Tysers 2020 Marine Liability Report – The Clubs: #2, Britannia Club

The Britannia Steam Ship Insurance Association Ltd

Managers – Tindall Riley (Britannia) Ltd

Gross Tonnage

Owned 117,500,000
Chartered 45,000,000

Standard & Poor’s Rating confirmed at A (stable) last week

Free reserves

2020 594,388,000
2019 587,561,000
2018 641,557,000
2017 601,042,000
2016 512,696,000

Tonnage By Vessel Type

Bulkers/OBO 34%
Tankers (Crude) 18%
Containers 27%
Tankers (Other) 14%
Cargo/Other 7%

Tonnage By Area

Asia 46%
Scandinavia 15%
Europe 33%
Americas 4%
Other 2%

Results since 2016 policy year

Year 2020 2019 2018 2017 2016
Calls/Premium 201,185 204,415 208,147 225,854 260,722
Reinsurance Cost 33,152 32,433 30,507 39,498 43,413
Net Claims (incurred) 189,832 164,941 144,828 114,789 192,276
Operating Expenses 31,891 28,649 25,666 25,719 26,986
Net Underwriting Result (53,691) (21,608) 7,146 45,848 (2,403)
Gross Outstanding Claims 1,198,743 1,163,551 1,142,577 1,173,878 1,308,955
Total Assets 1,806,962 1,747,396 1,807,557 1,796,568 1,853,548
Average Expense Ratio 11.50% 10.90% 9.73% 9.42% 9.12%
Solvency Margin 1,51 1.50 1.58 1.53 1.42
Reserves/GT Ratio $5.06 $5.25 $6.00 $5.96 $4.84

All figures for Britannia have been restated to include those of Boudicca.

All figures $’000

Tysers said that, despite a combined ratio of 132%, which was the second-worst in the IG after the London Club, the Club still managed a surplus of $32m, with an investment return of $87m more than compensating the underwriting loss of $54m and enabling the Club to make a total capital distribution of $25m to members so the final net surplus was $7m.

The broker observed that over the past four years the Club had returned $85m to members on a non-policy year basis. Last year gross premium reduced by $3m to $201m, while net claims were up $25m at $190m. For the 2019 policy year the Club suffered 20 claims in excess of $1m and these totalled $70m, with three claims hitting the Pool. However, overall, the net retained claims position for the policy year was some $20m better than for 2018.

Owned tonnage rose by more than 5m gt to 118m gt; chartered tonnage saw a greater rise, from 19m gt to 45m gt, pushing overall tonnage to a record high.

Tysers said that it was remarkable that the Club ended the year, on a consolidated basis, as financially strong as ever, “despite the awful combined ratio”.

Tysers had one negative comment:

“In order to make a fair comparison with the other Clubs, we do look at the Club and Boudicca on an overall basis. We appreciate that the Club cannot issue consolidated accounts but we do feel its Review of the Year issued in advance of the Annual Report is misleading in summarizing the Club’s performance (excluding Boudicca) by including investment income of $62m to improve the Club’s “net loss ratio” to 79.9%”. Tysers requested that Britannia adopt the market practice of separating the technical result from the investment performance.

Meanwhile, last week Standard & Poor’s confirmed Britannia’s ‘A’ rating with a stable outlook.

S&P added that Britannia’s outlook remained stable over the next two years, based on its view that the Club’s current capital buffer well exceeded S&P’s ‘AAA’ level requirement. S&P noted the difficult trading conditions experienced in 2020/21, with significant earnings volatility. The agency also recognized that Britannia had a “large capital cushion” available’. It expected the Association to return to profitable underwriting and investment performance in 2021/22.

S&P said that Britannia “benefited from well-articulated conservative risk tolerances across the organization, the expertise of the experienced and long-standing management team, and good knowledge transfer across the organization.”