Three-year accounting (Lloyd's)

A Lloyd's syndicate's 2022 year of account started writing on January 1, 2022. It closed on December 31, 2024, and its members saw their profit only in 2025. That is three-year accounting, what older hands still call funded accounting: a year of account stays open for thirty-six months, because a policy signed in December 2022 runs to December 2023 and its claims keep coming in after that. The market lets the loss experience mature before it fixes a number. At closing, the year buys a reinsurance to close (RITC) that transfers everything still to be paid, reported and IBNR, to the same syndicate's next year or to a third party; the result becomes final, and it is either distributed to members or called from them. Practitioners look first at the RITC price, because that price decides who pays for the tail: set too low, the receiving year inherits a deficiency; set too high, the departing members leave a redundancy to their successors. When uncertainty makes the price impossible to set, the year stays open and its members stay on risk. This long cycle now sits beside two other readings of the same syndicate. Since the mid-2000s, syndicates have also published annual accounts under UK accounting standards, earned premium against the calendar year's incurred claims, all years of account combined. And since 2016, Solvency II has required an economic balance sheet and a capital figure every year. A syndicate can therefore show a calendar-year loss and a year of account that closes at a profit, and neither figure is wrong. Not to be confused with the underwriting year itself, which is the convention for attaching claims to a year, nor with an open year, which is what happens when closing fails.