No general increase at American Club

American P&I Club has declared no general increase for premiums for the next policy year. However, there will be some increase in deductibles.

In its Autumn statement, American said that Mutual P&I and Mutual FD&D will both have a zero general increase. Fixed Premium P&I, Damage to Hull (DTH) and FD&D Insurance will also have a zero general increase.

Expiring deductibles for all classes of business will be subject to changes.

Claims arising under the provisions of Class I, Rule 2, Section 14.4 will be subject to a minimum deductible of $50,000 any one incident; and, for vessels over 15 years of age, claims arising under the provisions of Class I.

Rule 2, Section 13 will be subject to a minimum deductible of $50,000 any one incident; and all expiring deductibles of less than $10,000 will be increased by $1,000 in every case, save that there will be a minimum deductible for all claims in respect of crew of $7,500.

American Club said that annualized premium income for 2016 had increased over the period since February 20, but the Club had experienced a comparatively larger rise in total tonnage. This had resulted in a reduction in the average net rate per ton.

The Club’s retained claims exposures developed as expected over the first nine months of the current year. Claims for the Club’s own account for 2016 were higher than they were for 2015 at the same point, but the frequency of underlying attritional exposures was much the same.

So far as the Pool is concerned, the 2013 through 2015 policy years continued to develop favourably, while claims for 2016, albeit at an early stage, were also emerging at a moderate pace, the Club said.

As of mid-November 2016 the investment portfolio had generated a year-to-date return of just over 2%, up from 0.24% at the same point last year.

There had been some degree of claims deterioration on closed policy years over the recent period. This, coupled with unrealized losses in the Club’s investment portfolio as of September 30th 2016, had caused the Club’s contingency fund to reduce by about $1.5m over the most recent quarter, down to $64.5m, from $66m as of June 30th 2016.

The Club said that Open policy year 2014 was emerging in a manner similar to 2013, which was closed in June this year, while Pool exposures to date were “significantly lower”.

The deficit for 2014 had improved from about $9.7m to $7.9m over the twelve months since September 30th 2015. “There are grounds for optimism that this deficit will diminish as the year moves towards closure”, American said. The release call margin for 2014 will be maintained at 12.5% of estimated total, having been reduced a year ago from the originally mandated figure of 20%.

Open policy year 2015 was a strong year all round and it was now in a surplus of about $600,000 as of September 30th 2016. The release call margin for 2015 will remain at 15% of estimated total premium.

Attritional exposures for policy year 2016 were broadly the same as they were for 2015 at the same stage of development. However, an increase in claims severity experienced at the beginning of the year, and a continuingly conservative projection of ultimate losses, had combined to generate a deficit for the year at this stage. American said that, “as has been the case in previous years, this deficit may be expected to reduce over time as investment earnings begin more significantly to contribute to overall results as the year moves toward closure.