London Club has added further details to its November 20th announcement of a 10% general increase at the 2020/21 renewal, plus an increase of $2,000 in deductibles.
2020/21 renewal (IMN, November 24th 2020).
The Club said that its financial position remained strong.
During the first half of the year London Club said that it welcomed entries of more than 1.5m gt from new as well as existing mutual members. London also said that it had seen further support for the Club’s war risks, charterers and owners’ fixed premium products.
The combined ratio for the current year is projected to be better than last year’s, but it admitted that it would remain “in excess of the Board’s risk appetite”.
The Club’s retained claims in the current year were currently in line with expectations, but there had been a serious escalation in the cost of Pool claims – following on from increased activity seen in 2018/19 and 2019/20.
The Club said that rates in the P&I sector had been subject to significant and prolonged downward pressure. There was progress to reverse this unsustainable trend at the February 2020 renewal but London said that “further recalibration is needed to balance the discrepancy between premium and claims costs”.
The full industry impact of Covid-19 was still unfolding. The Club’s investment portfolio had recovered fully the losses incurred during the early part of the year. Subsequent changes to asset allocation meant that London Club’s investment portfolio was now more defensively positioned. Equities now make up 8.2% of the portfolio, with fixed income securities at 73.6% and cash or cash equivalents at 18.2%.
“While the portfolio is therefore further insulated from excessive volatility, the level of the projections for future positive returns have been reduced and reflected in the Board’s business planning”, the Club said.