QBE Syndicate 2999 Annual Report 2008

QBE Syndicate 2999
Annual report 2008

QBE Syndicate 2999
QBE vision QBE values

To be internationally recognised as: • Increasing the long term
wealth of shareholders
• A highly successful general insurance
and reinsurance group • Customer satisfaction and retention
• A builder of shareholders’ wealth • Employee motivation
• A developer of “can do” people • Integrity
• An organisation that excels in the

continuous delivery of new and
proven quality products and services
01 Introduction 11 Risk management

02 What makes QBE different? 12 Report of the directors of the
04 QBE Syndicate 2999 at a glance managing agent
06 QBE Reinsurance Syndicate 566 18 Managing agency – corporate information
Business of the syndicate 19 Independent auditors’ report to the
07 QBE Marine and Energy Syndicate 1036 members of Syndicate 2999
Business of the syndicate 20 Profit and loss account:
08 QBE Syndicate 1886 technical account – general business
Business of the syndicate 21 Profit and loss account:
09 QBE Property Syndicate 2000 non-technical account
Business of the syndicate 22 Balance sheet
10 QBE Aviation Syndicate 5555 24 Statement of cash flows
Business of the syndicate 25 Notes to the financial statements
37 QBE Syndicate 2999 contacts
Frank O’Halloran Steven Burns
Chief Executive Officer, Chief Executive Officer,
QBE Insurance Group QBE European Operations
QBE European Operations overview This was achieved through focused underwriting
discipline and high business retention ratios
Despite less favourable market coupled with a strong prior year performance.
Following the successful implementation of

conditions, two major hurricanes and our product and distribution model and the
development of our UK National and European
an increase in large loss frequency for Markets distribution capabilities, we are now
very well positioned to deliver strong growth
2008, QBE European Operations (EO) through these local offices as and when market
conditions improve.
has produced another strong result QBE’s philosophy remains based on
with a combined operating ratio of underwriting specialism, leadership and
continuity, which, combined with the highest
85.6% (2007 84.8%). quality of products, enables us to provide a
secure, professional environment to fully
service clients’ insurance needs.
EO’s eight product focused underwriting

divisions allow it to leverage the
d
breadth and depth of its capabilities lan
in a coordinated and focused way. Ire
This means brokers and clients have access to:

UK
A wider distribution network Q

• B
E
Na
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• All expertise in one place arine Spec

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• A choice of Lloyd’s paper or

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Avia
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2008 GWP
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• The strength and size of QBE £2.4

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Ma nergy
Casu
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• The individuals who understand

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01
QBE Syndicate 2999
Annual report 2008
What makes QBE different?
1
Strong and
2
Entrepreneurial
3
Empowers through
growing market solutions to a collaborative can
presence business risk do spirit across the
business and with all
business partners
Strong Entrepreneurial Empowers

QBE is one of the world’s top 25 insurers We are always looking for solutions to business At every stage of the relationship we encourage
and reinsurers and has been established in risks which means working closely with all parties a “can do” spirit, which means everyone benefits
the UK since 1904. At QBE we understand the to understand their business and creating the from quicker decision making and faster
importance of security in the insurance decision right product for them. solutions.
making process and the strength of our ratings
and financial backing gives us a real advantage A groundbreaking six year deal signed with We emphasise the importance of
in the market. a major provider of transport infrastructure cooperation across all departments and this
provides a graphic illustration of an insurer in turn enables us to provide a bespoke service
QBE is one of the world’s leading insurers and that has an appetite for tripartite partnerships and excellent customer relations management
reinsurers with offices in 45 countries, backed with brokers and clients built around shared programme to our clients.
by A+ ratings by S&P and Fitch. Our approach information. This also demonstrates our appetite
is one of leading not following, so when it to tackle risks that others cannot and this deal An example of this was provided recently to a
comes to product design or setting the terms provided the client with the necessary insurance major UK based corporate catering company
and conditions we take the initiative. first to survive and, latterly, the confidence to where a flexible, coordinated approach to client
build for the future. care was implemented, including scheduled
quarterly meetings backed up by fully transparent
management reporting.
02
QBE Syndicate 2999
Annual report 2008
1
Heading
The QBE European Operations brand promise Strong
strives for excellence in five core areas
5
Specialist
2
Entrepreneurial
4
Delivers reliable
5
Specialist in
4
Delivers
3
Empowers
and responsive every business

service at every line and consistently
stage of the across all disciplines
stakeholder
experience
Delivers Specialist
By understanding the market better and in Our teams are specialists in every business
particular the risks associated with that product, line, which means they give equal importance
we are more responsive and able to deliver to the generation of new business as they do to
solutions to everyone’s requirements. supporting the retention of key existing business.
Not only do we take great satisfaction from our Our underwriters are readily accessible and their
claims record, we also place a great emphasis on skills and in depth product knowledge of their
risk management, with regular forums held sector enable them to provide an answer straight
addressing the key risk issues facing our clients. away. The sheer number of underwriters allows
This emphasis is recognised by brokers who us to have specialists for individual subclasses of
rated QBE fourth for claims handling in a product and, if an answer is not readily available,
recent study*. then we are always looking for creative solutions.
These key attributes resulted in brokers ranking

QBE underwriters in third place in a recent
survey*. So whether it’s cover for aviation
products or zoos, or anything in between, we
can provide a competitive and effective outcome.
*Commercial Insurer Service study 2008 (Insurance Times).
03
QBE Syndicate 2999
Annual report 2008
QBE Syndicate 2999 at a glance
QBE Syndicate 2999 continues to provide a

scalable and efficient operating structure which,
supported by QBE EO’s product and distribution
model, enables the specialist product lines to
adapt to prevailing market conditions.
The syndicate accounts are prepared on an annually accounted basis under UK GAAP.
Highlights Strengths of the syndicate

• 2008 combined operating ratio of 79.7% • Flexible sub-syndicate structure permitting £852 million
(2007 85.6%) a high degree of autonomy for each of the 2008 GWP
underlying sub-syndicates
• 2008 GWP of £852 million
(2007 £799 million)
excluding third party RITC policies
(refer to note 18 on page 36)
• Service excellence and provision of
innovative solutions – each syndicate has
experienced and dedicated specialist
79.7%
2008 combined operating ratio
underwriting and support teams
• Continued focus on underwriting discipline
and service excellence
• Part of QBE Underwriting Limited, one of the
largest managing agents at Lloyd’s with over £1.5 billion
£1 billion of underwriting capacity for 2009 Total syndicate funds
• 100% QBE capital – capital to support

Syndicate 2999 is provided entirely by QBE
Corporate Limited, part of QBE Insurance
Group Limited (S&P, “A+” (strong))
• Total syndicate funds of £1.5 billion
• Lloyd’s security – policies issued by the sub-

syndicates benefit from the security,
expertise and brand of the Lloyd’s insurance
market (S&P, “A+” (strong)/A M Best, “A”
(Excellent))
• S&P LSA “3+” – S&P interactive Lloyd’s

Syndicate Assessment of “3+” reflects the
strength of support provided by QBE and
its superior operational management
04
QBE Syndicate 2999
Annual report 2008
QBE Syndicate 2999 comprises five
sub-syndicates and is the primary
entity from a Lloyd’s reporting and
regulatory perspective.
Under this arrangement, sub-syndicate Syndicate 2999 is a wholly aligned syndicate, Each of the sub-syndicates (referred to
underwriters retain a high degree of autonomy whereby 100% of its capital is provided by herein as syndicates) has established licences
to determine and fulfil their underwriting QBE Insurance Group. Sub-syndicate capacity and premium trust funds under their own
strategies, whilst benefiting from the allocations are not restrictive and may number for the specific types of business they
combined size, strength and capital base be adjusted within the overall umbrella underwrite. They are all licensed and accredited
of the umbrella syndicate. allocation. This means the team can respond to underwrite both surplus lines and reinsurance
to underwriting opportunities as they arise, business in the United States and have
whilst minimising the cost of capital provision. funded trust funds in accordance with local
regulatory requirements.
In 2008, Syndicate 2999 wrote total

gross income of £852 million
QBE Aviation Syndicate 5555 QBE Reinsurance

£99 million (12%) Syndicate 566
Managing Director – Emilio Di Silvio £293 million (34%)
Managing Director – Jonathan Parry
QBE Property Syndicate 2000

£86 million (10%)
Managing Director – Bernard Mageean
£852
million
QBE Syndicate 1886
£92 million (11%)
Managing Director – John Neal
QBE Marine and Energy

Syndicate 1036
£282 million (33%)
Managing Director – Colin O’Farrell
05
QBE Syndicate 2999
Annual report 2008
QBE Reinsurance
Syndicate 566
Business of the syndicate
Jonathan Parry
Managing Director
QBE Reinsurance Syndicate 566 is a leading 2008 Portfolio split

excess of loss reinsurance syndicate
specialising in non-marine property, aviation,
marine, North American and International 8
casualty treaty and personal accident in the 1
1 International Property Treaty 18%
Lloyd’s market. 2 North American Property Treaty 20%
7
3 International Casualty Treaty 15%
Underwriting reinsurance treaties from most parts 4 Aviation 5%
2
of the world, 566’s underwriters have an in depth 5 Marine 6%
knowledge of their clients and the territories in 6
6 Personal Accident 7%
which they operate. 5 7 Worldwide and Retrocession 20%
4 3
8 North American Casualty Treaty 9%
The use of sophisticated catastrophe models
enables us to estimate the magnitude and
frequency of large events and to analyse and
understand our clients’ portfolios effectively. the US can be accommodated. Syndicate 566 Worldwide and Retrocession
underwrites a diverse book encompassing most Jonathan Parry
As part of the product and distribution liability classes. The syndicate will also look This is the longest established portfolio in
reorganisation outlined earlier for 2008, Syndicate at retrocessional business. Syndicate 566. The account comprises
566 has witnessed the transfer in of the North catastrophe retrocession, catastrophe
American and International casualty treaty Aviation protections of direct and facultative accounts,
accounts, previously written by Syndicate 2000. Richard Sammons and tier 1 and tier 2 risk excess business. The
The syndicate’s aerospace focus is on syndicate leads over 80% of the account written
International Property Treaty non-proportional aviation and space treaty and has a significant impact in the quoting
Ulrich Loessl reinsurance. The major part of the portfolio process of the remainder. Syndicate 566 targets
The international property portfolio is heavily comprises excess of loss treaties, protecting business with a high risk to reward ratio whilst
biased towards catastrophe excess of loss insurers and reinsurers of the world’s major positioning itself away from attritional loss activity.
reinsurance. Less than 5% of the portfolio is airlines, airports and aerospace product The syndicate values continuity and has been
risk exposed. The account is exceptionally well manufacturers. The account also targets insurers trading with its core clients for many years.
spread geographically, with the United Kingdom, and co-insurers writing general aviation and hull
Europe, Japan, Australasia and Latin America liability for smaller planes. North American Casualty Treaty
comprising the major focus. Much of the portfolio David Woodruff
is written in a lead position. Property is the main Syndicate 566 is a member of the SATEC Pool This account is biased toward risk and
focus of the portfolio but the account also providing cover on satellite launch and in-orbit catastrophe excess of loss treaty, but most
includes agricultural and engineering portfolios. risks on a proportional basis. reinsurance structures will be entertained.
We split the account between standard lines
North American Property Treaty Marine and professional lines. Historically, professional
Paul Horgan Jonathon Dean lines have comprised errors and omissions,
Over 90% of the North American portfolio The syndicate’s marine portfolio covers all healthcare, fidelity and directors’ and officers’
emanates from the US, with the remainder from aspects of marine business and also includes covers. From January 2008 the decision was
Canada. Of the combined book, the majority is third party coverages such as P&I and pollution. taken to focus exclusively on healthcare
written on a catastrophe excess of loss basis We write the account on a risk and catastrophe business in this sector. Standard lines comprise
with risk exposed programmes comprising less excess of loss basis and the syndicate has the general liability, WCA, clash and motor covers.
than 5%. Historically the account has focused on ability and capacity to act as a lead reinsurer. The syndicate tends to target small to medium
those regional companies operating in single or It focuses on middle to high layers avoiding sized regional portfolios.
limited states, but more recently the account has attritional levels. The portfolio currently consists
expanded to afford cover to the large stock of business emanating from over 50 countries. Claims
companies operating on a nationwide basis. Mark Wilson
Personal Accident
The portfolio also includes a specialised Our adjusters are authorised to handle all classes
Peter Wilkins
agricultural account. of business. Technical strengths are combined
The personal accident account written by the with a pragmatic claims handling philosophy,
International Casualty Treaty syndicate is split almost equally between risk and which recognises the need for proactive and
Richard Fothergill catastrophe excess of loss business and primary flexible claims management.
Syndicate 566 is a recognised market leader in direct and facultative insurance including lineslips
this class. The account is written on both an excess and binders. In addition to PA business, the
of loss and proportional basis. Geographically, account also comprises life and travel business.
the syndicate focuses on all territories with the
exception of the US. Incidental exposures in
06
QBE Syndicate 2999
Annual report 2008
QBE Marine and Energy
Syndicate 1036
Colin O’Farrell
Managing Director
QBE Marine and Energy Syndicate 1036 is 2008 Portfolio split

a leading marine syndicate specialising in
hull, energy, liability, specie, cargo, war and
allied risks. 7 1
6 1 Cargo 7%
Established in 1987, the syndicate underwrites a 2
2 Liability 18%
worldwide account, requiring underwriters to have 5 3 Energy Offshore 33%
a comprehensive knowledge of their clients’ 4 Energy Onshore 17%
businesses and the territories in which they operate. 5 Specie 7%
4 6 Hull and War 11%
The use of sophisticated software, combined with 3 7 Political Risk and Terrorism 7%
extensive travel, enables the syndicate to analyse
and understand its clients’ needs effectively.
As part of the product and distribution

reorganisation in 2008, Syndicate 1036 now Energy Onshore War
incorporates the sabotage and terrorism Stephen Saunders Haydn Costin
portfolio, previously written by Syndicate 1886 A wide range of onshore assets for oil and gas We write a maritime war account, which includes
and QBE’s company operations. companies worldwide are insured, from well war risks on vessels, cargo, floating energy risks
heads to refineries and petro-chemical plants, and maritime liabilities. We are an established leader
Cargo with particular dominance in the Middle East in the class and are instrumental in setting terms
Tim Pembroke and Indonesia. Approximately 75% is written and conditions which are followed worldwide.
We write a high quality portfolio of cargo in a lead capacity. To complement the above we
business and are recognised as a leader in high- also underwrite an onshore construction account Political Risk and Terrorism
tech, pharmaceutical and manufactured goods focusing on erection all risks and associated lines Nicky Ablett
as well as excess cargo business. We emphasise of third party liability. Through a specialist underwriting team, we have
the value of long term relationships with our developed a political risk and terrorism portfolio
clients and work with them to develop mutually Specie of broad based, worldwide business. This account
beneficial risk control programmes. Ryan Joseph complements existing areas of the book, but
We underwrite a worldwide account specialising particularly onshore energy, cargo and specie.
Liability in the areas of armoured car, general specie, fine
Daryl Ewer art and jewellers’ block. Business is written to all Claims
We are a major leading underwriter in the global the major brokers, dealing with some of the most Gary Crowley
liability market, with an account produced from prominent institutions in the financial sector and Our well respected claims team works closely
all the major brokers worldwide and from industry art world. We lead approximately 40% of the with our underwriters to ensure claims are
specialists. The account comprises pure marine business we write. managed to an extremely high standard.
coverages such as P&I, pollution, charterers, stand The claims team have long standing relationships
alone energy liabilities and package policies. Hull with surveyors, loss adjusters, lawyers and other
Haydn Costin professional advisers whose expertise can be
Working closely with our colleagues in hull and We write an established high quality hull account. brought to bear on our response to a claim. We
energy, particularly offshore, we specialise in The portfolio, which principally consists of enjoy a good working relationship with brokers
tailoring complex and unusual coverages to bluewater vessels, includes a significant and London insurance market organisations.
clients’ needs and requirements. We are the proportion of builders’ risks, short-tail total loss
leading underwriter to many International Group only, increased value and mortgagees’ interest
P&I associations, providing extended coverages, risks. Risks of physical damage to ports,
over and above those offered by club rules, worldwide are also included. Recognised as
as well as reinsurance capacity solutions. leaders in all aspects of the account, we are
supported by all the major hull brokers. We
Energy Offshore maintain a significant presence on market wide
Sam Harrison initiatives, for example the Joint Hull Committee,
Writes a portfolio of risks worldwide, from which complement our underwriting.
dedicated upstream entities to fully integrated
energy companies.
We insure offshore risks for oil and gas

companies worldwide, specialising in offshore
insurance for assets located in the North Sea and
the Far East, particularly China. Approximately
60% of the business written is in a lead capacity.
07
QBE Syndicate 2999
Annual report 2008
QBE Syndicate 1886
John Neal
Managing Director
QBE Syndicate 1886 was established for the 2008 Portfolio split
2006 year and specialises in non-marine
casualty and specialty.
4 5
The business is focused into a number of 1 General Liability 56%
areas, each with a specialist underwriting team 3 1 2 Financial Institutions 22%
responsible for its account. The underwriters 3 Overseas Motor 14%
have dual underwriting authorities allowing them 4 Specialty 7%
access to Lloyd’s or company paper. 5 Marine Liability 1%
2
By operating on this basis, Syndicate 1886
enables QBE company underwriters to
participate in previously inaccessible markets
and provides existing Lloyd’s underwriters with
additional capacity. This adds significantly to the
company’s underwriting capabilities and brings Overseas Motor Marine Liability
new business to the Lloyd’s market. Steve Stone Robert Johnston
Aiming to underwrite personal lines portfolios, We offer intermodal and professional indemnity
General Liability the overseas motor team targets well managed insurance to companies in the shipping/transport
Ash Bathia and administered coverholders with good local fields. Cover is offered on a worldwide basis,
We offer a broad spectrum of insurance and knowledge and high integrity anywhere in the including the US.
reinsurance products backed by extensive world, outside North America.
experience in all classes. We have dedicated Claims
professionals specialising in public liability, Specialty Andrew McBride
product liability, medical malpractice, product This division comprises the following portfolios: The team is focused on delivering outstanding
recall, directors’ and officers’ liability, professional levels of service and expertise to clients across
Kidnap and Ransom all lines of business. This embedded customer
indemnity and construction all risks.
Graeme Rayner service ethic is supported by innovation and
Financial Institutions Offering worldwide cover for kidnap, extortion, transparency in claims handling and management.
Gary Norman hijacking and wrongful detention. The team is also proactive in supporting and
We underwrite a broad spectrum account embracing new technologies and market initiatives,
Bloodstock
specialising in leading middle market financial including the use of electronic claims files.
Graeme Rayner
institutions and all commercial crime business.
Offering worldwide insurance products for
This includes comprehensive crime, professional
bloodstock and equine, livestock, aquaculture,
indemnity, directors’ and officers’ liability and
all risks of mortality, infertility, theft and
commercial crime.
associated risks.
Product Protection
Graeme Rayner
We have developed a reputation for delivering
successful insurance programmes covering
extended warranty, GAP insurance and
creditor insurance.
08
QBE Syndicate 2999
Annual report 2008
QBE Property
Syndicate 2000
Bernard Mageean
Managing Director
QBE Property Syndicate 2000 is a leading 2008 Portfolio split

syndicate operating in the Lloyd’s market,
specialising in direct property and accident
and health. 3
1
1 Property Direct and Facultative 66%
Dedicated professionals within specialist expert 2 Property Binders 27%
underwriting teams have full authority to trade 2 3 Accident and Health 7%
and clear accountability and responsibility for
each account.
As part of the product and distribution

reorganisation outlined earlier for 2008, Syndicate
2000 has become the exclusive vehicle for
property insurance and all accident and health
business within umbrella syndicate 2999.
Accident and Health
Property Direct and Facultative Mike Bridgeman
Andrew Stout Syndicate 2000 has developed a broad range
We have a worldwide property account of insurance products supported by extensive
predominantly at present in North America, experience in all classes. The syndicate has
for business ranging from small surplus lines dedicated professionals specialising in general
commercial and light industrial risks to larger personal accident, high risk personal accident,
Fortune 1000 type accounts. We are still willing, sports personal accident and film and contingency.
and have the capacity, to write catastrophe
exposed business worldwide. Claims
Andrew McBride
Property Binders We provide a professional, effective and
Martin Rowling efficient claims service to our clients and their
We underwrite a select number of property related agents. Our claims handling expertise is used
and commercial vehicle facilities, enabling agents by our underwriters to ensure our future
to bind, on underwriters’ behalf, a comprehensive underwriting success.
portfolio of business in the agent’s office.
Business under these contracts, predominantly
for US based agents, ranges from small to
medium sized commercial and industrial risks,
homeowner/condominium and real estate type
risks and selective catastrophe peril facilities.
09
QBE Syndicate 2999
Annual report 2008
QBE Aviation
Syndicate 5555
Emilio Di Silvio
Managing Director
QBE Aviation Syndicate 5555 was launched 2008 Portfolio split

in September 2006 and began writing
business incepting 1 October 2006.
The objective has always been to develop a

3 1 1 General Aviation 52%
balanced portfolio across all classes of business
2 Airlines 22%
namely general aviation, airlines, products and
3 Products and Airports 26%
airports. After our second full year under our
belts we are well on our way to achieving this.
We will continue to focus on growing the general 2

aviation portfolio in line with the improving market
which will further reduce the volatility in the major
areas of our business which is in line with our
long term strategy of balance across the
account. The last two months of 2008 saw us We sub-divide our portfolio into three sections: Products and Airports
reduce our airline portfolio by approximately 20% Graham Daldry
Private Business and Pleasure, which is Our objective and experience is that of a strong
on business which we felt was inadequately
essentially light aircraft owned by private leader, having gained significant participation
priced in an improving environment.
individuals and flying clubs. and influence in the aviation market. We have
We have focused on achieving a lead position expanded our underwriting and claims services
Industrial Aid, which consists of fixed wing aircraft
on the business which allows us to control our that we offer directly to the brokers and to our
and helicopters owned or operated by corporations
claims more robustly and in the process have mutual clients. Our areas of expertise include
for the transport of their executives and employees.
been successful in a large number of cases, airframe, engine and component manufacturers
but predominantly on the general aviation as well as airport and airport related servicing
Commercial, which we categorise as aircraft with
portfolio to date. risks including refuelling operations.
a maximum of 50 seats conducting revenue
earning flights.
Undoubtedly price is still a major driver in the Claims
client’s purchasing criteria, but our approach Jerry Flaxman
The insurance solutions that we provide for all of
has been to supplant price as the primary Providing our customers with an efficient,
our clients, and our expertise in the general aviation
requisite by promoting competitive terms in sympathetic and speedy resolution to a claim
area, differentiates us from our competitors.
relation to the service, coverage and security is our primary aim as this is when the insurance
we are able to offer. Airlines policy and our promises come to life. Our claims
Dan Boultwood handling philosophy focuses on being prepared
General Aviation Our airline business continues to be written and proactive in providing an effective and
Anthony Prokopiou on a co-insurance basis within the international professional claims handling service to our clients.
We are a leader of business in the general subscription market. Our capacity is available
aviation market. This is a position that we have We adopt a sympathetic approach to
for a complete cross section of worldwide airline
cemented during the past 12 months as we determining any claims issues and with our
business ranging from international, national and
continue to build our account in a structured breadth of expertise and experience can manage
regional carriers to charter and cargo airlines.
and measured way. the simplest to the most complex and potentially
Our focus has been on the major flag carriers
costly claims, fairly and in a timely fashion.
during our initial development phase, although
This leadership position enables us to manage
our book is constantly under review as the market
our clients’ needs effectively and efficiently on
and the syndicate develop. We have taken
both underwriting and claims issues.
leadership on one account at present and
Our portfolio is very broad in terms of the although technical pricing of the business has
geographical location of our clients, the aircraft to be our main driver, our long term objective
types that we insure and the coverages that is to become an influential market leader
we offer. demonstrating our knowledge, skills and
expertise in this sector.
10
QBE Syndicate 2999
Annual report 2008
Risk management
The syndicate’s activities expose the business to a number of key risks which have the potential to affect its ability to achieve its business
objectives. The board is responsible for ensuring that an appropriate structure for managing these risks is maintained. The board
acknowledges that it is not realistic or possible to eliminate risk entirely, and therefore seeks to ensure that the appropriate controls are in
place to manage risks effectively in line with the agreed tolerance.
The syndicate continues to develop its risk management capability to ensure that an effective framework exists to support the management
of all types of risk. Elements of this framework include the regular identification and assessment of the key risks and controls and clearly
defined ownership of both the risks and controls.
Risk groups
The key risks can be grouped under the following headings.
Insurance risk The syndicate’s business is to accept insurance risk which is appropriate to enable it to meet its
objectives. In line with the QBE Group risk strategy, the syndicate seeks to balance insurance risk with
reward. All underwriting divisions are set specific and measurable performance targets which they
are expected to achieve by operating within the parameters of the approved business plan.
Credit risk In addition to the insurance terms of trade offered as standard, a certain amount of credit risk
is unavoidable, as it can arise as a result of the inability to pay or slow payment of any of the
syndicate’s counterparties. The syndicate therefore seeks to limit exposure as far as is practical
and therefore has established detailed guidelines, procedures, limits and monitoring requirements
to mitigate credit risk.
Capital and liquidity risk Capital and liquidity risk is the potential that the syndicate is unable to meet its obligations as
they fall due or its capital falls below that required by regulators. The objective of QBE’s capital and
liquidity risk management is to ensure that capital is optimally managed, that the syndicate remains
solvent by a significant margin and that all withdrawals and funding requirements can be met out
of readily available sources of funding. QBE undertakes capital exercises to ensure that capital is
adequate to meet risks and seeks to maintain a strong liquidity position by holding its assets in
liquid funds.
Market risk The syndicate’s exposure to financial market risk arises out of the investment decisions made
in relation to the investment of Premium Trust Fund assets. Exposure to market risk is managed
through the investment strategy, which reflects the appetite of the board. The strategy is
deliberately conservative in order to eliminate potential volatility to market fluctuations as
much as possible.
Operational risk The syndicate seeks to mitigate exposure to operational risks through ensuring that an effective
infrastructure, robust systems and controls and appropriately experienced and qualified individuals
are in place throughout the organisation.
Cash flow risk The syndicate’s exposure to cash flow risk is addressed under the heading of capital and
liquidity risk.
11
QBE Syndicate 2999
Annual report 2008
Report of the directors
of the managing agent
The directors of QBE Underwriting Limited (QUL), the managing agent for Syndicate 2999, present the syndicate’s annual report and audited financial
statements for the year ended 31 December 2008.
This annual report is prepared using the annual basis of accounting as required by Statutory Instrument No 3219 of 2004 the Insurance Accounts Directive
(Lloyd’s Syndicate and Aggregate Accounts) Regulations 2004 (the 2004 Regulations).
Principal activity
Syndicate 2999 is an umbrella syndicate with Peter Grove as Active Underwriter. For 2008, it comprised the following five actively trading sub-syndicates:
Sub-syndicate Managing Director Specialist classes
566 Jonathan Parry Reinsurance: property; aviation; casualty treaty; personal accident; and marine
1036 Colin O’Farrell Marine insurance: hull; energy; liability; specie; cargo; war; and political risks
1886 John Neal Non-marine: general liability; bloodstock; specialty; product protection; overseas motor; and marine liability
2000 Bernard Mageean Non-marine: property; and accident and health
5555 Emilio Di Silvio Aviation: general aviation; airlines; and products and airports
Business review and future developments

For the 2008 financial year Syndicate 2999 produced a combined operating ratio of 79.7% (2007 85.6%) and an insurance profit for the financial year of
£166.4 million (2007 £161.8 million), analysed by sub-syndicate as shown in the following table:
2008 2007
5661 1036 1886 2000 5555 Total Total2
£000 £000 £000 £000 £000 £000 £000
Gross premium written 293,275 282,222 92,082 85,583 99,105 852,267 977,891
Net earned premiums 206,689 158,351 69,871 81,993 71,500 588,404 742,494
Net claims (124,099) (83,907) (21,509) (14,724) (72,626) (316,865) (446,452)
Acquisition costs (41,700) (43,726) (19,047) (30,976) (18,818) (154,267) (150,454)
Net underwriting profit 40,890 30,718 29,315 36,293 (19,944) 117,272 145,588
Profit/(loss) on exchange 31,102 19,491 5,381 37,497 6,120 99,591 10,011
Other net operating expenses (26,640) (25,624) (14,335) (29,098) (1,450) (97,147) (48,780)
Investment return 5,180 10,300 4,908 25,100 1,150 46,638 54,954
Total profit for the financial year 50,532 34,885 25,269 69,792 (14,124) 166,354 161,773
Claims ratio 60.0% 53.0% 30.8% 18.0% 101.6% 53.9% 60.1%
Combined operating ratio 78.1% 84.5% 70.9% 45.5% 121.4% 79.7% 85.6%
1 Excludes 2000 and prior open year of account liabilities, which remain in a separate syndicate.
2 Gross written premiums in 2007 included the reinsurance to close of syndicates 456, 980 and 1036 as required by UK GAAP (see note 18 on page 36).
On analysis of the account on an underwriting year basis, the 2008 year produced a modest loss in the financial year of £12.2 million, reflecting the tough
trading conditions and severity and frequency of losses. This was materially outweighed by a strong prior year performance, coupled with significant releases
arising from the run-off portfolios.
The Managing Director comments for each sub-syndicate are as follows:
Jonathan Parry – QBE Reinsurance Syndicate 566

We are pleased to report an insurance profit of £50.5 million for the 2008 financial year, which represents a combined operating ratio of 78.1%. Unlike the
previous two years, 2008 was a more active year for US hurricanes and the syndicate suffered losses from both Ike and Gustav. Hurricane Ike caused
nearly US$20 billion of market insured damage both offshore and onshore, producing a loss to the syndicate of US$77.0 million gross, US$41.5 million net.
Thankfully, with the exception of the marine account, attritional losses remained low, enabling the account to remain profitable. The result was also assisted
by the favourable earn-out of the 2006 and 2007 underwriting years as well as the strong US dollar.
With the turmoil in financial markets, demand for reinsurance capacity has again increased, and with a reduction in supply, this has led to a hardening in
the market for 2009. We can see terms improving throughout this year and into 2010, which will obviously help the syndicate’s ability to deal with any
catastrophic losses.
12
QBE Syndicate 2999
Annual report 2008
The long-tail classes are now fully integrated, and with a new marine reinsurance underwriter on board, we believe the syndicate is well placed to take
advantage of the current market upturn.
We are also pleased to report the acceptance of Syndicate 566 open year reinsurance to close premium following a successful consultation with all
capital providers.
Colin O’Farrell – QBE Marine and Energy Syndicate 1036

After what can only be described as a quite extraordinary year it is particularly pleasing to be able to record another exceptional result where the syndicate
has delivered a combined operating ratio of 84.5% and a profit of £34.9 million.
I say extraordinary because who would have predicted that the global economic crisis would deepen at such speed, whilst the market endured yet another
year of significant hurricane activity culminating in Hurricane Ike battering the coastline of the Gulf of Mexico. Both events have had substantial impact on
the syndicate.
As we entered 2008, market conditions in all areas we trade continued to worsen. Underwriters’ memories had been wiped clean of the troubles of 2005
and they were fooled into thinking that 2006 and 2007 years were the norm. New entrants had also emerged and intermediaries were quick to remind
underwriters that there were always alternatives. All was not lost, as in the spring of 2008 the onshore energy market had a short and sharp reminder of the
exposures that exist when several mining losses occurred causing a temporary halt to the rate cutting.
As the year progressed the effects of the economic crisis became apparent, and accelerated sharply in the last quarter. At this time the market began to
react. No longer was it acceptable to offer reductions, but business that sought such terms were stringently reviewed and risk management processes
they deployed rigorously evaluated. However, there still appears to be resistance to this hardening. Brokers and clients alike continue to seek reductions:
brokers, for fear of being the individual who delivers bad news to the client and; clients due to the effects that the current global recession is having on
their own business. Cost savings became of paramount importance as opposed to expertise and security.
Hurricane Ike has tested the resolve of the market. Few experts would have predicted that a category 2 hurricane could have caused such damage.
As a consequence, capital providers, risk modellers and industry experts alike have reviewed their positions and thinking with regard to hurricanes.
As we enter 2009 many capital providers have withdrawn their capacity for such risks, both insurance and reinsurance. We remain firmly in the market
place but our underwriting of this risk will become even more vigilant and we will only provide the product to the companies that can show outstanding
risk management.
We highlighted last year that the diversity of our product offering had enabled us to deliver the result we had. This comment is echoed for 2008. Whilst our
energy portfolio has suffered in 2008 other accounts have made substantial contributions. Of particular note are our political risk and political violence
accounts, whilst we only started underwriting these for the 2005 year they are now producing healthy profits.
Another important contributor to the result has been the development of our prior years. Disappointingly our 2007 underwriting year has had a number
of large risk losses during 2008, however this has been offset by prior years and it demonstrates the robustness of the syndicate’s reserving policy.
The tenacity shown by all involved in this process is tremendous and I express a special note of thanks to the syndicate’s claims team for their contribution.
In the aftermath of the catastrophic losses of 2005, reinsurance was a scarce commodity. However, there was a surfeit of capacity in 2008 following the
relatively benign loss environment in recent years. How times change. The full effects of the “credit crunch” and subsequent lack of capital has meant
reinsurers have retrenched and the amount of capacity being deployed for catastrophic risks, particularly USA exposed, has become almost non-existent.
Having expanded our product capability in 2008 with the ability to offer dual pens utilising either our Lloyd’s or QBE paper and licenses, it is very pleasing
to announce further diversification. During 2008 we expanded our distribution by opening an office in Singapore operating on the Lloyd’s Asia platform and
now offer capacity for risks in the region in conjunction with our Asian colleagues.
Furthermore, in December 2008 we purchased Burnett & Co, a USA based MGA, with offices in both Houston and New Orleans to enable us to further
strengthen our position in a very important market for QBE. Both platforms will enable us to offer our products in a fast and efficient way as our customer
demands change.
Given the current global economic conditions, it will be a tremendous challenge to replicate the 2008 result for 2009. A worldwide recession is upon us,
capital is difficult to acquire, assureds face challenges not seen for a generation or more and commodity prices have plummeted from their recent all time
highs. However, I am sure that with the team we have within the syndicate, allied to the support we receive from management we will meet the challenge
head on and succeed.
Lastly, a personal note of thanks to all the syndicate staff for their continued fortitude and hard work in producing the result.
13
QBE Syndicate 2999
Annual report 2008
continued
John Neal – QBE Syndicate 1886

Syndicate 1886 remains a cornerstone in enabling QBE European Operations’ underwriters to deliver its products to brokers and clients around the globe.
In 2008 gross written premiums increased to £92 million (2007 £53 million) coupled with an impressive combined operating ratio of 70.9%. Whilst
appropriate provisions have been made on the 2008 underwriting year for the potential of claims arising from the global credit and liquidity crisis,
the profitable outturn of the 2007 underwriting year and a significant surplus on the motor account prior years have bolstered profits.
The syndicate continues to add to both its product range and its geographical reach, further increasing our presence in Canada and adding professional
indemnity covers and a contractors all risks package to its stable.
Bernard Mageean – QBE Property Syndicate 2000

Syndicate 2000 was restructured with effect from 1 January 2008, becoming the exclusive vehicle for the property, leisure and sports insurance portfolios
within Syndicate 2999. Prior to 2008 the syndicate wrote a range of non-marine business, property and casualty, insurance and reinsurance.
The 2008 calendar year produced a profit of £69.8 million and a combined operating ratio of 45.5%, due primarily to 2006 and prior underwriting
year performances.
The property portfolio experienced a difficult year in 2008 which also adversely impacted 2007. The causes have been inadequate and reducing rates,
and a large increase in both the frequency and more importantly the severity of losses. This was especially true in the mineral, metals and utility industries.
On top of this there has been a frequency of natural catastrophe losses, the largest of which, Hurricane Ike, has slightly impacted our reinsurance
programme; but others such as Gustav and Dolly have also contributed lesser amounts.
The 2007 underwriting year deteriorated during 2008, not only because of the increased attrition on the property account, but also due to adverse
developments on the financial institutions portfolio. Our analysis of the syndicate’s US sub-prime exposures has not changed materially over the past
12 months. However, as the turmoil in worldwide financial markets gathered pace during 2008, we had to strengthen our overall reserves for this sector.
The 2006 and prior years have performed extremely well during 2008. Significant releases have been made from the various run-off syndicates
previously reinsured into Syndicate 2000, the largest element relating to an anticipated global settlement of the so-called “IPO Laddering” claims, which
mainly impacted the 2000 and 2001 years of account. There have also been material releases from the 2004-2006 years of Syndicate 2000’s reinsurance
casualty portfolios.
The outlook for 2009 is more encouraging. From late 2008, rates, especially in the USA and in the problem industries, started rising and so far in 2009
the pace of increase has accelerated. Rates in other territories have so far been slow to follow suit but we are expecting all rates to harden as the
year progresses.
Emilio Di Silvio – QBE Aviation Syndicate 5555

We are disappointed to have produced an underwriting loss for 2008. This is a reflection of difficult market trading conditions for all sectors of our business.
The underwriting loss comes largely from our airlines account, from risks written during the fourth quarter of 2007 when the world’s major aviation
risks renew.
During 2008, airline rates increased most significantly towards the end of the year although, irrespective of improving market conditions, we took the
decision to reduce our airline portfolio until such time that we are able to achieve further improvement of rates. We have developed an airline rating tool
to support our decision making process in this regard. The most noticeable incident in the year was the Spanair loss of 20 August 2008.
Our general aviation business is developing to plan although market conditions have been such that an underwriting loss resulted. Our products and airport
account continues to be profitable.
During the latter part of 2008, the products, airports and general aviation portfolios began to stabilise and with airline risks receiving the much needed rate
increases, there is now a brighter prospect of returning to underwriting profit.
We are optimistic about 2009 and believe that the market will improve further thus offering us greater opportunities.
14
QBE Syndicate 2999
Annual report 2008
Investment policy
QBE European Operations operates an investment committee which is responsible for recommending to the QUL agency board appropriate investment
policy and strategy, and which also monitors the performance of investment managers and their compliance with internal guidelines and external regulation.
The investment policy is designed to ensure that appropriate levels of liquidity, credit and investment risk are maintained.
Syndicate investments are currently limited to fixed income bonds and money market instruments. The majority of portfolios have an average credit rating
equivalent to or better than Standard and Poor’s “AA”. The minimum permitted credit quality is “A-”. The performance of the investment manager is
monitored against an absolute return mandate with other reference benchmarks or peer group performance used as key performance indicators.
Management of the investment portfolios for the syndicate is delegated under an arm’s length agreement to Minster Court Asset Management (UK) Ltd,
(the investment manager), a wholly owned subsidiary of the QBE Group. The activities of the investment manager are regulated by the Financial Services
Authority (FSA).
Investment performance
The total investment returns achieved for each calendar year are set out below. These include income earned on funds which are not managed by the
investment manager, such as short term liquid deposits and certain regulatory overseas deposits. The combined total currency return for the year was
3.8% (2007 5.2%).
2008 2008 2008 2007 2007 2007

Average Actual Target Average Actual Target
funds return return funds return return
Portfolio currency 000 % % 000 % %
Canadian dollar 183,311 5.0 4.3 139,114 4.3 4.0

Euro 46,770 1.9 4.0 51,593 3.3 3.4
Sterling 228,482 6.9 5.2 242,845 5.6 4.8
US dollar 1,643,560 3.0 4.6 1,512,068 5.3 4.9
The benchmark target for fixed income portfolios is now an absolute return yield to be agreed for each currency on an annual basis by the QBE European
Operations executive board. Targets for each currency agreed for each calendar year are shown above.
Individual currency investment returns varied in performance when compared to their respective currency targets for the year. Outperformance was
achieved in the sterling and Canadian portfolios whilst the euro and US dollar funds fell short of their benchmark. Overall performance for the syndicate
was below the weighted target return of 4.6% but slightly better than the currency weighted cash equivalent return.
During 2008, the investment manager adopted a cautious stance by maintaining relatively short duration in all portfolios. As the intensity of the credit
crunch worsened during the year, the investment strategy adopted for the syndicate was dominated by an emphasis on preservation of capital as the
primary goal. As a result of this strategy, the syndicate investment portfolios performed favourably when compared with returns in the insurance industry
peer group and managed funds avoided any credit defaults in 2008.
After taking account of the investment return, profit payments and significant exchange rate movements, overall syndicate funds closed the year below
budgeted target but materially above their opening level.
Corporate governance
Managing agency board
The board is committed to high standards of corporate governance and has established a practical governance framework which includes the delegation
of considerable authority to divisional product management committees and a number of other authorised committees. All of the committees comprise
appropriately skilled and experienced members, and operate under formal terms of reference. The board comprises 19 executive directors and three
non-executive directors and meets seven times a year.
Divisional product management committees

These committees are responsible for the reporting and review of all aspects of the division’s day to day management of underwriting and meet monthly.
Each committee is chaired by the divisional Managing Director and comprises senior underwriting and management representatives of the division,
together with representatives of the managing agency board.
15
QBE Syndicate 2999
Annual report 2008
continued
Other committees
• Strategic underwriting committee: the committee is responsible for developing the business strategy and agrees and oversees the implementation
of appropriate policies and controls for underwriting activities. The committee is chaired by the Chief Operating Officer.
• General business committee: the committee reviews and approves routine matters where the board has delegated authority to the committee;
it makes recommendations where board approval is required; and reviews and approves routine matters and regulatory returns which do not require
board approval. The committee is chaired by the Compliance and Risk Management Director.
• Group security committee: the committee is responsible for establishing and monitoring procedures and systems for the evaluation of all reinsurance
security and outwards reinsurance intermediaries to be utilised by regulated entities within the Group. The committee is chaired by the Chief
Underwriting Officer.
• Information technology committee: the committee is responsible for reviewing and recommending the IT strategy to the board, recommending
the annual IT plan, implementing strategy and providing oversight of material IT projects. The committee is chaired by the Chief Operating Officer.
• Investment committee: the committee is responsible for making recommendations to the board as to the appropriate investment policy and
guidelines for each of the syndicates’ funds and to take responsibility for the day to day implementation and monitoring of the agreed strategy.
The committee is chaired by the Chief Financial Officer.
• Audit committee: the committee is responsible for assisting the boards in discharging their oversight responsibilities, by overseeing the financial
reporting process and reviewing the effectiveness of the internal financial control and risk management system, the effectiveness of the internal audit
function, the independent audit process including recommending the appointment and assessing the performance of the external auditor, and the
process for monitoring compliance with laws and regulations. The committee is chaired by a non-executive director.
• Reserving committee: the committee is primarily responsible for undertaking a review of the reserve information (including reinsurance to close and
open year reserve information produced by each managed syndicate) in support of the accounts and solvency returns, and to be satisfied that the level
of total closed and open year reserves have been calculated, where appropriate having regard to Lloyd’s Code for Management for Reserving Risks,
Regulations and Byelaws, and are consistent with the standards required to attain satisfactory audit and actuarial opinions. The committee is chaired
by the Chief Actuarial Officer.
• Capital committee: the committee is responsible for providing guidance and review on capital assessment issues in relation to the FSA and Lloyd’s
regimes. The committee is chaired by the Chief Actuarial Officer.
• Risk management committee: the committee is responsible for ensuring that all risks to QUL’s objectives are identified, assessed and monitored
in accordance with the overall risk policy. The committee is chaired by a non-executive director.
• Internal audit committee: the committee provides assurance that an appropriate control framework is in place to mitigate business risk and that these
controls are both functioning in practice and consistent with QBE Group and QUL procedures together with legislative and regulatory requirements.
The committee also provides assurance that compliance and monitoring procedures are operating effectively. The committee is chaired by a non-
executive director.
Internal audit
An independent internal audit function provides assurance to the internal audit committee as to the effectiveness of internal systems and controls, makes
recommendations for improvement and monitors progress towards completion via management action plans. Internal audit also provides independent
feedback on the risk management process.
Risk management
Details of the principal risks and uncertainties facing the syndicate are shown on page 11.
Other governance issues

QUL has adopted a code of conduct which outlines a set of general business ethics that apply to all employees when conducting any activity on behalf
of the company. The code of conduct requires employees to carry on business in an open and honest manner with customers, shareholders, employees,
regulatory bodies, outside suppliers, intermediaries and the community at large. The code also deals with a number of other requirements including whistle
blowing, confidentiality, disclosure of information and conflicts of interest. Other policies are in place to cover areas such as health and safety, harassment,
equal opportunities and financial crime.
16
QBE Syndicate 2999
Annual report 2008
Directors
Details of the directors of the managing agent that served during the year are shown on page 18.
Creditor payment policy

The managing agent’s policy on the payment of creditors is to abide by London insurance market practices, including those of Lloyd’s and the International
Underwriting Association. The managing agent agrees terms with its other suppliers when it enters into binding purchase contracts. The managing agent
seeks to abide by the payment terms agreed with these suppliers whenever it is satisfied that the supplier has provided the goods or services in
accordance with the agreed terms and conditions.
Statement of managing agent’s responsibilities

The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2004 require the managing agent to prepare syndicate
annual accounts at 31 December each year which give a true and fair view of the state of affairs of the syndicate as at that date and of its profit or loss
for that year.
In preparing the syndicate annual accounts, the managing agent is required to:
• Select suitable accounting policies which are applied consistently, subject to changes arising on the adoption of new accounting standards in the year
• Make judgements and estimates that are reasonable and prudent
• State whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the
financial statements
• Prepare the financial statements on the basis that the syndicate will continue to write future business unless it is inappropriate to presume that the
syndicate will do so
The directors confirm that they have complied with the above requirements in preparing the annual accounts for Syndicate 2999.
The managing agent is responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the
syndicate and enable it to ensure that the syndicate annual accounts comply with the 2004 Regulations. It is also responsible for safeguarding the assets
of the syndicate and hence for taking reasonable steps for prevention and detection of fraud and other irregularities.
Statement of disclosure of information to auditors

Each of the persons who is a director of the managing agent at the date of this report confirms that:
• So far as each of the directors is aware, there is no information relevant to the audit of the syndicate’s financial statements for the year ended
31 December 2008 of which the auditors are unaware; and
• The director has taken all the steps that he ought to have taken in his duty as a director in order to make himself aware of any relevant audit information
and to establish that the syndicate’s auditors are aware of that information.
Auditors
The directors of the managing agent intend to reappoint PricewaterhouseCoopers LLP as the syndicate’s auditors.
By order of the Board
S M Boland
Company Secretary
QBE Underwriting Limited
Plantation Place
30 Fenchurch Street
London
EC3M 3BD
17 March 2009
17
QBE Syndicate 2999
Annual report 2008
Managing agency –
corporate information
Directors
The directors of QUL, the managing agent, who served during the year ended 31 December 2008 and subsequently are:
A M Bathia Appointed 1 January 2008

I D Beckerson
S P Burns
D A Constable
M F Crane Appointed 1 January 2008
E Di Silvio
P A Dodridge
D Grossman Appointed 1 January 2008
P E Grove
R B M Johnston Appointed 10 March 2009
B Mageean Appointed 11 June 2008
V McLenaghan
J D Neal
C R O’Farrell
F M O’Halloran
P J O’Neill Appointed 1 January 2008 Resigned 11 June 2008
P V Olsen*
J W Parry
B W Pomeroy*
H M Posner*
G S Rayner Appointed 1 January 2008
T J Whittaker Appointed 1 January 2008
D J Winkett
*non-executive director
Directors’ interests
None of the directors were members of the syndicate for the years of account open during the period of these accounts.
Secretary
S M Boland
Registered office
Plantation Place
30 Fenchurch Street
London
EC3M 3BD
Auditors
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
Hay’s Galleria
1 Hay’s Lane
London
SE1 2RD
18
QBE Syndicate 2999
Annual report 2008
Independent auditors’ report to
the members of Syndicate 2999
We have audited the syndicate annual accounts of Syndicate 2999 for the year ended 31 December 2008 which comprise the profit and loss account,
the balance sheet, the cash flow statement and the related notes. These accounts have been prepared under the accounting policies set out therein.
Respective responsibilities of managing agent and auditors

The managing agent’s responsibilities for preparing the syndicate annual accounts in accordance with the Insurance Accounts Directive (Lloyd’s Syndicate
and Aggregate Accounts) Regulations 2004 and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set
out in the statement of managing agent’s responsibilities.
Our responsibility is to audit the syndicate annual accounts in accordance with relevant legal and regulatory requirements and International Standards on
Auditing (UK and Ireland). This report, including the opinion, has been prepared for and only for the syndicate’s members as a body and for no other
purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or
into whose hands it may come save where expressly agreed by our prior consent in writing.
We report to you our opinion as to whether the syndicate annual accounts give a true and fair view and are properly prepared in accordance with the
Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2004. We also report to you whether, in our opinion, the information
given in the report of the directors of the managing agent is consistent with the syndicate annual accounts. We also report to you if, in our opinion, the
managing agent has not kept proper accounting records in respect of the syndicate, if the syndicate annual accounts are not in agreement with the
accounting records, if we have not received all the information and explanations we require for our audit or if information specified by law regarding
remuneration of the directors of the managing agent and the active underwriter and other transactions is not disclosed.
We read other information attached to the syndicate annual accounts and consider the implications for our report if we become aware of any apparent
misstatements or material inconsistencies with the syndicate annual accounts. This other information comprises only the report of the directors of the
managing agent and the information on pages 01 to 11. Our responsibilities do not extend to any other information.
Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and disclosures in the syndicate annual accounts. It also includes an assessment of the
significant estimates and judgements made by the managing agent in the preparation of the syndicate annual accounts, and of whether the accounting
policies are appropriate to the syndicate’s circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the syndicate annual accounts are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the syndicate annual accounts.
Opinion
In our opinion:
• the syndicate annual accounts give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state of
the syndicate’s affairs as at 31 December 2008 and of its profit and cash flows for the year then ended;
• the syndicate annual accounts have been properly prepared in accordance with the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate
Accounts) Regulations 2004; and
• the information given in the report of the directors of the managing agent is consistent with the syndicate annual accounts.
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
London, United Kingdom
17 March 2009
Note:
The maintenance and integrity of the QBE website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters
and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
19
QBE Syndicate 2999
Annual report 2008
Profit and loss account:
technical account – general business
For the year ended 31 December 2008
2008 2007
Notes £000 £000 £000 £000
Earned premiums, net of reinsurance

Gross premiums written – continuing operations 3 851,963 836,516
discontinued operations 304 141,375
Gross premiums written 3 852,267 977,891
Outward reinsurance premiums (217,767) (226,993)

Net premiums written 634,500 750,898
Changes in the provision for unearned premiums:
Gross amount (49,975) (9,216)
Reinsurers’ share 3,879 812
(46,096) (8,404)
Earned premiums, net of reinsurance 588,404 742,494
Investment return transferred from the non-technical account 46,638 54,954
Claims incurred, net of reinsurance

Claims paid
Gross amount (458,859) (442,453)
Reinsurers’ share 144,759 198,704
(314,100) (243,749)
Changes in the provision for claims
Gross amount (55,371) (189,071)
Reinsurers’ share 52,606 (13,632)
(2,765) (202,703)
Claims incurred, net of reinsurance 4 (316,865) (446,452)
Net operating expenses 5 (151,823) (189,223)
Balance on technical account – general business 166,354 161,773
Attributable to:
Continuing operations 119,523 140,362
Discontinued operations 46,831 21,411
166,354 161,773
The notes on pages 25 to 36 form an integral part of these financial statements.
20
QBE Syndicate 2999
Annual report 2008
Profit and loss account:
non-technical account
2008 2007
Notes £000 £000
Balance on technical account – general business 166,354 161,773
Investment income 8 50,400 55,480

Unrealised losses on investments (2,445) –
Unrealised gains on investments – 609
Investment expenses and charges 8 (1,317) (1,135)
Investment return 46,638 54,954
Allocated investment return – transferred to general business account (46,638) (54,954)
Profit for the financial year 166,354 161,773
There are no recognised gains or losses for the current and preceding year other than those included in the profit and loss account above and therefore
no statement of recognised gains and losses has been presented.
21
QBE Syndicate 2999
Annual report 2008
Balance sheet
As at 31 December 2008
2008 2007
Assets Notes £000 £000
Investments
Financial investments 9 1,414,383 1,078,880
Reinsurers’ share of technical provisions

Provision for unearned premiums 37,226 33,347
Claims outstanding 743,313 530,572
780,539 563,919
Debtors
Debtors arising out of direct insurance operations 11 367,450 291,499
Debtors arising out of reinsurance operations 242,249 169,620
Other debtors 875 928
610,574 462,047
Other assets
Cash at bank and in hand 10,136 12,658
Overseas deposits 12 69,768 65,750
79,904 78,408
Prepayments and accrued income
Accrued interest 15,287 26,094
Other payments and accrued income 89 –
Deferred acquisition costs 71,618 63,109
86,994 89,203
Total assets 2,972,394 2,272,457
22
QBE Syndicate 2999
Annual report 2008
2008 2007
Liabilities Notes £000 £000
Capital and reserves

Member’s balance 13 172,318 105,426
Technical provisions
Provision for unearned premiums 357,564 307,588
Claims outstanding 2,098,100 1,642,221
2,455,664 1,949,809
Creditors
Creditors arising out of direct insurance operations 14 109,952 88,547
Creditors arising out of reinsurance operations 143,085 95,692
Other creditors 91,290 32,789
344,327 217,028
Accruals and deferred income 85 194
Total liabilities 2,972,394 2,272,457
These financial statements on pages 20 to 36 were approved by the Board of QUL on 17 March 2009 and were signed on its behalf by
D J Winkett
Director
17 March 2009
23
QBE Syndicate 2999
Annual report 2008
Statement of cash flows
2008 2007
Notes £000 £000
Net cash inflow from operating activities 129,861 376,772

Transfer to member in respect of underwriting participations
Distribution of profits (19,950) (46,476)
Open year profit release (79,624) (59,197)
Other – (520)
Financing
Cash calls received 40 44
30,327 270,623
Cash flows were invested as follows:
(Decrease)/increase in cash holdings 15 (5,382) 5,081
(Decrease)/increase in overseas deposits 15 (5,909) 11,091
Net portfolio investments 15 41,618 254,451
Net investment of cash flows 30,327 270,623
2008 2007
Notes £000 £000
Reconciliation of profit to net cash flow from operating activities

Unrealised investment (gains) (306,672) (3,817)
Increase in net technical provisions 289,235 208,414
(Increase)/decrease in debtors (146,318) 25,536
Increase/(decrease) in creditors 127,190 (14,987)
Other 72 (147)
Net cash inflow from operating activities 129,861 376,772
24
QBE Syndicate 2999
Annual report 2008
Heading
Notes to the financial statements
Forming part of the financial statements
1 Accounting policies
a) Basis of preparation
These financial statements have been prepared in accordance with the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts)
Regulations 2004 and applicable Accounting Standards and comply with the Statement of Recommended Practice on Accounting for Insurance Business
issued by the Association of British Insurers dated December 2005 (as amended in December 2006), except that foreign exchange gains and losses are
taken to the profit and loss technical account.
The accounts incorporate all transactions committed to by the 2008 year of account and prior years of account.
The directors of the managing agent have prepared the financial statements on the basis that the syndicate will continue to write future business. The ability
of the syndicate to meet its obligations as they fall due is underpinned by the support provided by Lloyd’s solvency process and its chain of security for any
members who are unable to meet their underwriting liabilities. Members’ funds at Lloyd’s are further explained in note 2.
b) Insurance
The result is determined on an annual basis whereby the incurred cost of claims, commission and related expenses are charged against the earned portion
of premiums, net of reinsurance, as described below.
i) Premiums written
Premiums written comprise premiums on contracts incepted during the financial year, together with adjustments made in the year to premiums written
in prior years. Premiums are shown gross of commissions payable to intermediaries and exclude taxes and duties levied on them. Estimates are
included for premiums due but not yet received or notified, less an allowance for cancellations.
ii) Unearned premiums

Unearned premiums represent the proportion of premiums written in the year that relate to unexpired terms of policies in force at the balance sheet
date, calculated on the basis of established earnings patterns.
iii) Reinsurance premium ceded

Outwards reinsurance premiums are accounted for in the same accounting period as the premiums for the related direct or inwards business
being reinsured.
iv) Claims provisions and related recoveries

Claims incurred comprise claims and related expenses paid in the year and changes in provisions for outstanding claims, including provisions for claims
incurred but not reported and related expenses, together with any other adjustments to claims from previous years. Where applicable, deductions are
made for salvage and other recoveries.
Provision is made at the year end for the estimated cost of claims incurred but not settled at the balance sheet date, including the cost of claims
incurred but not yet reported to the syndicate. The estimated cost of claims includes expenses to be incurred in settling claims and allows for the
expected value of salvage and other recoveries.
Outstanding claims and reinsurance recoveries are estimated by reviewing individual claims and making allowance for claims incurred but not reported
using past experience and trends adjusted for foreseeable events.
Case estimates are set by experienced claims technicians, applying their skill and specialist knowledge to the circumstances of individual claims.
The ultimate cost of outstanding claims, including claims incurred but not reported, is estimated by the syndicate actuaries who apply recognised
actuarial techniques considered appropriate for each portfolio, such as the Chain Ladder and Bornhuetter-Ferguson methods. These methods take
into account, amongst other things, statistical analysis of the development of the value and frequency of past claims and the results of analyses
undertaken at the point of underwriting. Techniques considered appropriate for specific portfolios include contract by contract analysis, segmentation
by subclass, and stochastic analysis. Classes of business are analysed at a level of detail appropriate to their materiality. Allowance is made for
changes or uncertainties which may create distortions in the underlying statistics or which might cause the cost of unsettled claims to increase or
decrease when compared with the cost of previously settled claims, for example, one-off occurrences and changes in mix of business, policy
conditions or the legal environment.
The syndicate actuaries produce an estimate of reserves, which is reviewed by an independent actuarial firm, and is then assessed by QBE
management with input from the syndicate underwriting and claims experts.
25
QBE Syndicate 2999
Annual report 2008
continued
1 Accounting policies continued

iv) Claims provisions and related recoveries continued
As provisions for claims outstanding are based on information which is currently available, the eventual outcome may vary from the original assessment
depending on the nature of information received or developments in future periods. For certain classes of business including liability and other long-tail
classes written by the syndicate, claims may not be apparent for many years after the event giving rise to the claim has happened. These classes will
typically display greater variation between initial estimates and final outcomes. Differences between the estimated cost and subsequent re-estimation
or settlement of claims are reflected in the technical account for the year in which these claims are re-estimated or settled.
Provisions are calculated gross of any reinsurance recoveries. A separate estimate is made of the amounts that will be recoverable from reinsurers
based upon the gross provisions and having due regard to collectability.
v) Unexpired risks provision

Provision is made for any deficiencies arising when unearned premiums, net of associated acquisition costs, are insufficient to meet expected claims
and expenses after taking into account future investment return on the investments supporting the unearned premiums provision and unexpired risks
provision. The expected claims are calculated having regard to events that have occurred prior to the balance sheet date.
Unexpired risks surpluses and deficits are offset where business classes are managed together.
vi) Acquisition costs

Acquisition costs, which represent commission and other costs related to the acquisition of new insurance contracts, are deferred subject
to recoverability and amortised over the period to which the related premiums are earned.
vii) Reinsurance to close

Following the end of the third year, the underwriting account of each Lloyd’s syndicate is normally closed by reinsurance into the following year of
account. The amount of the reinsurance to close (RITC) premium is determined by the managing agent, generally by estimating the cost of claims
notified but not settled together with the estimated cost of claims incurred but not reported at that date and claims handling costs.
The payment of an RITC premium does not eliminate the liability of the closed year for outstanding claims. If the reinsuring syndicate was unable to
meet its obligations, and other elements of Lloyd’s chain of security were to fail, then the closed underwriting account would have to settle the
outstanding claims. The directors of the managing agent consider that the likelihood of such a failure of the RITC is extremely remote, and
consequently the RITC has been deemed to settle liabilities outstanding at the closure of an underwriting account.
c) Foreign currency transactions

Transactions denominated in foreign currencies are translated into sterling at the rate of exchange prevailing at the time of the transaction.
Assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange prevailing at the balance sheet date with the
exception of non-monetary assets and liabilities which are maintained at historic rates.
Exchange differences are included in the technical account, except for differences arising on the member’s balance, which are included in members’ balances.
d) Financial assets
Financial assets are managed on a fair value basis in accordance with the syndicate’s investment strategy. The syndicate has therefore elected to measure
all financial assets at fair value through the profit and loss non-technical account, except where noted below.
Listed investments are stated at fair value on current bid prices quoted by the relevant exchanges. Unlisted investments are carried at the directors’
estimate of the current fair value, except as stated below.
Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently stated at fair value obtained
from quoted market prices in active markets.
Financial assets are derecognised when the right to receive future cash flows from the assets has expired, or has been transferred, and the Group has
transferred substantially all the risks and rewards of ownership.
26
QBE Syndicate 2999
Annual report 2008
Heading
1 Accounting policies continued

e) Investment return
Investment return comprises all investment income, realised investment gains and losses and movements in unrealised gains and losses, net of investment
expenses, charges and interest.
Realised gains and losses on investments carried at fair value are calculated as the difference between net sale proceeds and purchase price.
Unrealised gains and losses on investments represent the difference between the valuation at the balance sheet date and their purchase price, or if they
have previously been valued, their valuation at the previous balance sheet date, together with a reversal of unrealised gains and losses recognised in earlier
accounting periods in respect of investment disposals in the current year.
Investment return is initially recorded in the non-technical account. A transfer is made from the non-technical account to the general business technical
account. Investment return has been wholly allocated to the technical account as all investments related to the technical account.
f) Taxation
Under Schedule 19 of the Finance Act 1993 managing agents are not required to deduct basic rate income tax from trading income. In addition, all UK basic
rate income tax deducted from syndicate investment income is recoverable by managing agents and consequently the distribution made to the member
is gross of tax. Capital appreciation falls within trading income and is also distributed gross of tax.
No provision has been made for any United States Federal Income tax payable on underwriting results or investment earnings. Any payments on account
made by the syndicate during the year are included in the balance sheet under the heading “member’s balance”.
No provision has been made for any overseas tax payable by the member on underwriting results.
g) Administrative expenses
Administrative expenses are taken into account on an accruals basis. These recharged expenses include the costs of staff, who are employed by QBE
Management Services (UK) Limited. QBE Management Services (UK) Limited operates both defined benefit and defined contribution pension schemes,
the expense of which is included in the recharges.
h) Profit commission
Profit commission is recognised on the basis of the annual accounting result for each year of account, and charged to the syndicate as incurred.
For the 2008 year of account no profit commission has been charged by the managing agent. For prior years of account profit commission was charged
by the managing agent at a rate of 20% of profit subject to the operation of a deficit clause.
i) Change in accounting standards

The following accounting standards were adopted by the syndicate this year as a result of the purchase of derivative contracts in the year and accounting
for them at fair value:
i) The syndicate has adopted FRS 26, “Financial Instruments: Measurement”. There is no impact on current or prior years’ profit or net assets
resulting from the adoption of this standard as previously the syndicate has valued its financial instruments at fair value. In addition, the syndicate
has reviewed the classification of its contracts with policyholders and has determined that they are all insurance contracts.
ii) Following adoption of FRS 26, the syndicate has adopted FRS 23, “The Effects of Changes in Foreign Exchange Rates”. There is no impact
on the current or prior years’ profit or net assets resulting from the adoption of this standard.
iii) Following adoption of FRS 26, the syndicate has adopted FRS 29, “Financial Instruments: Disclosures”. There is no impact on the current
or prior years’ profit or net assets resulting from the adoption of this standard.
27
QBE Syndicate 2999
Annual report 2008
continued
2 Capital
Each syndicate in Lloyd’s is required to carry out a self assessment of the capital it requires, the Individual Capital Assessment (ICA). This is required
to reflect the level of capital needed to ensure that the syndicate will remain solvent for the next 12 months in 99.5% of future foreseeable scenarios.
QBE has developed a sophisticated stochastic risk-based capital model over the past three years, which incorporates the key risks being faced by each
of the legal entities. The output from this model, which is tailored to QBE’s risk profile, is reported to the Capital Committee, which in turn recommends
it to the relevant QBE Boards for adoption. The ICAs have been reviewed by Lloyd’s, and form the basis of the minimum capital required by the syndicate.
Every member is required to hold capital at Lloyd’s which is held in trust and known as Funds at Lloyd’s (FAL). These funds are intended primarily to cover
circumstances where syndicate assets prove insufficient to meet participating members’ underwriting liabilities.
The level of FAL that Lloyd’s requires a member to maintain is determined by Lloyd’s based on FSA requirements and resource criteria. FAL has regard
to a number of factors including the nature and amount of risk to be underwritten by the member and the assessment of the reserving risk in respect
of business that has been underwritten. Since FAL is not under the management of the managing agent, no amount has been shown in these financial
statements by way of such capital resources. However, the managing agent is able to make a call on the member’s FAL to meet liquidity requirements
or to settle losses.
All externally imposed capital requirements have been complied with during the year.
QBE’s capital model has been embedded in the business, and as well as assessing minimum capital requirements for QBE entities, it has also been
used to:
• allocate capital to class of business for business planning and performance monitoring
• assess the effectiveness of existing reinsurance protections and new reinsurance strategies
• consider the implications of Solvency II on the business
3 Segmental information
Gross Gross Gross Gross Re-
premiums premiums claims operating insurance
written earned incurred expenses balance Total
2008 £000 £000 £000 £000 £000 £000
Direct insurance:
Accident and health 15,669 12,132 (4,186) (3,019) (2,707) 2,220
Motor (third party liability) 11,142 5,245 (3,669) (2,034) 119 (339)
Marine, aviation and transport 113,079 107,325 (93,643) (21,624) (207) (8,149)
Fire and other damage to property 80,931 81,921 (52,954) (29,012) (9,659) (9,704)
Third party liability 136,129 146,638 (139,520) (25,049) 33,442 15,511
Credit and suretyship 18,042 13,971 1,452 (5,324) (6,235) 3,864
Miscellaneous (4) (4) 1,733 (11) (1,400) 318
374,988 367,228 (290,787) (86,073) 13,353 3,721
Reinsurance acceptances 477,279 435,064 (223,443) (65,751) (29,876) 115,993
Total 852,267 802,292 (514,230) (151,824) (16,523) 119,714
28
QBE Syndicate 2999
Annual report 2008
3 Segmental information continued
Gross Gross Gross Gross Re-
premiums premiums claims operating insurance
written earned incurred expenses balance Total
2007 £000 £000 £000 £000 £000 £000
Direct insurance:
Accident and health 10,238 8,864 (1,224) (2,372) (919) 4,349
Motor (third party liability) 9,733 9,859 (9,462) (2,432) (143) (2,178)
Marine, aviation and transport 104,979 98,213 (50,488) (25,503) (15,086) 7,136
Fire and other damage to property 75,282 77,479 (31,527) (21,296) (20,220) 4,436
Third party liability 145,117 119,254 (95,413) (33,783) (1,191) (11,133)
Credit and suretyship 12,425 12,376 (3,503) (2,935) (5,883) 55
Miscellaneous (53) (38) 171 (46) (140) (53)
357,721 326,007 (191,446) (88,367) (43,582) 2,612
Reinsurance acceptances 620,170 642,668 (440,078) (100,857) 2,473 104,206
Total 977,891 968,675 (631,524) (189,224) (41,109) 106,818
The geographical analysis of gross premiums written by destination of risk is as follows:

2008 2007
£000 £000
UK 83,776 267,071
Other EU countries 78,740 68,748
US 191,909 214,984
Other countries 497,842 427,088
852,267 977,891
The above includes the effects of RITC accepted as per note 18, which is wholly included in the “reinsurance acceptances” segment. All premiums were
concluded in the UK.
4 Claims outstanding
During the year there was a positive net run-off development of £126,187,000 (2007 £42,938,000), of which the main contributor was reinsurance
accepted, with a positive development of £97,123,000 (2007 £39,767,000).
5 Net operating expenses

2008 2007
£000 £000
Acquisition costs – direct commission 126,871 116,763

Acquisition costs – other 36,693 35,768
Change in deferred acquisition costs (8,509) (1,696)
Administrative expenses 97,147 48,780
Reinsurance commission revenue (788) (381)
(Profit)/loss on exchange (99,591) (10,011)
151,823 189,223
Administrative expenses include auditors’ remuneration:
Fees payable to the syndicate’s auditor for the audit of the syndicate’s annual accounts 336 362
Other services pursuant to legislation 288 294
29
QBE Syndicate 2999
Annual report 2008
continued
6 Directors’ emoluments
The directors of QUL and the Active Underwriter received the following aggregate remuneration charged to the syndicate and included within
net operating expenses:
2008 2007
£000 £000
Directors of the managing agent 5,895 2,123

Active Underwriter 142 138
Further information in respect of the directors of QUL is provided in that company’s financial statements.
7 Employees
All staff are employed by QBE Management Services (UK) Limited, a wholly owned subsidiary of QBE Insurance Group Limited.
The following amounts were charged to the syndicate in respect of salary costs:
2008 2007
£000 £000
Wages and salaries 46,979 23,018

Social security costs 5,606 2,564
Other pension costs 3,466 2,811
56,051 28,393
The average number of staff represented by the above recharge for the period was:
2008 2007
Number Number
Underwriting 137 105

Claims 52 80
Administration 249 156
438 341
8 Investment income, expenses and charges

2008 2007
Investment income £000 £000
Income from investments 46,590 51,963

Gains on the realisation of investments 3,810 3,517
50,400 55,480
2008 2007
Investment expenses and charges £000 £000
Investment management expenses 1,317 1,135
30
QBE Syndicate 2999
Annual report 2008
Heading
9 Financial investments
a) Designated at fair value through profit and loss
Cost Market value
2008 2007 2008 2007
£000 £000 £000 £000
Shares and other variable yield securities and units in unit trusts 66,075 95,923 66,075 95,923
Debt securities and other fixed income securities 1,286,232 907,035 1,283,884 908,553
Participation in investment pools 57,078 63,279 57,078 63,279
Deposits with credit institutions 7,346 11,125 7,346 11,125
1,416,731 1,077,362 1,414,383 1,078,880
Shares and other variable yield securities, units in unit trusts, and debt securities and other fixed income securities are all listed on recognised stock exchanges.
b) Derivative financial instruments

2008 2007
Fair value £000 £000
Foreign currency derivatives

Included in other creditors 30,891 –
Foreign currency derivatives

The company uses forward foreign exchange derivatives in order to hedge its exposure to foreign currencies. These are valued using the underlying foreign
exchange rates at the year end. Contractual amounts for foreign currency exchange derivatives outstanding at the balance sheet date include foreign
exchange contracts to transact the net equivalent of £30,891,000 (2007 £nil). All derivative forward contracts entered into during the financial year were to
purchase US dollars.
The forward foreign exchange derivatives outstanding at year end expire by 5 February 2009 (2007 n/a).
During the year an unrealised loss of £30,891,000 (2007 £nil) relating to such contracts was recognised. This is included in the net foreign exchange gain
of £99,591,000 (2007 £10,001,000) in the profit and loss non-technical account.
10 Financial risk management

The activities of the syndicate expose it to financial risks such as market risk (including currency risk, cash flow and fair value interest rate risk and price
risk), credit risk and liquidity risk. The syndicate’s risk management framework recognises the unpredictability of financial markets and seeks to minimise
potential adverse effects on the financial performance of the syndicate.
The key objectives of the syndicate’s asset and liability management strategy are to ensure sufficient liquidity is maintained at all times to meet the
syndicate’s obligations, including its settlement of insurance liabilities and, within these parameters, to optimise investment returns for the syndicate.
i) Market risk
Currency risk
The syndicate is exposed to foreign currency risk in respect of its foreign currency exposures and forward foreign exchange derivatives are used to protect
the currency positions.
In the past the syndicate has not undertaken currency hedging, and the results shown in converted sterling were susceptible to material fluctuations arising
from movements in the exchange rate. During the year this policy was changed, and from the fourth quarter the syndicate now hedges foreign currency risks.
The risk management process covering forward foreign exchange derivatives involves close senior management scrutiny, including regular board and other
management reporting. All forward foreign exchange derivatives are subject to delegated authority levels provided to management, and levels of exposure
are reviewed on an ongoing basis.
31
QBE Syndicate 2999
Annual report 2008
continued
10 Financial risk management continued

The table below shows the impact on profit/(loss) and equity of changes in the value of the syndicate’s financial instruments as a result of movements
in foreign exchange rates.
2008 2007
Movement in Profit (loss) Equity Profit (loss) Equity
variable % £000 £000 £000 £000
US dollar +10 (8,415) (8,415) (12,959) (12,959)

–10 10,284 10,284 15,838 15,838
Canadian dollar +10 (701) (701) (777) (777)
–10 856 856 950 950
Euro +10 105 105 1 1
–10 (128) (128) (2) (2)
The syndicate manages its exposure to foreign currencies based on the balance sheet by currency which also include insurance assets and liabilities.
Interest rate risk

The syndicate is exposed to interest rate risk arising on interest bearing assets. Assets with floating interest rates expose the syndicate to cash flow interest
rate risk. Fixed interest rate assets expose the syndicate to fair value interest rate risk. The syndicate’s strategy is to invest in high quality, liquid fixed interest
securities and cash and to actively manage duration. The investment portfolios are actively managed to achieve a balance between cash flow interest rate
risk and fair value interest rate risk bearing in mind the need to meet the liquidity requirements of the business.
The syndicate’s exposure to interest rate risk and the effective weighted average interest rates for each significant class of interest bearing financial assets
and liabilities is as follows:
Floating Fixed interest rate maturing in

interest 1 year 1 to 2 2 to 3
rate or less years years Total
2008 £000 £000 £000 £000 £000
Interest bearing assets 429,960 1,042,048 2,466 19,813 1,494,287

Weighted average interest rate 3.0% 2.9% 5.0% 5.3% 3.0%
Financial liabilities – – – – –
Weighted average interest rate – – – – –
Net interest bearing financial assets 429,960 1,042,048 2,466 19,813 1,494,287
Floating Fixed interest rate maturing in

interest 1 year 1 to 2 2 to 3
rate or less years years Total
2007 £000 £000 £000 £000 £000
Interest bearing assets 296,122 833,603 60,045 2,984 1,192,754

Weighted average interest rate 4.6% 4.8% 5.0% 5.3% 4.7%
Financial liabilities – – – – –
Weighted average interest rate – – – – –
Net interest bearing financial assets 296,122 833,603 60,045 2,984 1,192,754
32
QBE Syndicate 2999
Annual report 2008
Heading
10 Financial risk management continued

The syndicate’s sensitivity to movements in interest rates in relation to the value of fixed interest securities is shown in the table below.
2008 2007
Movement in Profit (loss) Equity Profit (loss) Equity
variable % £000 £000 £000 £000
Interest rate movement – fixed interest securities +1.5 (13.234) (13.234) (6,530) (6,530)
-1.5 13.234 13.234 6,530 6,530
Price risk
Price risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those
arising from interest rate or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors
affecting all similar financial instruments traded on the market.
The syndicate holds no equity investments and so has a low exposure to price risk.
ii) Credit risk

Credit risk is the risk that one party to a financial instrument will cause financial loss to the other party by failing to discharge an obligation.
Credit risk exposures are calculated regularly and compared with authorised credit limits before further transactions are undertaken with counterparties.
99.6% (2007 99.4%) of total fixed interest and cash investments are with counterparties having a Moody’s rating of Aa or better. The syndicate does
not expect any investment counterparties to fail to meet their obligations given their strong credit ratings. The syndicate only uses derivatives in highly
liquid markets.
The reinsurers share of claims outstanding is also exposed to credit risk. 94.9% (2007 95.7%) of the balance is with reinsurers with an S&P rating of A-
or greater.
The following table provides information regarding the carrying value of the syndicate’s financial assets, excluding amounts in respect of insurance
contracts. All amounts are neither past due nor impaired at the balance sheet date.
2008 2007
£000 £000
Cash and cash equivalents 10,136 12,658

Interest bearing investments 1,484,151 1,144,630
Other receivables 16,456 27,022
iii) Liquidity risk

In addition to the treasury cash held for working capital requirements, a minimum percentage of the syndicate’s total financial assets is held in liquid, short
term money market securities to ensure there are sufficient liquid funds available to meet current obligations.
The table below summarises the maturity profile of all financial liabilities based on the remaining contractual obligations.
2008 2007
Within Over Within Over
1 year 1 year 1 year 1 year
£000 £000 £000 £000
Trade and other payables 252,976 61 183,675 564

Derivative financial instruments 30,891 – – –
Borrowings 14,394 – 32,983 –
The syndicate has no significant concentration of liquidity risk.
33
QBE Syndicate 2999
Annual report 2008
continued
11 Debtors arising out of direct insurance operations

2008 2007
£000 £000
Due within one year

Due from policyholders 1,384 705
Due from intermediaries 365,460 289,541
Due after one year

Due from intermediaries 606 1,253
367,450 291,499
12 Overseas deposits
Overseas deposits are lodged as a condition of conducting underwriting business in certain countries.
2008 2007
£000 £000
Joint Asset Trust Funds 8,025 9,005

Canadian Margin Fund 14,147 9,841
Kentucky Trust Funds 4,153 2,973
Australian Trust Funds 18,205 17,323
South African Trust Funds 9,423 10,962
ASL Overseas Deposit 4,355 2,844
Illinois Deposit 11,460 12,802
69,768 65,750
The deposits with Additional Securities Limited are required to allow names to write business in various overseas countries.
13 Reconciliation of member’s balance

2008 2007
£000 £000
At 1 January 105,426 49,949

Payments out of profit to member’s personal reserve funds (99,574) (106,296)
Other 112 –
At 31 December 172,318 105,426
Members participate on syndicates by reference to years of account and their ultimate result, assets and liabilities are assessed with reference to policies
incepting in that year of account in respect of their membership of a particular year.
34
QBE Syndicate 2999
Annual report 2008
14 Creditors arising out of direct insurance operations
2008 2007
£000 £000
Due within one year

Due to policyholders 1,277 1,521
Due to intermediaries 108,650 86,867
Due after one year

Due to intermediaries 25 159
109,952 88,547
15 Movement in opening and closing portfolio investments net of financing

2008 2007
£000 £000
(Decrease)/increase in cash holdings (5,382) 5,081

(Decrease)/increase in overseas deposits (5,909) 11,091
Cash inflow from portfolio investments 41,618 254,451
Movement arising from cash flows 30,327 270,623
Changes in market value and exchange rates 306,671 3,817
Total movement in portfolio investments, net of financing 336,998 274,440
At 1 January, net of financing 1,157,288 882,848
At 31 December, net of financing 1,494,286 1,157,288
Changes
At to market At
1 January Cash value and 31 December
2008 flow currencies 2008
Movement in cash, portfolio investments and financing £000 £000 £000 £000
Cash at bank and in hand 12,658 (5,382) 2,860 10,136

Overseas deposits 65,750 (5,909) 9,926 69,767
Shares and other variable yield securities and units in unit trusts 95,923 (58,854) 29,006 66,075
Debt securities and other fixed income securities 908,553 124,033 251,298 1,283,884
Participations in investment pools 63,279 (15,826) 9,625 57,078
Deposits with credit institutions 11,125 (7,735) 3,956 7,346
Total cash, portfolio investments and financing 1,157,288 30,327 306,671 1,494,286
35
QBE Syndicate 2999
Annual report 2008
continued
16 Cash flows invested in portfolio investments

2008 2007
£000 £000
Purchase of shares and other variable yield securities (1,035,357) (300,046)

Purchase of debt securities and other fixed income securities (3,198,645) (2,390,484)
Purchase of participations in investment pools (115,385) (52,391)
Decrease in deposits with credit institutions – (372)
Sale of shares and other variable yield securities 1,094,211 258,799
Sale of debt securities and other fixed income securities 3,074,612 2,207,821
Sale of participation in investment pools 131,211 13,838
Increase in loans with credit institutions 7,735 8,384
Net cash outflow on portfolio investments (41,618) (254,451)
17 Related parties
The managing agent of the syndicate, QUL, and the corporate member that provides capital to the syndicate, are wholly owned subsidiaries of their
ultimate parent company, QBE Insurance Group Limited.
All transactions between the syndicate and companies within the QBE Insurance Group are conducted on normal market terms on an arm’s length basis.
The syndicate is exempt under the terms of FRS 8 from disclosing related party transactions.
18 Reinsurance to close accepted

In 2007, the syndicate accepted the reinsurance to close of three other syndicates, Syndicate 456, Syndicate 980 and Syndicate 1036.
Syndicate 456 ceased writing in 2001 and had three years of account open, 1999, 2000 and 2001. It wrote mainly following lines on US and UK liability
classes. The reinsurance to close of all these years totalled £48.9 million which included a risk premium of £3.5 million.
Syndicate 980 ceased writing at the end of 2004 when its business was transferred from the Lloyd’s market. It wrote mainly motor business.
The reinsurance to close of £91.9 million did not include a risk premium.
Syndicate 1036 ceased writing as a separate syndicate at the end of 2004 when it became a sub-syndicate of Syndicate 2999. It was a direct marine
and energy syndicate. The reinsurance to close of £38.4 million did not include a risk premium.
Those amounts, totalling £179.2 million, have been treated as gross written premium in the technical account.
The business of Syndicate 456 and Syndicate 980 has been treated as discontinued, because their lines of business are no longer written within the
2999 umbrella.
Syndicates 1036 has been treated as continuing business on the basis that this business continues to be written within the 2999 umbrella.
In early 2009, the syndicate agreed to accept the RITC of Syndicate 566’s 2000 and prior years of account, following a successful consultation with
capital providers.
36
QBE Syndicate 2999
Annual report 2008
QBE Syndicate 2999 contacts
Heading
QBE Reinsurance Syndicate 566 QBE Property Syndicate 2000

Managing Director Managing Director
Jonathan Parry Bernard Mageean
jonathan.parry@uk.qbe.com bernard.mageean@uk.qbe.com
tel +44 (0)20 7105 4077 tel +44 (0)20 7105 5621
Head of Underwriting Management Operations Manager

David Woodruff Nick Dinsdale
david.woodruff@uk.qbe.com nick.dinsdale@uk.qbe.com
tel +44 (0)20 7105 4638 tel +44 (0)20 7105 4210
Head of Reinsurance Operations Claims Director

Steve Edwards Andrew McBride
steven.edwards@uk.qbe.com andrew.mcbride@uk.qbe.com
tel +44 (0)20 7105 4686 tel +44 (0)20 7105 4050
QBE Marine and Energy Syndicate 1036 QBE Aviation Syndicate 5555
Managing Director Managing Director
Colin O’Farrell Emilio Di Silvio
colin.o’farrell@uk.qbe.com emilio.disilvio@uk.qbe.com
tel +44 (0)20 7105 4073 tel +44 (0)20 7105 5714
Head of Operations Operations Manager

David Herridge Ken Limber
david.herridge@uk.qbe.com ken.limber@uk.qbe.com
tel +44 (0)20 7105 4753 tel +44 (0)20 7105 5707
Head of Claims Claims and Business Development Manager

Gary Crowley Jerry Flaxman
gary.crowley@uk.qbe.com jerry.flaxman@uk.qbe.com
tel +44 (0)20 7105 4792 tel +44 (0)20 7105 5706
QBE Syndicate 1886

Managing Director
John Neal
john.neal@uk.qbe.com
tel +44 (0)20 7105 4054
Operations Manager
Roger French
roger.french@uk.qbe.com
tel +44 (0)20 7105 4401
Claims Director
Andrew McBride
andrew.mcbride@uk.qbe.com
tel +44 (0)20 7105 4050
Designed and produced by 85four www.85four.com 37

Printed in England by Cousin www.cousin.uk.com QBE Syndicate 2999
Cousin is a carbon neutral company with ISO 14001 accreditation: it recycles all solvents used in the Annual report 2008
printing process, making any waste ph neutral, and also hold fsc status.
This report is printed on paper made from totally chlorine-free (TCF) and elemental chlorine-free (ECF) pulp,
sourced from sustainable forests. It is recyclable and biodegradable.
QBE Syndicate 2999
Plantation Place
30 Fenchurch Street
London EC3M 3BD
tel +44 (0)20 7105 4000
fax +44 (0)20 7105 4019
For more information:
e-mail enquiries@uk.qbe.com
or visit www.QBEeurope.com
QBE Syndicate 2999 is managed by QBE Underwriting Limited (no. 01035198), registered office Plantation Place, 30 Fenchurch Street, London, EC3M 3BD, a Lloyd’s managing agent authorised
and regulated by the Financial Services Authority.

QBE Syndicate 2999 Annual Report 2008

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QBE Syndicate 2999 Annual Report 2008

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QBE Syndicate 2999

Annual report 2008

QBE vision QBE values

• A builder of shareholders’ wealth • Employee motivation

• A developer of “can do” people • Integrity

• An organisation that excels in the

01 Introduction 11 Risk management

Following the successful implementation of

EO’s eight product focused underwriting

This means brokers and clients have access to:

A wider distribution network Q

• All expertise in one place arine Spec

• A choice of Lloyd’s paper or

• The strength and size of QBE £2.4

• The individuals who understand

Strong Entrepreneurial Empowers

and responsive every business

These key attributes resulted in brokers ranking

*Commercial Insurer Service study 2008 (Insurance Times).

QBE Syndicate 2999 continues to provide a

Highlights Strengths of the syndicate

• 100% QBE capital – capital to support

• Total syndicate funds of £1.5 billion

• Lloyd’s security – policies issued by the sub-

• S&P LSA “3+” – S&P interactive Lloyd’s

In 2008, Syndicate 2999 wrote total

QBE Aviation Syndicate 5555 QBE Reinsurance

QBE Property Syndicate 2000

QBE Marine and Energy

QBE Reinsurance Syndicate 566 is a leading 2008 Portfolio split

QBE Marine and Energy Syndicate 1036 is 2008 Portfolio split

As part of the product and distribution

We insure offshore risks for oil and gas

QBE Property Syndicate 2000 is a leading 2008 Portfolio split

As part of the product and distribution

QBE Aviation Syndicate 5555 was launched 2008 Portfolio split

The objective has always been to develop a

We will continue to focus on growing the general 2

Sub-syndicate Managing Director Specialist classes

Business review and future developments

The Managing Director comments for each sub-syndicate are as follows:

Jonathan Parry – QBE Reinsurance Syndicate 566

Colin O’Farrell – QBE Marine and Energy Syndicate 1036

John Neal – QBE Syndicate 1886

Bernard Mageean – QBE Property Syndicate 2000

Emilio Di Silvio – QBE Aviation Syndicate 5555

2008 2008 2008 2007 2007 2007

Canadian dollar 183,311 5.0 4.3 139,114 4.3 4.0

Divisional product management committees

Other governance issues

Creditor payment policy

Statement of managing agent’s responsibilities

• Make judgements and estimates that are reasonable and prudent

Statement of disclosure of information to auditors

By order of the Board

A M Bathia Appointed 1 January 2008

Respective responsibilities of managing agent and auditors

Basis of audit opinion

Earned premiums, net of reinsurance

Outward reinsurance premiums (217,767) (226,993)

Investment return transferred from the non-technical account 46,638 54,954

Claims incurred, net of reinsurance

The notes on pages 25 to 36 form an integral part of these financial statements.

Balance on technical account – general business 166,354 161,773