American Club reports “solid” 2020 renewal

American Club has said that both its mutual and fixed premium businesses have recorded “creditable performances”. With the fixed premium operation American Hellenic Hull seeing “sharp increases in premium and profitability”.

The club said that recent results augured well for the coming year and beyond.

Year-on-year premium revenue in mutual business remained flat as of February 20th, while year-on-year tonnage across the Club’s mutual business declined by about 9% overall to about 17m gt overall. This was counterbalanced by an average rate per gross ton for Club’s mutual P&I business up by 10% for 2020.

FD&D entries also moved lower somewhat in tonnage terms, again by about 9%, to 10.7m gt. However, almost all of this was offset by an increase in daily tonnage on risk in regard to the Club’s charterers business, so that total income on renewal will be virtually identical for 2020 to that of the previous year.

The Club said that the loss ratio on continuing business had yet again improved and that this implied a favourable claims outlook.

Funds under investment generated a 10.6% return for 2019, which it said was the best in a decade. This helped enable the Club to state that the 2019 financial year surplus forecast would grow by over 20% over the previous year-end.

Free reserves per ton were expected to show considerable increase into Q1 2020. Retained claims for 2019 were emerging less favourably than was the case in 2018, although the Club said that they remained largely within the original budget set for the year. Pool claims for 2019 were developing in an above-trend direction, similar to that for 2018. The Club noted that once again it had no claim on the Pool on its own account during the year.

The Club said that fixed premium business Eagle Ocean Marine continued to make excellent progress, while American Hellenic Hull’s impressive 2019 results had gained further momentum at the beginning of 2020.

Premium attributable to renewing P&I entries for 2020 saw an increase, in cash terms, of approximately 1.5%. However, the Club said that, taking into account increases in deductibles, in some cases significant, as well as the modification of terms applying to the application of deductibles generally, and changes to other insurance conditions, the overall premium increase, as if expiring terms had prevailed, was closer to 5%.

The Club’s P&I business renewing into the 2020 policy year saw a trailing five-year loss ratio of 41%, down from 48% a year earlier. The Club said that this suggested a positive trend for future losses; “an improving profile for continuing Members can be expected to moderate prospective exposures over the years ahead”, the Club said.

American Club’s year-end 2019 financials remain to be formally concluded, but it said that preliminary indications pointed to a positive development of certain important metrics. Surplus was expected to grow by more than 20% year on year.

Free reserves per ton for 2020 are also forecast to rise, being likely to settle in the area of $4.15 on a statutory basis within Q1 2020.

Premium for 2019/20 policy year to date at Eagle Ocean Marine (EOM), has grown by 23% year on year and was forecast to exceed $14.5m in total for the current facility year.

American Hellenic Hull, the Club’s hull and war risks underwriting subsidiary, was said to have “performed conspicuously well over the past 12 months”. Preliminary results for the financial year to December 31st 2019 showed sharp increases in both revenue and profitability, buoyed by higher levels of market pricing.

Earned premium grew by about 90% over the previous year to $16.7m in 2019, while pure underwriting profit rose fivefold to $3.6m. The bottom-line result for 2019 was marginally below break-even, but the Club said that this was “a notable improvement on the comparatively small, but inevitable, losses sustained during the company’s start-up period”.

Joe Hughes, Chairman and CEO of SCB, Inc., the Club’s managers, said that “although difficult business conditions prevail in both the shipping and insurance sectors, the American Club’s recent experience has been highly encouraging.  The 2020 renewal of the Club’s mutual P&I and FD&D entries proceeded in a very respectable direction, while both EOM and American Hellenic Hull have performed with real distinction over recent months”.