Norway-based P&I Club Gard has waived its entire deferred call for the 2016 policy year. This represents a 20% reduction on the premium agreed at the beginning of the policy year”, the insurer said.
However, the company warned that a new trend in claims consisted of seafarers seeking back pay and repatriation. This followed the introduction of the Maritime Labour Convention in 2017 that protected seafarers’ rights in case of abandonment and unpaid wages. Gard also said that it was seeing an increasing need for cashflow support to pay for repairs.
Gard announced its group results for financial year 2016/17, stating that GWP fell to $824m, from $911m. while total equity rose to $1.135bn, from $1.01bn. The combined net ratio was 83%, the same as the previous year.
Gross earned premiums fell to $767.4m, from $897.3m the previous year. This is after the reduction in deferred call of $89.9m and a reduction in deferred call of $37.2m the previous year.
Earned premium for Gard’s own account declined to $617.2m, from $727.5m after reduction in deferred call. Gross incurred claims fell to $530.4m, from $791.2m. Claims incurred after reinsurance fell to $493.0m, from $532.3m. This led to a positive technical result of $31.1m, compared to $96.2m the previous year.
The non-technical result rose to $103.7m, a 4.7% return on the investment portfolio, from a loss of $54.0m the previous year. As a result, pre-tax profit rose, to $134.8m, from $42.3m the previous financial year. The net result rose to $125.9m, from $33.4m.
A change in accounting principles took effect in Norway on January 1st 2017 (contingency reserve is now presented as other equity as well as a deferred tax liability) and the accounts for the previous year have therefore been restated to enable direct comparison.
In Marine & Energy, GWP for the year was $203m; this equates to nearly 9,000 vessels, with Gard having claims lead on 47% of these. “Energy had a less successful year with this relatively small book of business suffering from a few large claims. This is a volatile class of business and we plan accordingly”, said CEO Rolf Thore Roppestad.
In Marine, Roppestad said that the fact that the insurer offers a combined P&I and marine claims service and a global network was “one of the fundamentals underpinning our value proposition – one that sets us apart from other providers”.
Both property and loss of hire claims were below average, which Roppestad said possibly reflected a less active trading environment and more vessels in lay-up, especially in the offshore sector. “We are seeing an increasing need for cashflow support to pay for repairs etc. Where we have the claims lead, we are able to act swiftly to give the right support”, he said.
Roppestad observed that “undoubtedly this is a very difficult trading period for those in the marine industries. It is unsurprising that shipowners and operators are looking carefully at their costs – managing their bottom line is vital”. However, he noted that more business critical was dealing with the consequences of a catastrophe – both in terms of cashflow and ongoing operations. “At times such as these, a proper
partnership is critical – working with an insurer who can deliver prompt payment and the capabilities to get the business back on track,” the CEO wrote.
The group’s income declined by 9%, which Roppestad acribed primarily to a continued softening market and lower demand in some segments. The technical result benefited from a fall both in the frequency and severity of claims. The non-technical result was a profit of $104m, a 4.7% return on the investment portfolio. Roppestad said that Gard’s strategy of “focusing on three key activities – maintaining our financial strength, developing our market position and building an efficient global organisation – is fundamental to further improving our ability to deliver the insurance products and services our clients and Members need today and in the future.”
Referring to the February renewals, Roppestad said that “during the 2017 P&I renewal many businesses were taking tough decisions about how much money they had to spend and on what. We believe that there is a right price for each risk and are prepared to stand our ground on pricing decisions when we think that is the right thing to do for the long-term health of the Club.”
He noted that “we are seeing a number of other claims’ trends, including cases of seafarers seeking back pay and repatriation following the introduction of the Maritime Labour Convention in 2017 protecting seafarers’ rights in case of abandonment and unpaid wages. It is likely that these will increase in number as shipowners hit hard times”. http://www.gard.no/annual_report/2017/home