Gross earned premiums up at Norwegian Hull Club; 7.5% return

Norwegian Hull Club has proposed a 7.5 % return on premium in its Annual Report 2018, which published on Thursday April 11th). The 7.5 % return amounts to $5.7m.

The Club ended 2018 with a pre-tax profit of $9.9m

Gross earned premiums were $172.1m, up from a restated $157.7m in 2017. The gross result was a gain of $22.34m, compared with a loss of $69.7m in 2017. The operating result declined to $9.87m, from $29.83m – a result of net financial income declining to $1.63m, from $35.85m in 2017, from 8.6% down to 0%. The Board said that there were large gaps between returns for different asset classes. Negative returns on public equities, emerging-market government bonds and high-yield bonds were offset by private-market investments, including real estate, and investment-grade bonds.

The combined ratio improved to 94%, from 104% the previous year.

Norwegian Hull Club CEO Hans Christian Seim said that “in a rapidly changing landscape, we work hard to stay relevant for our clients. For a company such as Norwegian Hull Club … acquiring and retaining the right competence, knowledge and experience is vital if we are to continue to live up to our motto Expect More”.

He noted that “after experiencing a soft insurance market for at least a decade, the tide has finally shifted. For Norwegian Hull Club, such a market proved to be a long, challenging voyage.”

In its report the board of directors said that the soft market trend appeared to come to an end in the final months of 2017. This trend continued with the market tightening in the first half of 2018 – which strengthened in H2. The Club attributed this to several factors, including the Lloyd’s market and the UK branch markets beginning to take a tougher stance on pricing, with other markets soon following suit. There were also some very large losses that impacted a great many underwriters. Finally, there were – for the second year in a row – a number of severe marine losses resulting from natural catastrophes in the Pacific and Atlantic.

Gross premium income increased from previous years – the main reason being attributed to a combination of improved rates and slightly more activity in most segments.

The Club continued its diversification strategy in 2018, writing several new and existing projects within the renewable energy sector.

As of February 20th this year Norwegian Hull Club began underwriting Owners’ P&I in addition to already established classes within Liabilities, such as Charterers’ P&I and Crew P&I (via its subsidiary Marine Benefits).

In general there was a slight increase in reported claims compared to previous years. This correlated with a growth in both the lead and co-insurance portfolio in 2018. As of the end of 2018, 2,225 new marine claims were registered (excluding P&I).

The reported claims costs were lower than previous years, despite substantial losses related to the builders’ risks segment.

A total of 712 adjustments were finalized on policies where Norwegian Hull Club was Claims Lead.

As December 31st 2018 the Club’s equity was $303.7m. The Club said that no events had occurred in 2019 that significantly affected the capital or results of the Club.