Gallagher’s pre-renewal review 2020 #9 Standard 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: Standard Club.

Full Name:    The Standard Club

Web Address: www.standard-club.com

Address: The Minster Building, 21 Mincing Lane, London EC3R 7AG

Tel: +44 203 320 8888

Fax: +44 203 320 8800

S&P Rating (last change: unchanged in last 7 years) ‘A’, outlook negative

Geography

Europe 47%
Asia-Pacific 43%
Americas 14%
RoW 5%

Types of vessel insured

Tanker/Gas Carrier 31%
Passenger/Ferry 29%
Bulker 23%
Offshore 13%
Passenger/Ferry 2%
Other 2%

Gallagher asked CEO Jeremy Grose what was the most valuable lesson learnt from 2020. He said that the COVID‑19 situation had highlighted for him that risks which were considered to be remote might not in reality be quite so unlikely.

On being asked whether the Club would have done anything differently with the benefit of hindsight. He said that “despite the fact that I am firmly an advocate of the benefit of a ‘real’ interaction with colleagues, members and brokers, I think it is a shame that it has taken the confinement brought about by the pandemic to make us all really appreciate how we can get positive benefits from remote working and communication and I would have incorporated these into BAU earlier”.

Gallagher commented that  it hoped 2019-20 concluded a traumatic few years for Standard, which culminated with an outlook downgrade from Standard & Poor’s, from stable to negative.

“Whilst a negative, or positive, outlook is not necessarily a precursor of a rating change it is indicative of problems that the Club had experienced with its underwriting ratios and the unfolding of further losses associated with Lloyd’s, which now look to be about $100m at a technical level.”

The Club has sold the syndicate to run-off specialist Premia, which Gallagher said “should staunch the bleeding once and for all”.

In September 2019, the directors of Charles Taylor plc (the Club’s managers at the time) unanimously recommended that their shareholders accept a deal which in effect privatized the company under ownership of venture capital / private equity. The deal was eventually completed in early 2020, which Gallagher said in part explained the Club’s excellent investment income in 2019-20.

Following the change of ownership of the management company, the shipowning board determined to bring the Club management back in house, a process which started recently. Most of the core staff will remain under employment contracts with the Club, and a 12 month timeframe is envisaged to complete the transition. Certain core services, such as IT, will remain sub-contracted with Charles Taylor Managements.

TONNAGE 2019-20 2018-19 2017-18 2016-17 2015-16
Owned Tonnage 133.0 135.0 125.0 116.0 112.0
Chartered Tonnage 22.0 24.0 24.0 24.0 23.0
CALL HISTORY 2020-21 2019-20 2018-19 2017-18 2016-17
Forecast Call 0% 0% 0% 0% 0%
Latest Estimate 0% 0% 0% -5% -5%
GENERAL INCREASE 2020-21 2019-20 2018-19 2017-18 2016-17
On Advance Call 7.5% 0.0% 0.0% 0.0% 2.5%
On ETC 7.5% 0.0% 0.0% 0.0% 2.5%
POLICY YEAR DATA 2019-20 2018-19 2017-18 2016-17 2015-16
Call Income 253.6 269.6 284.0 298.0 340.3
Incurred Claims 227.2 222.9 186.4 180.2 227.5
Total Outgoing 330.4 330.9 284.9 283.9 361.5
Underwriting Result -76.8 -61.3 -0.9 14.1 -21.2
Call Income/GT 1.64 1.70 1.91 2.13 2.52
Claims Incurred/GT 1.47 1.40 1.25 1.29 1.69
SOLVENCY 2019-20 2018-19 2017-18 2016-17 2015-16
Total Free Reserve 393.7 434.7 461.5 430.5 390.1
Tier 1 Capital 345.6 284.2 365.2 395.1
Tier 2 Capital 52.1 64.4 34.0 44.6
Solvency Capital Required 229.1 215.2 193.7 181.1
INVESTMENT INCOME 2019-20 2018-19 2017-18 2016-17 2015-16
Return on Total Assets 7.40% 1.52% 4.54% 2.84% -0.50%

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