This year the Club has produced a surplus of $9.5 million, increasing the free reserves and hybrid capital of the UK Club to a new high of $494 million. Underpinning this result was a respectable underwriting performance in the face of mounting claims costs, and an investment return of 3.7%, equivalent to $39.6 million.
Overall this was a good outcome, but it does not allow for complacency. The combined ratio for the financial year was 104% (excluding the mutual premium discount) which is within the Club’s tolerances in the short term, taking into account the current elevated claims environment. However, the increased claims on the 2012 policy year are a warning that, despite weak global economic growth, claims inflation, particularly in the higher value claims, continues to be present. It is therefore essential to maintain a disciplined approach to underwriting in the coming years to achieve the target of a balanced underwriting result over the claims cycle.