RESOLUTION_UNDERWRITING_P - Accounts
RESOLUTION_UNDERWRITING_P - Accounts
The directors present their annual report and financial statements for the year ended 31 December 2021.
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 profit of £11,637 (2020: £37,563). 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.
PKF Littlejohn LLP 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.
select suitable accounting policies and then apply them consistently; make judgments and accounting estimates that are reasonable and prudent; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
give a true and fair view of the state of the company’s affairs as at 31 December 2021 and of its profit for the company 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.
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's 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.
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; or the directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies' exemption in preparing the directors' report and take advantage of the small companies exemption from the requirement to prepare a strategic report.
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:
We obtained an understanding of the company and the sector in which it operates to identify laws and regulations that could reasonably be expected to have a direct effect on the financial statements. We obtained our understanding in this regard through discussions with management, and application of cumulative audit knowledge and experience of the sector.
We determined the principal laws and regulations relevant to the company in this regard to be those arising from FCA Rules, FRS 102, Companies Act 2006 and relevant tax compliance regulations in the UK.
We designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by the company with those laws and regulations. These procedures included, but were not limited to making enquiries of management, review of minutes and review of regulatory correspondence.
We also identified the risks of material misstatement of the financial statements due to fraud. We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, that included the potential for management bias in relation to the impairment of debtors and we addressed this by challenging the assumptions and judgements made by management when auditing their assessment of the recoverability of debtors.
As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to: the testing of journals; reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: 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 Number One, 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. On the basis of this the intercompany balances are considered recoverable.
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 2023 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 2021 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.
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.
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.
The average monthly number of persons (including directors) employed by the company during the year was:
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 £866,974 (2020: £80,878) held in a separate bank account maintained for client 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 £9,527 (2020: £785) from the government business bounce back loan scheme.
As at 31 December 2021, subordinated loans of £748,373 (2020: £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 (£2020: £440,000) could be payable within one year if the company's solvency position permitted.
Loans due after one year includes bank loans of £39,689 (2020: £49,215) from the government business bounce back loan scheme.
Mr C G Harman and Mr R C Hayes are also directors in Resolution Underwriting Holdings Limited, the parent company. As at 31 December 2021, the Company owed £759,167 (2020: £935,587) to Resolution Underwriting Holdings Limited.
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 £16,771 (2020: £12,375) relating to this agreement. As at 31 December 2021, the Company owed £6,955 (2020: £830) to Falcon MGA Services Limited in respect of this agreement.
Mr C G Harman and Mr R C Hayes are also directors in Resolution Group Services Limited, Trilogy Underwriting Limited, Trilogy Managing General Agents Limited, ActiveRisk Group Limited and Trinity General Holdings Inc, all of which are fellow subsidiaries of the parent company, Resolution Underwriting Holdings Limited.
As at 31 December 2021, the Company was owed £442,496 (2020: £318,669) by Resolution Group Services Limited, £17,000 (2020: £nil) by Trilogy Underwriting Limited, £954 (2020: £nil) by Trilogy Managing General Agents Limited, £16,958 (2020: £nil) by ActiveRisk Group Limited and £7,861 (2020: £nil) by Trinity General Holdings Inc.
Interest was not charged on these loans.
The company is wholly owned and controlled by Resolution Underwriting Holdings Limited, a company incorporated and domiciled in England. The address of the registered office is 1 Vicarage Lane, London E15 4HF.
As at 31 December 2021, the company owed £759,167 (2020: £935,587) to Resolution Underwriting Holdings Limited. Of this, £10,794 (2020: £187,214) in due in under one year with no interest or repayment terms and £748,373 (2020: £748,373) relates to subordinated loans to the company.
Mr C G Harman, Mr R C Hayes and Mr N H Topche are also directors in Resolution Underwriting Holdings Limited.
The interest at a base rate plus 3.5% on £308,373 of the subordinated debt has been waived in 2020 and 2019 and the remaining debt of £440,000 (2020: £440,000) is non-interest bearing.