S&P affirms UK P&I Club’s A rating – confirms “very strong” capital but changes outlook
On 30th October 2020 ratings agency Standard & Poor’s released a research update on the UK Club and affirmed the Club’s ‘A’ rating. In doing so S&P confirmed the UK Club’s capital as being “very strong” and at the ‘AAA’ level on its capital model. Nevertheless, the agency amended the outlook from stable to negative. S&P reports that, in general, “Protection and indemnity (P&I) clubs are facing a high number of claims this year” and the rating agency further notes both the high level of Pool claims, shared by the entire International Group of P&I Club, as well as the role of COVID-19.
The Directors’ report for the year ended 20th February 2020 observed that although the year ended in a $54 million surplus, thanks to a very strong investment result, premium rates have been falling across the P&I market for several years and are no longer sufficient to cover the associated claims and expenses. It therefore remains critical that the UK Club continues to focus on underwriting discipline and careful risk selection.
The Directors of the Club will hold their regular Autumn meeting on 9th November and will review the Club’s premium requirements then.