Disciplined underwriting increases UK P&I Club free reserves to new high
London - The UK P&I Club, one of the largest and oldest providers of mutual liability insurance to ship owners, today announces its financial results for the year ended 20 February 2013.
• Surplus of $9.5 million increases free reserves and hybrid capital to new high of $494 million
• S&P rating upgraded to: A- (Positive outlook)
• $4.11 free reserves per gross ton
• Strongest renewal season in recent years, increasing gross tonnage to 120 million
• Combined ratio of 104%, with a four year average of 100%
• 3.7% investment return of $39.6 million (1.5% in 2012)
• Total assets of $ 1.56 billion
• Club has maintained focus on disciplined underwriting and a balanced book
• Average cost of claims continues to rise, despite continued low total volume of claims
Dino Caroussis, Chairman of the UK P&I Club, said:
"In the year under review, the Club has strengthened financially, increasing its free reserves and capital to $494 million, a new high. Further, in evidence that the Club's strategy of disciplined underwriting is being recognised as achieving results, S&P's upgraded the Club to A- (positive outlook).
"This last renewal season was one of our strongest in recent years, with mutual owned tonnage growing to 120 million gross tons, maintaining our position at the top of P&I market. This increase reflects the Club's aim to grow with quality tonnage at the right premium rating.
"However, the Board is very conscious of the need to strike a sensible balance between the financial requirements of the Club and the needs of Members, in what is a very weak market for most shipping sectors."
Hugo Wynn-Williams, chairman of Thomas Miller P&I, the Club's managers said:
"This is a strong set of results, but it does not allow for complacency. The combined ratio for the financial year of 104% is within the Club's tolerances in the short term, taking into account the current elevated claims environment.
"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, will continue. 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.
"We recognise the economic reality facing ship owners and in addition to our financial strategy we will continue to help Members reduce their claims exposure through our extensive loss prevention activity."
Further information is available through the UK P&I Club Review of the Year 2013.
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Standard & Poor's ("S&P") today affirmed the Club's A (stable) rating after completing its full annual review of the Club. The S&P review considers a wide range of factors including the Club's capital adequacy, industry and competitive position, risk profile and, importantly, risk management. This S&P rating therefore provides a much wider view of the Club's financial health than the more generic measures such as free reserves per ton.