Directors Report & Financial Statements for the year ended 20th February 2013

This year the Club has produced a surplus of $9.5 million, increasing the free reserves and hybrid capital 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 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.

FINANCIAL HIGHLIGHTS

Surplus of $9.5m for this year increasing free reserves and hybrid capital to a new high of $494m.

FINANCIAL STRENGTH

Free reserves and hybrid capital increased from $486m to $494m
Free reserves and hybrid capital of $4.11 per gross ton
S&P rating: A- Positive outlook

CLAIMS VALUES

2012 claims above $0.5m significantly higher than 2011
Attritional claims frequency remains low,but claims values drifting higher
Overall 2012 a more normal year,compared to exceptionally good 2011
Pool credit balance significantly in excess of $100m

UNDERWRITING DISCIPLINE

Last three financial years combined ratio averaged 100%
2012/13 financial year combined ratio - 104%
Underwriting discipline maintained

INVESTMENT PORTFOLIO

Investment return of $39.6m for 2012/13
3.7% return
Conservative asset allocation

CLAIMS FREQUENCY

Significantly reduced over last four policy years due to weakened state of shipping market
Frequency down for all classes of claim
Anticipated to increase when shipping markets recover

The print run of our Report & Accounts has been reduced to save Club expenses. We now provide all our Members and their brokers with a reference copy upon request. The Report & Accounts is also free to download from the website. Please call your usual Club contact if you require further copies.