2010 Report and Accounts

Chairman’s statement

"It is pleasing to be able to report that the Club has successfully weathered the storms of the last 18 months and that our free reserves and capital (including hybrid) have now increased to more than $400 million. Holding capital at this level puts the Club in a strong position as we look forward, both to meet the stern regulatory challenges expected under the new European solvency regime and also to give confidence to Members in the overall financial strength of our Club.

The Board's decision last October to levy the supplementary premium on the 2008 policy year at 20 per cent as estimated, has achieved the overall objective the Board set in October 2008 of minimising the deficits on the then open policy years - 2006, 2007 and 2008. Indeed, the surplus generated on the 2008 policy year has now effectively eliminated the remaining deficits on the other two policy years.

A number of positive features have contributed to this year’s surplus of $75 million. Investment income has made an important contribution with an investment return of more than 8 per cent, which has been most welcome when compared to the negative investment return of last year. Encouragingly, claims levels in the 2009 policy year have begun to show the reduction we expected to see as a result of the slow down experienced in most world shipping markets.

This is of great significance as lower claims mean that our goal of achieving balanced underwriting, with a combined ratio of 100 per cent, is made easier without the need for more substantial premium increases. The early signs of this better claims experience enabled the Board to set the general increase for the 2010 policy year at 5 per cent, a happily lower level than for many years. The Board however remains conscious of the need to maintain premium levels against an anticipated increase in claims activity as economic conditions improve."

Dino Caroussis, chairman

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