Gallagher’s pre-renewal review 2020 – #7 Shipowners’ 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: Shipowners’ Club.

Full Name: Shipowners Mutual P&I Insurance (Luxembourg).

Web Address: www.shipownersclub.com

Address: White Chapel Building, 10 Whitechapel High Street, London, E1 8QS, UK

Tel: +44 207 488 0911

Fax: +44 207 480 5806

Geography

Asia-Pacific 50%
Europe 21%
RoW 15%
Americas 14%

Types of entered vessel

Other 63%
Passenger/Ferry 15%
Offshore 12%
Tanker/Gas Carrier 6%
Unspecified 5%

Gallagher asked CEO Simon Swallow what to date was the most valuable lesson learnt from 2020/ Swallow said that in such unpredictable times, when some insurers continued to focus on growth, “we have been reminded that our existing Members’ seek predictability and consistency – in service, in premium and, so importantly, in our absolute focus on promptly settling and paying claims. It is these simple but vital areas that ensure peace of mind for our Members and their brokers.”

Gallagher asked CFO Simon Peacock whether the Club would in hindsight have done anything differently. Peacock said that it would be easy to choose what we could have done differently, with the benefit of hindsight.

“In the absence of a crystal ball, we are delighted with how the Club has performed. Our remote working has worked well these past six months; if only we had sub-let our offices!”

Gallagher noted that the Club had reported on its half year results to June 30th 2020, which confirmed that the significant collapse in investment asset values occasioned earlier in the year by the Covid-19 pandemic had been reversed by the year’s half-way point. The Club earned a small investment yield in this period which, coupled with underwriting at a 102.2% combined ratio, resulted in a small loss of $2.1m in H1.

The Club’s solvency return revealed that the Club had $155.6m in ancillary own funds (Tier 2), of which $100.5m were eligible for SCR purposes. Gallagher said that, while some of these funds might derive from adjustments regarding its Hydra cell and other sources, the lion’s share of such amount would be attributable to the Club’s potential to raise supplementary calls. “Given that perhaps 50% of the Club’s premiums are from members who are entered on a fixed basis, in a Club that has not made an excess call in living memory, this figure does seem incongruous”, said Gallagher.

TONNAGE 2019-20 2018-19 2017-18 2016-17 2015-16
Owned Tonnage 26.6 26.7 24.9 24.8 24.0
Chartered Tonnage 0.5 0.5 0.5 0.6 0.6
CALL HISTORY 2020-21 2019-20 2018-19 2017-18 2016-17
Forecast Call 0% 0% 0% 0% 0%
Latest Estimate 0% 0% 0% 0% 0%
GENERAL INCREASE 2020-21 2019-20 2018-19 2017-18 2016-17
On Advance Call 0.0% 0.0% 0.0% 0.0% 0.0%
On ETC 0.0% 0.0% 0.0% 0.0% 0.0%
POLICY YEAR DATA 2019-20 2018-19 2017-18 2016-17 2015-16
Call Income 229.2 223.1 216.8 226.4 241.4
Incurred Claims 166.2 173.5 135.1 150.1 157.3
Total Outgoing 249.0 255.0 211.4 228.0 236.7
Underwriting Result -19.8 -31.9 5.4 -1.6 4.7
Call Income/GT 8.46 8.20 8.54 8.91 9.81
Claims Incurred/GT 6.13 6.38 5.32 5.91 6.39
SOLVENCY 2019-20 2018-19 2017-18 2016-17 2015-16
Total Free Reserve 340.0 303.8 341.7 294.0 279.4
Tier 1 Capital 280.9 266.2 312.1 274.3  
Tier 2 Capital 100.4 98.5 107.3 108.3  
Solvency Capital Required 200.9 197.0 214.7 216.6  
INVESTMENT INCOME 2019-20 2018-19 2017-18 2016-17 2015-16
Return on Total Assets 5.91% -2.71% 4.76% 3.05% 0.99%

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