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.

This Solvency and Financial Condition Report (“SFCR”) covers the Business and Performance of the Association, its System of Governance, Risk Profile, Valuation for Solvency Purposes and Capital Management.

The ultimate Administrative Body that has the responsibility for all of these matters is the Association’s Board of Directors, with the help of various governance and control functions that it has put in place to monitor and manage the business. The Consolidated Group Solvency Capital Requirement (“SCR”) has been calculated using the standard formula. The Group intends to seek approval to use its internal model, which has already been approved for the subsidiary undertaking, for the calculation of the SCR at Group level.

For SCR purposes the Association’s total eligible own funds stood at $637 million. This includes ancillary own funds available to the Association’s subsidiary undertaking, The United Kingdom Mutual Assurance Association (Europe) Limited (“UK Europe” or “UKE”) as approved by UK Europe’s regulator.

The AOF available to UKE represents only the element of funds that would be retained within UKE in the event of a supplementary call. Although the balance of funds are payable to UKB these are not incorporated within Group eligible own funds. The Group intends to apply for the full AOF allowance which, if approved, would increase tier 2 eligible own funds by $148 million.

Eligible own funds cover the SCR (of $375 million) by 169.9% and the Minimum Consolidated Group SCR (“MCR”) (of $40.4 million) by 1,500.4%.