2017 was a good year for the Club. The underwriting surplus of $29 million was the largest in recent years. This, when coupled with a strong investment return of over $43 million, delivered a total surplus of $72 million. After adjusting for forward currency contracts, the Free Reserves at 20 February 2018 increased by $82 million to $540 million.
Preserving underwriting discipline continues to be a key financial objective of the Club. The combined ratio for the year of 90% brings the average combined ratio for the last 5 years to 99%. Premium rates across the market have steadily declined over recent years. Although financial year combined ratios have remained strong, the pressure on policy year results is increasing. It remains, therefore, essential that the Club stays focussed on maintaining breakeven underwriting. At 20 February 2018 the Club continued to meet all capital targets and hold an appropriate buffer which is designed to avoid a breach of any target even in an extreme event.
The Club holds Free Reserves of $540 million with a further $100 million in hybrid capital.
The Review of the Year is available to download as a pdf along with the assets and income tables which are an excerpt from the full Directors’ Report & Financial Statements for the year ended 20th February 2018.
The UK Club has entered into a closing agreement with the United States Internal Revenue Service (IRS). This closing agreement secures exemption for the Club from Section 4371 Excise Tax, which applies to insurance premiums paid to a foreign insurer or reinsurer when the exemption is based on the provisions of an income tax treaty to which the United States is a party. The UK Club is now listed on the IRS website as a party to a closing agreement with the IRS.
For more information on the IRS closing agreement, please see the IRS website http://www.irs.gov/Businesses/International-Businesses/Exemption-from-Section-4371-Excise-Tax