Gallagher’s pre-renewal review 2020 #11 – Swedish Club

Broker Gallagher has released its 2020 pre-renewal review, covering past results and the situation for the policy year to date, with individual sections on the Group Clubs. Today:  Swedish Club

Full Name: Sveriges Angfartygs Assurance Forening

Web Address: www.swedishclub.com

Address: Gullbergs Strandgata 6, SE 40122, Goteborg, Sweden

Tel: +46 31 638400

Fax: +46 31 156711

S&P Rating (last change: increase to A-from BBB+ in 2019) ‘A-‘ (Stable)

Geography

Asia-Pacific 53%
Europe 44%
RoW 3%

Types of vessel entered

Bulker 39%
Container/General Cargo 35%
Tanker/Gas Carrier 20%
Passenger/Ferry 3%
Other 3%

Gallagher asked Club managing director Lars Rhodin what so far this year had been the most valuable lesson learnt from 2020. Rhodin said that, while the purpose of underwriting was to provide cover for unlikely events, “it is true to say that Covid-19 is a black swan that few people saw coming”. It had forced the marine insurance industry to face an exposure which, although challenging, had become an inevitable part of business. “We have, as has the whole industry, adapted to the situation, and taken all actions necessary so we can continue to serve our members and business partners”. Rhodin said that flexible working had been key, as had making the most of all digital tools available. “I am very proud of the people in our organisation who have worked so hard to ensure we continue to deliver the top‑quality service our members require”, Rhodin concluded.

Gallagher asked him if he would have done anything differently. Rhodin replied that, while the purchase of a crystal ball might have been beneficial at the beginning of the year, in hindsight, it was “difficult to see what we could have done differently. Our business is about risk and facing uncertainties and so being prepared for contingencies is key”. Rhodin said that The Swedish Club had one of the strongest solvency rates of all the IG group Clubs and this had stood it in good stead.

Gallagher noted that Swedish Club had launched an innovative new Trade Enabling Loss Prevention (TELP) product in 2019-20, providing real time loss prevention advice that was personalized to location and voyage profile. Gallagher said that this would enable members to receive specific advice when nearing areas of specific risks at each stage of a given voyage.

During 2020 the Club has been applying for an insurance licence thorough its Hong Kong branch with the Insurance Authority of Hong Kong. The Hong Kong branch currently is tasked only to provide marketing, client liaison and advisory services.

The Club has reported on its results for the six months to June 30th. Free Reserves fell by $3.4m to $225m as a result of a 107% combined ratio, which generated an underwriting loss of $3.3m. The combined ratio was in line with the 108% ratio seen in the first six months of 2019. Investment income was essentially neutral, returning a small loss of $0.1m.

TONNAGE 2019-20 2018-19 2017-18 2016-17 2015-16
Owned Tonnage 48.3 51.1 46.8 43.6 41.5
Chartered Tonnage 24.0 18.0 18.8 21.4 18.9
CALL HISTORY 2020-21 2019-20 2018-19 2017-18 2016-17
Forecast Call 0% 0% 0% 0% 0%
Latest Estimate 0% 0% -5% -4% 0%
GENERAL INCREASE 2020-21 2019-20 2018-19 2017-18 2016-17
On Advance Call 5.0% 0.0% 0.0% 0.0% 0.0%
On ETC 5.0% 0.0% 0.0% 0.0% 0.0%
POLICY YEAR DATA 2019-20 2018-19 2017-18 2016-17 2015-16
Call Income 94.1 90.5 95.4 104.1 110.0
Incurred Claims 68.0 59.7 69.4 78.4 74.3
Total Outgoing 107.5 101.9 112.1 118.4 115.6
Underwriting Result -13.4 -11.4 -16.7 -14.3 -5.6
Call Income/GT 1.30 1.31 1.45 1.60 1.82
Claims Incurred/GT 0.94 0.86 1.06 1.21 1.23
SOLVENCY 2019-20 2018-19 2017-18 2016-17 2015-16
Total Free Reserve 222.1 203.5 211.8 194.1 183.1
Tier 1 Capital 244.3 229.2 234.1 215.6
Tier 2 Capital 53.7 48.4 54.1 59.3
Solvency Capital Required 107.4 96.8 108.2 118.5
INVESTMENT INCOME 2019-20 2018-19 2017-18 2016-17 2015-16
Return on Total Assets 6.21% -0.96% 5.15% 2.34% -0.63%

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