%”, the first quantified risk-appetite floor; SCR “£129m … determined using the Standard Formula Model” [SFCR p.7]*. [QRT verified: EOF, SCR and ratio match]

Headline metrics

SCR coverage (stated)128%2018: 133%

EOF / SCR / SurplusGBP 165.0m / 128.9m / 36.1m2018: 176.1m / 132.3m / 43.9m

Operating lossGBP 23m2018: GBP 37m loss

OwnershipSold to Allianz Holdings plc 31-12-2019L&G Group until completion

New (5)

Renamed Fairmead Insurance Limited ('formerly Legal & General Insurance Limited'); acquired by Allianz Holdings Plc on 31 December 2019, ownership transferred to Liverpool Victoria General Insurance Group Limited; ultimate controlling party now Allianz SE.

SCR basis switches to the Standard Formula: internal model approval revoked at the Company's application, effective on completion of the sale.

Investment portfolio moved to 100% LGIM Sterling Liquidity Fund by year-end, a requirement of the sale.

New reinsurance architecture: 100% quota share of the two main MGA books with Legal & General Assurance Society (31-12-2019); catastrophe treaty terminated and the LGAS quota share commuted; Allianz Re catastrophe cover from 1 January 2020, with a 50% quota share and an Adverse Development Cover protecting reserves for accidents before 31 December 2018, neither of which the Summary dates.

Risk appetite disclosure: coverage 'well above our red risk appetite level of 110%'.

Changed (4)

Operating loss narrows to GBP 23m (2018: GBP 37m) on claims inflation rather than weather; June, July and November 2019 flooding estimated at GBP 18m before quota share recovery.

Household GWP grows to c. GBP 407m (2018: c. GBP 370m), the high point of the window, with pet at c. GBP 28m and short-term income protection at c. GBP 13m.

Own funds down GBP 11m to GBP 165m; stated ratio 128% (2018: 133%), the decade low, and the footnote records the basis change: standard formula at year-end 2019 against internal model at year-end 2018.

Home-insurer ranking softened: 'a top 10 UK home insurer by size, with over a 4% market share' (2018: seventh largest, about 5%).

Dropped (1)

The Legal & General Group divisional table (the 2018 Summary's 'OUR BUSINESS' table) disappears with the sale; the AUM and top-10 asset manager framing had already left the Summary in 2018.

Was this 2019 analysis useful or accurate?

2020

Delta from 2019

⭳ SFCR PDF

The first full year under Allianz sets the run-off course: migration plans put all product lines (bar one MGA contract) on a path to run-off by end-2021, the headline KPI switches from operating profit to underwriting loss (GBP 44m excluding impairments), and the SCR nearly halves to GBP 79m, stated ratio 179% despite own funds falling to GBP 141m. COVID-19 enters the Summary once, in the claims paragraph.

2020 is where Fairmead's direction of travel is fixed. Integration language becomes explicit: “the Company has approved plans for migrations of several of its books of business, and therefore, with the exception of a specific contract with a Managing General Agent, it is anticipated all product lines will be in run off by the end of financial year 2021” [SFCR p.4-5]*, and the reporting lens changes with it: the KPI table now leads with “Underwriting loss (excluding impairment charges)” of “(44)” [SFCR p.5]*, dropping the operating-profit measure used since 2016 and restating 2019's comparative onto the new basis (GBP 38m, where the 2019 SFCR itself headlined a GBP 23m operating loss). The cover ratio improves for the first time in the window, after three successive falls (2019, at “128%”, was the decade low): own funds fall GBP 24m to “£141m”, but the SCR nearly halves to “£79m”, producing “179%” [SFCR p.5, p.8]*. The Summary gives no driver for the SCR fall, stating only that “Changes in the solvency ratio are due to changes in own funds (detailed below and further in section D) and changes in the SCR shown in section E”; the additional reinsurance is cited in the Summary only for the shift in the risk mix. COVID-19 appears once in the Summary, in the claims paragraph: “adverse experience on unemployment being more than offset by favourable experience on Household and Pet” [SFCR p.5]*; the Summary gives no operational account and no figures for the claims effect. A disclosed restatement also lands, the IPT gross-up of prior-year comparatives, “no impact on … own funds on a Solvency II basis” [SFCR p.7]*.

Introduction (SFCR pp. 4)

Note: Purpose sentence unchanged (PRA Rulebook / Solvency II Directive Article 51); the cover retains “(FORMERLY LEGAL & GENERAL INSURANCE LIMITED)” standard text [SFCR p.4].

Changed: “Who we are” now names “Allianz Societas Europaea (‘Allianz SE’)” as ultimate controlling party, with the ‘Allianz SE Group’ defined term [SFCR p.4]* standard text.

Business & Performance (SFCR pp. 4-5)

New: Migration and run-off plan, approved migrations, all product lines to run-off by end-2021 except the MGA contract, household migrations commenced 2020; Transitional Service Agreement with Legal & General Assurance Society to 31 December 2022 [SFCR p.4-5]*.

Changed: GWP by line falls back: household “c. £360m of gross written premium (‘GWP’) in 2020”, short-term income protection “c. £14m GWP” and pet insurance “c. £31m GWP” (2019: c. GBP 407m, c. GBP 13m and c. GBP 28m) [SFCR p.4]*.

Changed: KPI table leads with “Underwriting loss (excluding impairment charges) (44) (38)” [SFCR p.5]*, the operating-profit measure is dropped; impairments of GBP 9m (intangibles) and GBP 2m (plant and equipment) driven by the migration plans.

New: COVID-19 performance paragraph: “adverse experience on unemployment being more than offset by favourable experience on Household and Pet lines of business”, longer unemployment claims durations, fewer household theft claims [SFCR p.5]*.

System of Governance (SFCR pp. 6)

Changed: Board accountability rewritten to Allianz: strategy set “within the framework and overall strategy defined by the board of Allianz Holdings plc” [SFCR p.6]* standard text.

Risk Profile (SFCR pp. 6-7)

Note: Four material-risk bullets unchanged standard text [SFCR p.6]; “The purchase of additional reinsurance has reduced insurance risk, leading to a shift from insurance risk to market risk, operational and credit risk over the course of 2020.” [SFCR p.7]*

Note: Neither the strategy wording nor the internal-model narrative drops out in 2020. The Legal & General strategy paragraph (“grow a diversified, digitised business”) was last carried in the 2017 Summary and is recorded as dropped in the 2018 card; the internal-model narrative was replaced by the Standard Formula in the 2019 Summary, and the 2020 Summary repeats that paragraph unchanged: “Our regulatory SCR is based on the Standard Formula, following the Company’s application to the PRA to revoke its internal model approval as a result of its sale to Allianz. This was granted with effect from completion of the sale on 31 December 2019.” [SFCR p.6]*

Valuation (SFCR pp. 7)

New: IPT restatement, prior-year comparatives grossed up by GBP 10m on both sides of the balance sheet; “There has been no impact on the net asset value on an IFRS basis or own funds on a Solvency II basis.” [SFCR p.7]*

Changed: Excess of assets over liabilities “£141m (2019: £165m) … £16m lower than the IFRS net asset position” [SFCR p.7]*.

Capital Management (SFCR pp. 8)

Changed: Surplus “£62m … representing a regulatory capital coverage ratio of 179%”; SCR “£79m at 31 December 2020”; MCR halves to GBP 20m [SFCR p.8]*. [QRT verified: EOF, SCR and ratio match]

Headline metrics

SCR coverage (stated)179%2019: 128%

EOF / SCR / SurplusGBP 141.0m / 78.8m / 62.1m2019: 165.0m / 128.9m / 36.1m

Underwriting loss (excl. impairments)GBP 44m2019: GBP 38m (restated basis)

ImpairmentsGBP 9m intangibles + GBP 2m plant and equipment2019: GBP 43m intangibles

New (4)

Run-off plan: migration of books of business approved; 'it is anticipated all product lines will be in run off by the end of financial year 2021', excepting a specific MGA contract; household migrations commenced in 2020.

COVID-19 enters the Summary as one claims paragraph (adverse unemployment experience more than offset by favourable household and pet, stated without figures); the Summary says nothing on operations.

Prior-year IFRS comparatives restated for an Insurance Premium Tax gross-up (GBP 10m receivables / GBP 10m payables; no own-funds impact).

Gross additional unexpired risk reserve of GBP 8m recognised as the fixed cost base outruns projected business.

Changed (4)

Headline KPI changes from operating profit to underwriting loss: GBP 44m excluding impairments (2019 comparative restated to GBP 38m on the same basis; the 2019 SFCR's own headline was a GBP 23m operating loss).

SCR down from GBP 129m to GBP 79m and MCR from GBP 40m to GBP 20m; the Summary gives no driver for the fall, attributing only the shift in the risk mix to the purchase of additional reinsurance. Stated ratio up 51 points to 179%.

Ultimate parent wording formalised: 'Allianz Societas Europaea', with the Allianz SE Group defined term.

Household GWP falls back to c. GBP 360m (2019: c. GBP 407m), with pet up to c. GBP 31m and short-term income protection at c. GBP 14m.

Dropped (2)

The 2019 Summary's group-board sentence ('The role of the Board of Allianz SE is to lead the group and oversee the governance of the group'): accountability is now stated to the board of Allianz Holdings plc.

The 2019 'Any other information' section (change of ownership and the new reinsurance arrangements), which reverts to 'No further information to note'.

Was this 2020 analysis useful or accurate?

2021

Delta from 2020

⭳ SFCR PDF

Migration year: Broker, Pet and Direct books move to LVGIG and Allianz Insurance plc, the ASU book transfers to AmTrust, and, with the exception of one MGA contract, everything else is heading for run-off by end-2022. The underwriting loss narrows to GBP 16m and the stated ratio climbs to 208% as the SCR falls to GBP 62m.

2021 completes the strategic emptying-out that 2020 announced. The Summary reads as a checklist of departures: “The Company has successfully commenced the migration of Broker, Pet and Direct businesses to LVGIG and Allianz Insurance plc”, no new pet or ASU policies, and “it is anticipated all other product lines will be in runoff by 31 December 2022” [SFCR p.4]*; in August the Company “transferred its ASU book, including the policy administration and servicing to a new provider, AmTrust Financial” [SFCR p.5]*. The capital arithmetic starts the pattern that dominates the rest of the window, own funds drift down (GBP 128m eligible) while the SCR falls faster (“£62m at 31 December 2021”), lifting the stated ratio to “208%” [SFCR p.8]*. A small technical seam opens at the same time: “£2m (2020: £nil) of the tier 3 own funds is not eligible … a restriction on the eligibility of the tier 3 capital to 15% of the Solvency Capital Requirement” [SFCR p.8]*, trivial here, but the same mechanism excludes GBP 6m by 2023 as the SCR shrinks. The Summary's opening sentence drops the “(formerly Legal & General Insurance Limited)” rider carried in 2020 [SFCR p.4].

Introduction (SFCR pp. 4)

Changed: The Summary's opening sentence drops the “(formerly Legal & General Insurance Limited)” rider carried in 2020 and now reads “This Solvency and Financial Condition Report (‘SFCR’) for Fairmead Insurance Limited (‘the Company’)” [SFCR p.4]*.

Note: Purpose sentence unchanged (PRA Rulebook / Solvency II Directive Article 51) standard text [SFCR p.4].

Business & Performance (SFCR pp. 4-5)

Changed: Product framing rewritten and shortened: “We help customers to protect their homes (£281m GWP), pets (£21m GWP) and income (£8m GWP)” [SFCR p.4]*.

Changed: “The underwriting loss of £16m excluding impairments (2020: £44m loss) reduced from 2020”, with benign weather, reduced project spend, reserve-margin release and “favourable attritional claims from the Covid-19 lockdown restrictions (£2m)” among the drivers [SFCR p.5]*.

New: “In August 2021, the Company transferred its ASU book, including the policy administration and servicing to a new provider, AmTrust Financial ('AmTrust').” Claims handling delegated to Wessex [SFCR p.5]*.

System of Governance (SFCR pp. 6)

Note: Board accountability (to the Board of Allianz Holdings plc), three-lines-of-defence and ORSA wording carried over from 2020 standard text standard text [SFCR p.6].

Risk Profile (SFCR pp. 6-7)

Note: Four material-risk bullets unchanged standard text; “The risk profile has not materially changed over the course of 2021.” [SFCR p.7]*

Valuation (SFCR pp. 7)

Changed: Excess of assets over liabilities “£130m (2020: £141m) … £15m lower than the UK GAAP net asset position” [SFCR p.7]*; technical provisions switch to the PRA yield curve, “however this impact is not material for the business” [SFCR p.5]*.

Capital Management (SFCR pp. 8)

Changed: Surplus “£66m … representing a regulatory capital coverage ratio of 208%”; SCR “£62m at 31 December 2021”; “£2m (2020: £nil) of the tier 3 own funds is not eligible own funds” [SFCR p.8]*. [QRT verified: EOF, SCR and ratio match]

Headline metrics

SCR coverage (stated)208%2020: 179%

EOF / SCR / Surplus [QRT]GBP 128.0m / 61.6m / 66.4m2020: 141.0m / 78.8m / 62.1m; the Summary prints 128 / 62 / 66

Underwriting loss (excl. impairments)GBP 16m2020: GBP 44m

DividendNot mentioned in the Summary2020: the Summary is silent too

New (3)

ASU book transferred to AmTrust Financial (August 2021), with run-off claims handling delegated to Wessex Insurance Services.

Tier 3 eligibility restriction first bites: GBP 2m of the deferred tax asset ineligible against the 15%-of-SCR limit.

Switch from EIOPA to PRA yield curves for technical provisions (stated as immaterial).

Changed (3)

The Summary's opening sentence drops '(formerly Legal & General Insurance Limited)', carried in 2020, and names the Company plainly as Fairmead Insurance Limited.

Underwriting loss (excluding impairments) narrows to GBP 16m (2020: GBP 44m) on benign weather, lower project spend and a GBP 4m COVID-19 claims benefit.

Migration progress: no new pet, ASU, or Direct/Broker household business; all lines except the MGA contract expected in run-off by 31 December 2022.

Dropped (1)

The 2020 impairment narrative (intangibles and plant), amortisation/depreciation of assets recognised in 2020 falls out of the comparative.

Was this 2021 analysis useful or accurate?

2022

Delta from 2021

⭳ SFCR PDF

A nine-month report to 30 September 2022, the accounting reference date change, in which Fairmead stops underwriting household business (except one MGA book), pays a GBP 55m interim dividend enabled by a GBP 96m capital reduction, and announces the Part VII transfer and intention to dissolve. Eligible own funds nearly halve to GBP 68m; stated ratio 187%.

The 2022 report is shaped by its own calendar: “The Directors changed the accounting reference date of the Company to 30 September, shortening the financial period … to be the nine months ended 30 September 2022”, explicitly to keep the systems “decommissioning and archiving programme” away from a 31 December reporting date as the Company left the Legal & General platforms [SFCR p.4]* [Note 3]. Within those nine months the balance sheet is restructured for exit: “A payment of an interim dividend of £55m was made … The Company undertook a capital reduction transferring £96m from its share premium account to distributable reserves to facilitate the payment of this dividend” [SFCR p.6]*, and the endgame is stated for the first time, a Part VII transfer after which “the Directors are intending to take subsequent actions to dissolve the Company” [SFCR p.4]*. The stated ratio slips to “187%” and, unusually for this document series, the Summary disagrees with itself on the surplus: “£31m of surplus Own Funds” in the text against “32” in its own table [SFCR p.8]* [Note 4]; the QRT-computed figure sits between, at GBP 31.5m.

Introduction (SFCR pp. 4)

Changed: Purpose paragraph rewritten around Brexit, Solvency II described as an EU-wide regime which the PRA “continues to apply … in the United Kingdom” after the transition period [SFCR p.4]* standard text.

New: The nine-month period explanation and its systems-decommissioning rationale [SFCR p.4]* (Note 3).

Business & Performance (SFCR pp. 4-6)

Changed: “Gross Written Premium ('GWP') for the period was £100m (2021: £310m), a 68% decrease. The Company stopped underwriting household business in May 2022 except for a household book of business with a managing general agent ('MGA')” [SFCR p.5]*.

New: “A payment of an interim dividend of £55m was made during the financial period ended 30 September 2022. The Company undertook a capital reduction transferring £96m from its share premium account to distributable reserves to facilitate the payment of this dividend.” [SFCR p.6]*

New: Part VII and dissolution intention: should the transfer be sanctioned, “the Directors are intending to take subsequent actions to dissolve the Company. It is anticipated that the Part VII and cessation of trade will be achieved in 2023.” [SFCR p.4]*

System of Governance (SFCR pp. 6-7)

Note: Board accountability, three-lines-of-defence and ORSA paragraphs carried over standard text standard text; the ORSA plan horizon is “limited to a one year period to reflect the Directors intentions to complete a Part VII transfer” [SFCR p.7]*.

Risk Profile (SFCR pp. 7)

Note: The four material-risk bullets are unchanged (weather catastrophe, insurance, investment, operational) standard text [SFCR p.7].

Valuation (SFCR pp. 8)

Changed: “As at 30 September 2022, the Company’s excess of assets over liabilities was £71m (2021: £130m) on a Solvency II basis, which is £1m lower than the UK GAAP net asset position.” [SFCR p.8]*

Capital Management (SFCR pp. 8-9)

Changed: “As at 30 September 2022 the Company held £31m of surplus Own Funds above the SCR requirement, representing a regulatory capital coverage ratio of 187%”, against a Summary table stating surplus of 32 [SFCR p.8]* [Note 4]. SCR “£36m at 30 September 2022”, reduced by shrinking policy count and portfolio; “£3m (2021: £2m) of the tier 3 own funds is not eligible” [SFCR p.8-9]*. [QRT verified: EOF, SCR and ratio match the 30-09 figures]

Headline metrics

SCR coverage (stated)187%2021: 208%

EOF / SCR / Surplus [QRT]GBP 67.8m / 36.3m / 31.5m2021: 128.0m / 61.6m / 66.4m; the Summary prints 68 / 36 / 32, and 31 in the capital-management text, Note 4

Underwriting loss (9m)GBP 16m2021 (12m): GBP 16m

Dividend / capital reductionGBP 55m interim dividend; GBP 96m share premium reduction2021: no dividend stated in the Summary

New (4)

Accounting reference date changed to 30 September; this SFCR covers the nine months ended 30 September 2022, to de-risk financial reporting around the Q4-2022 systems decommissioning and archiving as the Company exits its Legal & General outsourcing arrangement.

Part VII transfer project announced, with the intention, subject to court and regulatory approval, that the Company will cease to trade and the Directors will 'take subsequent actions to dissolve the Company'.

GBP 55m interim dividend, facilitated by a GBP 96m capital reduction transferring share premium to distributable reserves.

Delegated authority arrangement with LVIC for household claims handling (back book migrated November 2022).

Changed (3)

Underwriting stopped in May 2022 for household (except the MGA book, itself 100% quota-shared); GWP GBP 100m for nine months (2021 full year: GBP 310m), a 68% decrease.

Eligible own funds down GBP 60m to GBP 68m; SCR down from GBP 62m to GBP 36m; stated ratio 187% (2021: 208%).

Net incurred loss ratio 62% (2021: 47%) on subsidence and inflation-driven prior-year strengthening.

Dropped (2)

The 'social purpose' sentence ('…not just for our customers and shareholders, but for the broader economy and society at large'), carried since 2018.

COVID-19 as a live risk theme (referenced only as a favourable comparator effect in 2021's result).

Notes this year (2)

Note 3 · Accounting reference date changed to 30 September: the 2022 SFCR covers the nine months to 30-09-2022, and the 2023 and 2024 SFCRs the years to 30 September. The QRT records for 2022 and 2023 are dated 31 December but hold the filings' 30 September figures.

Note 4 · Internal inconsistency in the 2022 Summary: the capital management text states surplus own funds of GBP 31m while the Summary's own table states GBP 32m (QRT-computed EOF minus SCR is GBP 31.5m).

Was this 2022 analysis useful or accurate?

2023

Delta from 2022

⭳ SFCR PDF

The first full September-year report and the first with everything in run-off: the last MGA policies were written to 31 March 2023, the Directors state their intention to close the Company, and a GBP 30m dividend takes eligible own funds to GBP 35m against an SCR of GBP 11m, stated ratio 306%.

2023 is the year the Summary stops describing an insurer and starts describing an estate. Products are recast in the past tense, household cover “provided”, income protection that “enabled” customers to meet obligations [SFCR p.4], and the intent is stated flatly: “The Directors’ intention is to close the Company and have no intention to re-commence underwriting any new business”, any excess wind-down costs “borne by other Allianz UK companies” [SFCR p.5]*. The capital pattern that defines late-stage Fairmead is now explicit: own funds fall (a GBP 30m interim dividend takes eligible own funds to “£35m”), but the SCR falls faster (“£11m at 30 September 2023”), so the stated ratio nearly doubles to “306%” [SFCR p.5, p.8]*. The underwriting account closes almost flat, a GBP 1m loss, yet carries a net incurred loss ratio of “192% compared to 62% in 2022” [SFCR p.5]*, subsidence and the December 2022 freeze landing on a premium base that has almost vanished. The deferred-tax eligibility restriction becomes material at the small end: “£6m (2022: £3m) of the Tier 3 Own Funds is not eligible” [SFCR p.8]*.

Introduction (SFCR pp. 4)

Changed: The period statement resets the baseline: “In the prior year the Directors changed the accounting reference date … The current year period is for the twelve months from 1 October 2022 to 30 September 2023” [SFCR p.4]* (Note 3 context).

Note: Brexit-era purpose wording carried over from 2022: the PRA “continues to apply the Solvency II framework in the United Kingdom” standard text [SFCR p.4].

Business & Performance (SFCR pp. 4-6)

Changed: “Gross Written Premium ('GWP') for the year was £81.7m (2022: £100.1m), a 18% decrease and representing the final household policies underwritten via a contract with a Managing General Agent (‘MGA’) up until 31 March 2023. All business lines are now in run off.” [SFCR p.4]*

New: “The Directors’ intention is to close the Company and have no intention to re-commence underwriting any new business. To the extent that any associated wind down costs exceed the costs already allowed for by the Company, these will be borne by other Allianz UK companies.” [SFCR p.5]*

Changed: Underwriting loss “£1m … significantly lower than £16m in 2022 as the business is in run-off”; loss ratio “192% compared to 62% in 2022” on subsidence, inflation and the December 2022 freeze [SFCR p.5]*.

Changed: “A payment of an interim dividend of £30m was made during the financial period ended 30 September 2023.” [SFCR p.5]*

System of Governance (SFCR pp. 6)

Changed: The risk function paragraph is rewritten, the risk function provides challenge “and the compliance function provides compliance guidance and challenge” [SFCR p.6]* standard text.

Risk Profile (SFCR pp. 6-7)

Changed: Material-risk list gains “credit counterparty risk from our reinsurance programme” [SFCR p.6]*, the first addition to the four-risk list since 2016 standard text.

Valuation (SFCR pp. 7)

Changed: “As at 30 September 2023, the Company’s excess of assets over liabilities was £40m (2022: £71m) on a Solvency II basis, which is £5m lower than the UK GAAP net asset position.” [SFCR p.7]*

Capital Management (SFCR pp. 7-8)

Changed: Surplus “£23m … representing a regulatory capital coverage ratio of 306%”; SCR “£11m at 30 September 2023”, reduced by shrinking policy count and investment portfolio; “£6m (2022: £3m) of the Tier 3 Own Funds is not eligible” [SFCR p.7-8]*. [QRT verified: EOF, SCR and ratio match]

Headline metrics

SCR coverage (stated)306%2022 (30-09): 187%

EOF / SCR / Surplus [QRT]GBP 34.9m / 11.4m / 23.5m2022: 67.8m / 36.3m / 31.5m; the Summary prints 35 / 11 / 23

Underwriting loss (12m to 30-09-2023)GBP 1m2022 (9m): GBP 16m

DividendGBP 30m interim paid in the period2022: GBP 55m

New (3)

Closure intention stated: 'The Directors' intention is to close the Company and have no intention to re-commence underwriting any new business', with wind-down costs above existing allowances borne by other Allianz UK companies.

Compliance function named alongside the risk function in the governance paragraph.

Credit counterparty risk from the reinsurance programme added to the material-risk list.

Changed (4)

Eligible own funds halve to GBP 35m after a GBP 30m interim dividend; SCR falls from GBP 36m to GBP 11m; stated ratio 306% (2022: 187%).

GWP GBP 81.7m (2022 nine months: GBP 100.1m), the final MGA-written household policies, underwritten to 31 March 2023.

Net incurred loss ratio 192% (2022: 62%) on subsidence, inflation-driven reserve strengthening and the December 2022 freeze.

Tier 3 eligibility restriction bites harder: GBP 6m of the deferred tax asset ineligible (2022: GBP 3m) as the SCR shrinks.

Dropped (2)

The 'What we do' present-tense product descriptions, household, income protection and pet wording moves to the past tense ('provided', 'enabled') with all lines in run-off.

The named MGA underwriting relationship as a live activity (policies ceased 31-03-2023).

Outside the Summary

From the contents page of the same report (p.2)

The contents page lists “B.5 Compliance Function” and “B.8 Risk Function” as separate sections of the report [SFCR p.2]*.

Was this 2023 analysis useful or accurate?

2024

Delta from 2023

⭳ SFCR PDF

The report itself is the biggest change: Fairmead moves onto the Allianz house SFCR format, whose Summary walks through sections A-E in two pages. Underneath, the run-off deepens, loss before tax GBP 9,475k, eligible own funds GBP 34.5m and an SCR of GBP 4.7m [SFCR] for a stated ratio of 735%. The QRT data carry no 2024 SCR figure.

2024 is a change of skin more than a change of story. The report arrives in the Allianz SE house format, “The SFCR is made up of five key sections”, walked through A to E in a two-page Summary [SFCR p.2]*, and the entity description is now written from the group down: Allianz SE, “a financial services provider with circa 125 million retail and corporate customers in nearly 70 countries” [SFCR p.2]*. The numbers continue the run-off pattern set since 2022: “FIL reported a loss before tax for the year of £9,475k (2023: profit of £1,285k)” [SFCR p.2]*; the Summary names no drivers for the loss (the report's underwriting and investment sections give them, shown in the note below this year). The capital ratio again rises as the SCR shrinks faster than own funds: “As at 30 September 2024, the SCR was £4,696k and is covered by £34,532k of eligible Own Funds … The Solvency ratio … is 735%” [SFCR p.3]*. That SCR is the one figure missing from the QRT data this year: the ratio (735%) is present but the SCR is not, so the charts use the SFCR-stated value [Note 5].

Introduction (SFCR pp. 2)

Changed: New format and purpose wording: “Publication of an SFCR is a mandatory requirement of the Solvency II (“Sll”) Directive for all insurance companies domiciled in the EU. Although the UK has left the EU, the Prudential Regulatory Authority (“PRA”) has adopted an equivalent approach.” [SFCR p.2]* standard text.

New: Group-first identity paragraph: Allianz SE described with “circa 125 million retail and corporate customers in nearly 70 countries” [SFCR p.2]* standard text.

Business & Performance (SFCR pp. 2)

Changed: “FIL reported a loss before tax for the year of £9,475k (2023: profit of £1,285k).” [SFCR p.2]* The KPI table of earlier years is replaced by prose within the walkthrough.

New: “The Company had a quota share (“QS”) reinsurance arrangement of 50% impacting the net results” [SFCR p.2]*. The Summary also restates the 100% MGA quota share as standing background, the treaty “effective from 31 December 2019” [SFCR p.2]*.

System of Governance (SFCR pp. 2)

Changed: Governance described through the new format, Board oversight, “three lines of defence”, CRO-managed Enterprise Risk Management Framework, ORSA “Produced at least annually … overseen by the AzH Board Risk committee” [SFCR p.2]* standard text standard text.

Risk Profile (SFCR pp. 2)

Changed: Risk list restated as “Underwriting Risk • Market Risk • Credit Risk • Liquidity Risk • Operational Risk” [SFCR p.2]*, liquidity risk named in the headline list for the first time standard text.

Valuation (SFCR pp. 2-3)

Note: Valuation described in walkthrough form: the balance sheet as “the main mechanism by which the solvency of the Company … is assessed”, with Technical Provisions as BEL plus Risk Margin in section D.2 [SFCR p.2-3] standard text standard text.

Capital Management (SFCR pp. 3)

Changed: “As at 30 September 2024, the MCR was £3,495k and is covered by £33,828k of eligible Own Funds (tier 1 only). As at 30 September 2024, the SCR was £4,696k and is covered by £34,532k of eligible Own Funds (£33,828k tier 1 and £704k tier 3). The Solvency ratio … is 735%.” [SFCR p.3]* [QRT: EOF and ratio match; no 2024 SCR figure in the QRT, Note 5]

Headline metrics

SCR coverage (stated)735%2023: 306%

EOF / SCR / Surplus [QRT; SCR SFCR-stated]GBP 34.5m / 4.7m / 29.8m2023: 34.9m / 11.4m / 23.5m; the Summary prints own funds 34,532k and SCR 4,696k and states no surplus (surplus derived [CALC]), Note 5

Loss before taxGBP 9,475k2023: profit GBP 1,285k

PeriodYear to 30-09-2024same basis as 2023

New (2)

Allianz house SFCR format: a section-walkthrough Summary (pp.2-3) replaces the six-part Summary used since 2016; performance, governance, risk, valuation and capital appear as one narrative.

50% quota share reinsurance arrangement impacting the net results, alongside the standing 100% MGA quota share effective 31 December 2019.

Changed (2)

Stated ratio more than doubles to 735% (2023: 306%) as the SCR falls to GBP 4,696k (SFCR-stated); EOF broadly flat at GBP 34,532k.

Result presented as a loss before tax of GBP 9,475k (2023: profit GBP 1,285k); the Summary names no drivers for the loss (see the note below this year).

Dropped (2)

The six-part Summary structure (THIS DOCUMENT / WHO WE ARE / WHAT WE DO / OUR BUSINESS…) used 2016-2023.

The Summary's Solvency II balance-sheet table (MCR ratio and tier split now stated in prose in section E's walkthrough).

Notes this year (1)

Note 5 · The QRT data carry no 2024 SCR figure for Fairmead (the coverage ratio, 735%, is present). The SFCR states an SCR of GBP 4,696k and eligible own funds of GBP 34,532k; the charts use the SFCR figure for the SCR, tagged [SFCR].

Outside the Summary

From elsewhere in the same report, outside the Summary

Section A.2, Underwriting performance (p.7): “Claims performance has seen inflationary pressure particularly on subsidence related losses.” “Operational costs have continued whilst managing the run-off of the Company.” [SFCR p.7]*

Section A.2, Underwriting performance (p.7): the quota share is “with an Allianz SE group reinsurance company. The arrangement is that 50% of net earned premiums and net claims are ceded (after all other reinsurance and quota share arrangements) and the Company receives a contribution of 38.2% of ceded earned premiums against incurred expenses and commission.” [SFCR p.7]*

Section A.3, Investment performance (p.8): the portfolio “is in run-off and the Company’s account is managed by the asset manager, PIMCO Europe Ltd”; during the year “the Company sold bonds to generate liquidity to fund the repayment of an intercompany loan”, and “the sale of bonds realised losses of £1,895k” [SFCR p.8]*.

Section A.4, Performance of other activities (p.9): operational costs include “£1,000k one-off spend relating to customer remediation activity, which originally began in 2020” [SFCR p.9]*.

Section A.5, Any other information (p.9): “The current intention is that the Board will apply for a Part VII transfer to rationalise the insurance entities in the Group during 2026. However, no binding legal or regulatory substantive steps have been undertaken at the date the financial statements have been authorised for issue.” [SFCR p.9]*

Was this 2024 analysis useful or accurate?

2025

Delta from 2024

⭳ SFCR PDF

A fifteen-month period (to 31 December 2025) closes the wind-down arc: Solvency UK framing arrives, a 50% loss portfolio transfer completes the reinsurance of the run-off, and eligible own funds more than halve to GBP 14.4m against an SCR of GBP 1.9m, stated ratio 740%. The MCR now exceeds the SCR.

The 2025 report redraws the frame around a shrinking balance sheet. The period itself is the headline oddity: fifteen months, from 1 October 2024 [CALC] to 31 December 2025, undoing the 30 September year-end adopted in the 2022 report (2022 Summary p.4) [Note 6]. Regime language finally moves on, publication is now required by “Solvency II as it applies in the UK (defined in this report as "Solvency UK" or “SUK”)” [SFCR p.2]*, and the annex switches from S.* QRTs to IR.* Insurance Reporting Templates, including “IR.25.04.21 Solvency Capital Requirement” [SFCR p.3]. The reinsurance of the run-off completes: the Summary records a Loss Portfolio Transfer “of 50% impacting the net results” [SFCR p.2]*, alongside the Whole Account Quota Share of 50% [SFCR p.2]. Capital keeps stepping down: “the SCR was £1,940k and is covered by £14,353k of eligible Own Funds”, a “Solvency Coverage Ratio … [of] 740%” [SFCR p.3]*. Notably, the MCR of GBP 3,500k now exceeds the SCR: the binding constraint at the bottom of the run-off is the absolute floor, not the risk-based requirement [Note 6].

Introduction (SFCR pp. 2)

Changed: The purpose sentence adopts the new regime name, “Publication of an SFCR is a mandatory requirement of Solvency II as it applies in the UK (defined in this report as "Solvency UK" or “SUK”)” [SFCR p.2]*, replacing 2024's SII-Directive-plus-PRA-equivalence wording standard text.

Note: The Allianz house format introduced in 2024 is retained: the Summary is a section-by-section walkthrough on pp.2-3 rather than the pre-2024 six-part Summary standard text.

Business & Performance (SFCR pp. 2)

Changed: “The Company reported a loss before tax for the 15 month period of £2,325k (2024: £9,475k)” [SFCR p.2]*, the comparative being the twelve months to 30-09-2024 [Note 6].

New: “The Company had a Whole Account Quota Share (“WAQS”) reinsurance arrangement of 50% impacting the net results, the Company also had a Loss Portfolio Transfer (“LPT”) arrangement of 50% impacting the net results.” [SFCR p.2]*

System of Governance (SFCR pp. 2)

Note: The “Three Lines of Defence” model, CRO-managed Enterprise Risk Management Framework and Board-overseen ORSA are carried forward from the 2024 format standard text standard text; ORSA oversight now sits with the Company's Board Risk Committee (2024: the AzH Board Risk committee) [SFCR p.2].

Risk Profile (SFCR pp. 2)

Note: The five-risk list is unchanged from 2024: “Underwriting Risk; Market Risk; Credit Risk; Liquidity Risk; and Operational Risk” standard text [SFCR p.2].

Valuation (SFCR pp. 2-3)

Note: The balance-sheet and Technical Provisions walkthrough wording is carried over from the 2024 format, now referenced to Solvency UK valuation requirements [SFCR p.2-3].

Capital Management (SFCR pp. 3)

Changed: “As at 31 December 2025, the MCR was £3,500k and is covered by £14,061k of eligible Own Funds (tier 1 only). As at 31 December 2025 the SCR was £1,940k and is covered by £14,353k of eligible Own Funds (£14,061k tier 1 and £292k tier 3). The Solvency Coverage Ratio … is 740%.” [SFCR p.3]* The MCR exceeds the SCR for the first time [Note 6]. [QRT verified: EOF, SCR and ratio match]

Headline metrics

SCR coverage (stated)740%2024: 735%

EOF / SCR / Surplus [QRT]GBP 14.4m / 1.9m / 12.4m2024: 34.5m / 4.7m / 29.8m; the Summary prints own funds 14,353k and SCR 1,940k and states no surplus (surplus derived [CALC])

Loss before tax (15 months)GBP 2,325k2024 (12m): GBP 9,475k loss

MCR vs SCRMCR GBP 3,500k exceeds SCR GBP 1,940kratio quoted is to SCR

New (4)

Solvency UK labelling adopted: the SFCR is now required by 'Solvency II as it applies in the UK', defined as 'Solvency UK' or 'SUK', the first year the report drops pure SII framing.

Loss Portfolio Transfer (LPT) of 50% alongside the 50% Whole Account Quota Share, both stated as impacting the net results.

Insurance Reporting Templates (the IR.* series, including the balance sheet, own funds and SCR templates) replace the S.* QRT annex.

Fifteen-month reporting period, returning the year-end to 31 December; the Summary states only “the 15 month period” ending 31 December 2025, so the 1 October 2024 start date is derived [CALC].

Changed (1)

Eligible own funds down 58% [CALC] to GBP 14,353k (GBP 14,061k Tier 1, GBP 292k Tier 3); SCR down to GBP 1,940k; stated ratio 740% (2024: 735%).

Dropped (2)

The 'Solvency II Directive' / PRA-equivalence purpose framing (replaced by Solvency UK wording).

The S.* QRT template list (replaced by IR.* IRTs).

Notes this year (1)

Note 6 · The 2025 SFCR covers a fifteen-month period (1 October 2024 to 31 December 2025), returning the year-end to 31 December; comparatives are the twelve months to 30-09-2024. At 31-12-2025 the MCR (GBP 3,500k) exceeds the SCR (GBP 1,940k); the 740% ratio quoted is coverage of the SCR.

Outside the Summary

From elsewhere in the same report, outside the Summary

Section A.2, Underwriting performance (p.6): the Company “has a WAQS arrangement with an Allianz SE group reinsurance company” and “also entered into a LPT arrangement with the same Allianz SE group reinsurance company on 1 January 2025 covering the remaining 50.0% of the net outstanding claims reserves” [SFCR p.6]*.

Section A.2, Underwriting performance (p.6): “Net incurred claims for the period ending 31 December 2025 were a recovery of £12,153k, driven by the impact of the initial recognition of the LPT agreement. This positive impact was offset by the reinsurance premium for the LPT recognised in negative earned premiums of £15,779k.” [SFCR p.6]*

Section A.5, Any other information (p.8): the section records that the Company “ceased underwriting activity in 2023 and since that date has been actively managing the settlement and run-off of the remaining insurance contract liabilities” [SFCR p.8]*. It makes no Part VII statement, and nor does any other part of the 2025 report. The 2024 report had stated, in its own section A.5 (p.9), outside its Summary, an intention to apply for a Part VII transfer during 2026.

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Generated by AI. This analysis was produced with AI from the companies’ SFCRs; check any figure against the source report before relying on it.