What's in a number? - Combined Ratio
A number of people have asked us to explain why the Club has started to refer to two different numbers when we report the Combined Ratio numbers for the year end.
A proportion of the Club's claims are incurred in currencies other than the US dollar. To mitigate the risk of currency rate movements on claims estimates, the Club holds an equivalent level of investments in each of those other currencies. So, as currency rates move, any resulting increases in claims levels are offset by gains in the corresponding investments, and vice versa.
During the last year, the US Dollar strengthened significantly against the Euro and Sterling, as well as against other currencies. The result was that the US Dollar-equivalent value of both claims and their matching investment assets reduced.
Because the Club has adopted International Financial Reporting Standards (IFRS), all currency gains and losses are reported in a single line in the financial statements. If the Club had been able to report the effect of currency movements in the claims and investments figures - as most of the International Group clubs are able to do - the results would have been as below, a better Combined Ratio but a lower investment return:
Combined Ratio | 104.6% | 97.1% |
Investment return | 5.0% | 2.5% |
Downloads
-
22136 - Assets2 719 KB
15/05/2015
Download PDF
Tags
You may also be interested in:
Crew Health Advice: Kidneys
09/03/2023
We are celebrating World Kidney Day, an awareness day created to remind us all about the importance of the kidneys as part of our overall health
Directors' Report & Financial Statements for the year ended 20th February 2022.
The UK P&I Club ("The Club") today announces its renewal for 2023 following the closure of the renewal season on 20 February
Circular 04/22: Review of Open Policy Years
27/05/2022
At their meeting in May 2022, the Directors closed the 2019 policy year. The deficit was transferred to the reserves.