No sleep `til May for Lloyd's accountants

"Year end". The two words that strike fear into accountants, actuaries and reinsurance staff. On 2nd January, hundreds of people in the Lloyd's community will bid farewell to their loved ones and pack suitcases in the knowledge that they will not see their homes again until mid May.

"He who fails to prepare, prepares to fail." With this thought, it all starts well in November with the production of the year-end timetable and the clever, but ultimately meaningless GANTT charts. Mid-January comes and 15 internal deadlines have been missed (obviously not the fault of the accounts department) and the timetable hits the bin. Let's go back 15 years when only ten risk codes existed. Lloyd's actuaries hadn't been invented (or were they in the early stages of evolution?) and the reserving was carried out using Lloyd's minimum reserves. For those of you too young to remember, this was a combination of percentages supplied by Lloyd's and the underwriter's own view of his result. Now, stop and think why Lloyd's was so profitable! January to April consisted of a combination of work (occasionally) and lunches (often). Come May, fights often broke out as to who was going to use the one available laser printer and the Applemac computer that had the awesome new WYSIWYG capability. The weakest had to make do with dot matrix. One solvency return was filled in, rooms were then requisitioned and their occupants banished to the pub for a week. Anyone who went near the accounts department was hauled in to help sort the 30,000 Names personal account statements into the 200 members' agents' piles. The same exercise then applied to the other 10 managed syndicates. Woe betide anyone who opened the window during a gale (this was pre-air-conditioning). I remember Plantation House well. What happened to this breed of Names - were they devoured by the now rapidly developing species of actuaries?

Roll forward to the present day. Syndicate accountants used to boast that they were specialists in their field. After all, what other industry made you wait for three years to come up with a result. Then, corporate investors came along with their desire for instant gratification. They wanted GAAP accounts. Everyone had heard of this but how many people knew what it stood for. Lloyd's then jumped on this bandwagon and brought in annual accounting. The FSA, not to be outdone, thought that it would be a great idea if every syndicate could fill in a 1,000-page return. Has the Lloyd's employee who received last year's hard copy returns been seen since or is he still buried under the mountain. Will the Brazilian rainforest ever recover?

Back to reserving and actuaries (who by now are fully developed and blend in with the rest of the population, although their dress sense normally gives the game away). Reserving follows the maxim that anything that can be changed will be changed until there is no time left to change anything. A range of results is struck and the Bernhuetter Ferguson method is used as a way of proving that the result may not make sense but as long as old Berny thinks it's okay it must be okay. After much discussion the Board agrees the reserves. The syndicate accounts team waits with baited breath for those few numbers to complete their return. But always remember in your rush to complete your task the 50-50-90 rule: Any time you have a 50-50 chance of getting something right, there's a 90% probability you'll get it wrong. Be warned! How many accountants have heard the comment "We've made a slight change to the reserves and accruals. Shouldn't take you too long to change the solvency return". Hmmm! 50 pages of changes later.

By now most of the company will know the auditors by their Christian names, nay they sometimes become friends. After all they have sat at your desk for the last three months, shared your coffee cup and even offered you some of their late night delivered pizza. Never be afraid to accept this, as it will end up on the audit bill anyway. Some auditors even return the following year and some may even swap sides. How many audit juniors at this point feel that their choice of career shouldn't have been decided on the back of the cheap beer served on campus? The returns make it in on time, in some cases 6 days, 23 hours and 59 minutes after the date on the original timetable. Remember the time when the deadline meant midnight and we all got to know the nightime security guard in the hut outside the `58 Building. Lloyd's have got clever now - changing the deadline to 4 o' clock. Where is the fun in that?

Back to where we started this tale. Mid May has arrived, suitcases are packed and many staff step out of their offices. They are hit by daylight and the sound of birds singing. Many of them do not recognise the buildings that have sprung up in the last 5 months. The date will be May 2003 but these pale, drawn accountants/actuaries/auditors etc will be dribbling and incoherently rambling on about December 2002. Give them a wide berth and hopefully they will ignore you.

I leave you with a thought. When the going gets tough and the deadlines are getting closer a crisis is when you can't say: "let's forget the whole thing".