Reporting results for its 2019/2020 financial year, The London P&I Club has recorded an operating surplus of $5.0m and an increase in free reserves to $173.9m (end 2018/19: $168.8m).
Earned premium income (net of reinsurance costs) increased by $13.7m when compared with the previous year ($85.55m) and the result included positive contributions from the Club’s fixed premium products and FD&D Class.
The investment portfolio returned 9.1%. (2018/19: 3.0%, $8.9m). During 2019 there was a reduction in the allocation to equities and the portfolio has weathered the market volatility seen in the current year with a near breakeven return at the end of May.
Club Manager A Bilbrough CEO Ian Gooch said that “the increase in our free reserve follows a challenging claims outturn for 2019/20″.
He noted that personnel and cargo claims involving Members ran at unusually expensive levels. There was also an increase in the call level from the International Group to cover large claims.
Gooch said that this, coupled with the effect of reductions in P&I rates over recent years, had impacted on the, technical performance leading to a combined ratio of 137%. “That’s something which we’re taking steps to address and was a driver of our approach to the 2020 renewal which saw an important increase in rates”, he said.
The increase in the cost of mutual P&I claims costs involved an atypical outturn of more expensive personnel and cargo claims.
In a small number of cases at renewal the Club said that it proved impossible to agree terms, but the Club also saw 2.6m gt of additional mutual business entered at the renewal by existing as well as new Members. Total entered tonnage was now 66.6m gt.
Gooch said that, when reports emerged of the Covid-19 outbreak towards the end of 2019/20, “it quickly became apparent that ensuing pandemic presents a serious threat across all walks of life, to health and to economies and, as such, is a risk to which the Club is giving considerable attention”.
Regional Spread of Members
|0 to 9 years||36%|
|10 to 19 years||52%|
|20 years +||12%|