Simon Swallow
Steady growth in business and a strong financial position maintained
London, 28 October 2015 – The Shipowners’ Club, the leading P&I insurer in the smaller and specialist vessel sector, has reported steady results for the six months ended 20 August 2015. Growth in the Club’s business in the first two quarters of the year has been supported by increased vessel activity.
While it is too early to predict the year’s underwriting performance, the first six months have been encouraging, with a small underwriting surplus on the 2015 policy year. Back year improvements on prior years have given rise to a combined ratio of 87% at the half year.
Highlights:
- Combined ratio 87.0% (2014: 95.5%)
- Capital and free reserves US$ 301.8 (2014: US$314.1m)
- Increase in free reserves US$ 1.5m (2014: US$15.3m)
- Earned premiums US$ 118.0m (2014: US$120.3m)
- Ultimate claims US$ 63.6m (2014: US$73.6m)
- Underwriting surplus US$ 12.9m (2014: US$4.6m)
- The Club has seen a slight reduction in the number of claims filed. However, over the last decade it has become more apparent that claims at the half year point of the policy year may not necessarily be a guide to the full year. One enduring trend from a risk perspective is that the cost of claims continues to rise. The greatest volatility at the half year position currently lies within the US $1-5m band, with four claims reported. Whilst there is no obvious trend in terms of vessel sector or trading region, environmental claims dominate.
The Club’s investments, as of 20 August 2015, included 76% of the Club’s funds in either cash or fixed income securities, with 24% in equities. The Board continues to monitor very closely the performance of investments and the impact that currency fluctuations have, as the consolidated portfolio returned a negative 1.5% on capital since the beginning of the year – the majority of which has arisen from currency movements.
The first six months of the year has produced a small surplus of US$ 1.5m, increasing the Club’s free reserves to US$ 301.8m.
After careful consideration of the Club’s financial position, the Board decided that no general increase would be applied to premiums for the 2016/17 policy year.
The Club’s financial year end is planned to change from 20th February to 31st December to be in line with the calendar year. As a consequence, the current financial year, which commenced at 20th February 2015, will end on 31st December 2015 and the Club will, for the 2015 financial year only, report on a slightly reduced number of months (ten months, 11 days). The Club will release its annual report and accounts earlier; this will also include the Club’s policy year position at 20th February to allow for previous year comparisons and thereby enabling Members, brokers and commentators to the P&I industry to continue monitoring the Club’s results on a policy year basis.
Simon Swallow, Chief Executive of The Shipowners’ Club, commented: “Falling oil prices and a reduction in trade with China have impacted certain sectors of the Club’s business. Yet diversification, afforded through our various vessel types and trading regions, has supported increased vessel activity and the Club remains in a secure financial position.
“The difficult trading conditions affecting many sectors of the Club’s membership were taken into consideration when the Board decided no general increase would be applied to premiums. As the cost of claims continues to rise, the Club prides itself on working with our members, through loss prevention initiatives, to share claims information and lessons learned based on causation to improve the standard and quality of their operations.
“In our 160th year we look ahead with confidence that with the expertise and experience of our people, we will continue to offer our members and brokers the widest cover, spread and diversification of risk, supported by our mutual philosophy.”
The Shipowners’ Club is a mutual marine liability insurer, providing Protection and Indemnity insurance for small and specialist vessels since 1855. The Club is a member of the International Group of P&I Clubs and works with more than 600 brokers globally to insure over 32, 000 vessels across a range of operating sections and geographical areas.
