FIRST_UNDERWRITING_LIMITE - Accounts

The directors of the company have elected not to include a copy of the income statement within the financial statements.true

These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.

First Underwriting Limited is a private company limited by shares incorporated in England and Wales. The registered office is Level 15, 30 St. Mary Axe, London, EC3A 8BF.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.

Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

The wider group has agreed to provide the necessary financial support for a suitable period enabling the directors to continue to adopt the going concern assumption.

Turnover represents underwriting commissions and fees received and receivable and are accounted for once the contractual right to the income is confirmed. Turnover is subject to a deferral in respect of policy administration services required to be undertaken in accordance with the contract.

Income received from bank interest is shown separately from turnover

Goodwill represents the excess of the cost of acquisition of the book of business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 5 years.

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

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.

At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets, 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.

Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

Insurance premium debtors and creditors

The company acts as an agent in underwriting insurance policies of its clients and generally is not liable as a principal for premiums due to insurers or for claims payable to clients. Premium debts are not recognised in relation to the insurance business where both the premiums due to and due from the entity are outstanding.

Accrued Income

Accrued income representing commission earned on underwriting activities is included in the balance sheet as an amount due in less than a year.

Deferred income

Where income relates to periods after the year end, the portion relating to future periods is deferred in the financial statements and recognised in the respective year.

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

The key judgements and sources of estimation uncertainty that have significant effect on the amounts recognised in the financial statements are described below:

Capitalisation of research and development

The company capitalises a proportion of the research and development annual expense. This is based on management's judgement that these relate to expenses incurred to produce or substantiality improves products and systems, rather than pure and applied research costs.

Impairment of intangible assets

The company tests annually whether intangible assets have suffered any impairment in accordance with the accounting policy stated. The recoverable amounts have been determined based on value in use calculations.

Impairment of group loans

The Company makes an estimate of the recoverable value of the group loans. When assessing the impairment of the group loans management considers whether there is objective evidence of impairment including:

• economic or legal reasons to the debtors financial difficult; and

• observable data including that there has been a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets.

Deferred Income

The company defers a proportion of the commission income earned against any costs of administering those policies. Deferment is over a 15 month period from the effective start date of policy. This is based on the assumption that policies are 12 months in length but any claims in process can have a 3 month run off. The deferral rate used for each binder is based upon an estimate of the claims costs in proportion to the costs of administering policies.

Provisions

The company includes a provision for the clawback of commission if it is deemed probable a particular binder's loss ratio will exceed that stated in the business producer agreement. A reliable estimate can be calculated in accordance with the terms of that agreement.

Intercompany Waiver

During the prior year the company agreed to the waiver of amounts due from a fellow subsidiary company of £314,833 (2020: £128,107). The amount is deemed material to the extent that it is disclosed separately on the face of the profit and loss account.

The average monthly number of persons (including directors) employed by the company during the year was:

Cash for settlement of insurance transactions is held in Non Statutory Trust accounts, operated in accordance with FCA regulations. The cash balances are recognised as assets of the company with the corresponding insurance liabilities recognised in creditors.

The amounts recognised in cash at bank in respect of the non statutory trust accounts total £15,873,293 (2020: £10,361,751).

As the income statement has been omitted from the filing copy of the financial statements, the following information in relation to the audit report on the statutory financial statements is provided in accordance with s444(5B) of the Companies Act 2006:

The auditor's report was unqualified.

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, as follows:

After the balance sheet date, ultimate control of the entity passed from White Mountain Insurance Group Ltd to Carlyle Partners VIII Holdings III, L.P. (Delaware Partnership).

The company has taken advantage of the exemption in FRS 102 from the requirement to disclose transactions with group companies that are wholly owned.

At the year end the company was owed £Nil (2020: £5,000) from a former director. The balance was repaid post year end.

Control of the company is held by Kingfisher UK Holdings Limited, a company registered and operating in the United Kingdom, who hold 100% of the issued Ordinary shares of £1.00 each.

At the reporting date, the ultimate parent is White Mountain Insurance Group Ltd, a company registered on both the New York Stock Exchange and the Bermuda Stock Exchange.

The financial statements of the company are consolidated in the financial statements of NSM Insurance Group LLC. These consolidated accounts are available from its register office.

At the reporting date, the largest group of undertakings for which group financial statements are drawn up is White Mountains Insurance Group Ltd and the smallest is NSM Insurance Group LLC.