October Review 2014

The strength of the Club has enabled it to weather the particularly intense claims year of 2013 and to return a break-even result for the half year.

The Club has maintained its capital position at the half year with $529m in free reserves and capital and total assets of $1.6 billion at the 20th August 2014. The UK Club's Standard and Poor's rating is A (Stable).

A small number of significant claims has increased the total cost of the 2013 policy year to the extent that it is now projected to be one of the most expensive years of the last two decades.

Conversely, the 2014 policy year has performed in line with expectations but the late development on prior policy years has increased the combined ratio for the half year to 109%. This underwriting deficit has been covered by a positive return on the Club’s investment portfolio

The Club’s reinsurance programme has played an important part in managing volatility arising from large claims, particularly in the 2012 and 2013 policy years. This reinsurance can reduce the Club’s exposure to claims volatility but not remove it. The availability of capital and free reserves enables the Club to manage the impact of the very expensive claims years.

A combination of an increase in the frequency of higher value claims on the one hand, and the underlying inflation in the attritional claims on the other, underlines the need to keep the premium moving.

A detailed explanation of the Club's half year figures is available in the "October Review 2014" attached.