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📅 '''Pure year of account''' refers to the financial reporting method used primarily at [[Definition:Lloyd's of London | Lloyd's of London]], where [[Definition:Premium | premiums]], [[Definition:Claim | claims]], and expenses are allocated to the specific [[Definition:Year of account | year of account]] in which the underlying [[Definition:Insurance policy | policy]] incepted, rather than being spread across multiple accounting periods. This approach contrasts with the more common calendar-year or accident-year accounting methods used by many conventional [[Definition:Insurance carrier | insurers]]. By tying every transaction back to the year in which the risk was originally written, a pure year of account gives [[Definition:Lloyd's syndicate | Lloyd's syndicates]] and their [[Definition:Capital provider | capital providers]] a precise picture of how a specific [[Definition:Underwriting | underwriting]] vintage is performing.

⚙️ Under this method, a [[Definition:Lloyd's syndicate | syndicate]] keeps each year of account open — typically for 36 months — while [[Definition:Loss | losses]] develop and outstanding [[Definition:Claim | claims]] are settled. During this period, the [[Definition:Managing agent | managing agent]] tracks all income and outgo attributable to policies bound in that year. At the end of the development period, the year is normally closed by way of [[Definition:Reinsurance to close (RITC) | reinsurance to close (RITC)]], transferring any remaining [[Definition:Liability | liabilities]] into a succeeding year of account. If [[Definition:Loss reserve | loss reserves]] remain too uncertain to close, the year is left open and continues to be reported separately until enough clarity emerges.

💡 For [[Definition:Name | Names]] and corporate [[Definition:Capital provider | capital providers]] backing Lloyd's syndicates, the pure year of account is central to understanding their exposure and return. It enables investors to participate in — or exit from — specific underwriting years, creating a level of transparency uncommon in most insurance accounting frameworks. Regulators and [[Definition:Rating agency | rating agencies]] also value this granularity because it isolates [[Definition:Underwriting performance | underwriting performance]] by vintage, making it harder to obscure deteriorating results by blending them with stronger years. The discipline it imposes is one reason Lloyd's has maintained its distinctive capital structure for centuries.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Year of account]]
* [[Definition:Reinsurance to close (RITC)]]
* [[Definition:Lloyd's syndicate]]
* [[Definition:Managing agent]]
* [[Definition:Lloyd's of London]]
* [[Definition:Run-off]]
{{Div col end}}

Definition:Pure year of account - Revision history

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