AMERICAN CLUB HOLDS RECENT ANNUAL MEETINGS IN PERSON FOR THE FIRST TIME IN THREE YEARS
2021 FINANCIALS DISCLOSE REVENUE RISE OFFSET BY GROWTH IN POOL AND RETAINED EXPOSURES
BOARD CHANGES INCLUDE A RETIREMENT, NEW DIRECTORS AND NEW GENERAL COUNSEL IMPENDING
CHANGES IN SENIOR MANAGEMENT DESCRIBED IN FURTHER DETAIL TO MEMBERS
NEW YORK, JUNE 29, 2022: For the first time since 2019, the American Club was able to hold the Annual Meetings of its Members and Directors in person last Thursday, June 23, in New York. Both were well attended, taking advantage of the recent relaxation of COVID-19 restrictions in North America and Europe.
The presentation of the Club’s Annual Report for the year ended December 31, 2021 took place at the Annual Meeting of the Members. It was simultaneously circulated in digital format to every Member of the Club and to other interested parties.
Notwithstanding significant year-on-year growth in net premiums and calls earned during the period under review, supported by an increase in overall investment income attendant upon a respectable year-end investment return of 7.1%, incurred losses rose substantially, driven mainly by continuing Pool and retained claims emergence, and an adverse 2021 policy year loss development, particularly during the last quarter.
The unrelentingly high cost of pooling (the American Club itself not having had a Pool claim for its own account since 2016) featured in this development, as did the effect of “social inflation” on claims exposures not only in the United States but elsewhere in the world. Many clubs have commented on this phenomenon in recent times.
The accounting treatment, and presentation, of premium earned but unbilled (EBUB), was maintained for the 2021 financial statements. There was a year-on-year decline in Members’ Equity (GAAP free reserves) at year-end 2021 of just under $8.7 million by comparison with year-end 2020 in consequence of, among other factors, a combined ratio of 112% for 2021 on an EBUB-calculated basis, but 129% without EBUB being taken into account. These figures, as other clubs have commented, highlight the need for the continuing pursuit of sustainability in premium pricing for the future.
Despite the challenging results for the 2021 year of account, 2022 had commenced strongly in revenue and tonnage terms both for the Club and EOM. Annualized year-on-year premium for the Club was up by 20% or so, while EOM was approaching nearly $20 million in gross written premium for its latest year in account, its reinsurance arrangements for 2022/23 having recently been completed on favorable terms. The fortunes of the American Club (Europe) in Cyprus (including its American Hellenic Hull brand) were also proceeding well, with a first quarter-end solvency capital requirement (SCR) ratio in excess of 220%. Although the 2022 policy year was in its earliest stages of development, there were grounds for cautious optimism for a better result over time than that of its predecessor year.
As foreshadowed in the American Club’s pre-renewal circular of November 2021, the 2019 policy year was formally closed at the meeting on the basis of end-March 2022 figures which disclosed a breakeven result for the year. As notified in principle in the same circular, a supplementary call of 35% for the 2020 policy year was also ordered by the Directors, payable in January and July 2023.
The Annual Meeting of the Members – the Club’s one-hundred-fifth – saw the retirement of Mr. Arnold Witte after seventeen years’ service, including from 2007 to 2018 as Chairman. The Club’s Board expressed their profound thanks and appreciation for Mr. Witte’s exemplary service, in which he played a key role in many of the Club’s most important initiatives over the years in question.
At the same time, Mr. John A. Witte, Jr. of Donjon Marine Co., Inc. was elected as a new Director. Ms. Boriana Farrar of Patriot Contract Services, LLC, who had been co-opted as a member of the Board in March, was also elected as a
Director at the meeting.
At the Annual Meeting of the Club’s Directors, which took place immediately after that of the Members, Mr. George D. Gourdomichalis of Phoenix Shipping & Trading S.A. and Mr. Robert D. Bondurant of Martin Resource Mgmt. Corp. were re-elected as, respectively, Chairman and Deputy Chairman of the Board.
At the same time, Ms. Dorothea Ioannou, Deputy Chief Operating Officer of the Club’s Managers, was re-elected as Secretary. As foreshadowed twelve months earlier, Mr. Lawrence J. Bowles retired as General Counsel to the Club, after twenty years of sterling service in that role. The Board thanked him most warmly for his outstanding contribution to the Club’s affairs during his long and illustrious tenure. Mr. LeRoy Lambert was appointed as General Counsel in succession to Mr. Bowles, with the Board’s best wishes for the discharge of his new responsibilities in the future.
The Annual Meeting of the Members also benefited from the presence of Mr. Nick Shaw, CEO of the International Group of P&I Clubs, who made a very interesting and enlightening presentation on the vitally important work of the Group in promoting the collective interests of the clubs and, by extension, the maritime community at large.
The meetings of both the Members and the Directors provided an opportunity for the Managers to elaborate on recently announced changes to their senior management teams across the world, consequent upon the retirement of certain key personnel and the promotion of others in the redeployment of the Managers’ professional capabilities.
In particular, the relinquishing of their respective CEO and COO duties by Joe Hughes and Vince Solarino as of August 2022 was a subject of discussion, as was the movement into these roles of Dorothea Ioannou and Dan Tadros respectively. Speaking on behalf of the senior team, Joe Hughes said: “As Dorothea and Dan take over the day-to-day responsibilities as CEO and COO of the Managers in August, Vince and I will remain respectively as President and Chairman of the management company and will be closely involved in the transition to Dorothea and Dan of our current day-to-day executive and management responsibilities.
“Together with others in our outstanding service teams around the world, Dorothea and Dan will maintain and no doubt enhance those high standards of customer care to which the Members and all other business counterparts have come to expect from the American Club and EOM over the years. Although the business environment remains thoroughly challenging, we have never been better positioned to fulfill the great promise the future holds for the Club in every aspect of its endeavors.”