Press Release: UK P&I Club reaps benefits of low cost $100 million Hybrid bond
-S&P ‘A’ Ratings affirmed following bond redemptionUK P&I Club has completed the redemption of its 10 year $100m hybrid bond with effect 22 August 2018 and has its S&P ‘A’ ratings affirmed, reflecting the strong financial position of the Club.
As formally announced on 18 July 2018, the UK P&I Board announced its intention to redeem the hybrid bond. The bond provided an effective way of increasing the Club’s regulatory solvency capital and free reserves, and allowed greater flexibility in its investment strategy. This increased flexibility has supported the Club’s strategy to build financial strength, and during the period since launching the bond the Club’s free reserves have grown very substantially.In the year to 20th February 2018, the Club’s strong financial position was further enhanced through an investment return (excluding currency) of 4% and a combined ratio of just over 90%, with the Club’s free reserves increasing by $82 million to $540 million.
Reacting positively to the bond redemption, RatingsDirect issued a research update on 7 September affirming the Club’s S&P ‘A’ ratings and stating, ‘this improves our financial flexibility assessment, which now largely reflects the Club's proven access to the capital markets as well as its ability to make supplementary calls on International Group (IG) of P&I Clubs members.’Alan Olivier, UK P&I Club, Chairman, says: “The redemption of the Hybrid bond is testament to our robust financial position, which has strengthened in the last decade and it’s encouraging to see this reflected in our recently affirmed S&P ‘A’ ratings. Over the term of the bond (10 years), the Club has paid interest on the bond of $82.5 million. However, the actual cost has been considerably lower. The Club has been able to invest the additional $100 million over this period, earning approximately $27m to 20th Feb 2018.
“The additional capital provided by the bond also allowed the Club to take more investment risk and achieve higher returns, benefiting the Club to the amount of $31m to 20th Feb 2018. Taking these factors into account, the estimated net cost of the bond over the past 10 years has been approximately 2% per annum.”
-ENDS-For further details, please contact:
Roland Cross / Jonathan Atkins / Alastair Doyle
UKP&I@fourbroadgate.com / +44 (0) 20 3697 4200
Notes to Editors
The UK P&I Club is a leading provider of P&I insurance and other services to the international shipping community. Established in 1869 the UK P&I Club insures over 240 million tonnes of owned and chartered shipping through its international offices and claims network. ‘A (Stable)’ rated by Standard & Poor’s with free reserves of $540m, the UK P&I Club is renowned for its specialist skills and expertise which ensure ‘best in class’ underwriting, claims handling and loss prevention services.The UK P&I Club is managed by Thomas Miller, an independent and international insurance, professional and investment services provider.
Thomas Miller is an international provider of market leading insurance services.
Founded in 1885, Thomas Miller’s origins are in the provision of management services to mutual organisations, particularly in the international transport and professional indemnity sectors; where today they manage a large percentage of the foremost insurance mutuals. Increasingly Thomas Miller applies its knowledge and expertise to the development of specialist businesses.
Principal activities include:
- Management services for transport and professional indemnity insurance mutuals
- Managing general agency
- Professional services including legal services, claims and captive management
- Investment management for institutions and private clients
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