London P&I Club will impose no general increase and no general rise in deductibles for policy year 2019/20.
The Club said that it had seen a better than projected outturn for retained claims during H1 2018/19, this being driven by a benign experience in the highest severity band ($1m-plus). There was an increase in the cost of claims on the pooling system, but the Club said that this remained within the expected range of outcomes.
The effect of churn in H1 was a contributor to continued pressure on premium levels, particularly in respect of the mutual product, the Club said. “There was, however, volume growth in the mutual membership, as well as in the Association’s fixed premium lines of business, where progress was ahead of expectations.”
The Club’s investments produced a positive return in H1 that was in line with projections, although the Club noted that this had since been subject to increased market volatility.
The Club said that the 2017/18 result saw a free reserve increase to $194.6m and capital adequacy was within the ‘AAA’ range, using S&P’s capital model. The Club said that its balance sheet was strong, not only on an absolute basis, but also in comparison to other IG Clubs.
The Board decided that no general increase in Annual Call rates would be set, with a focus instead on individual Members and such adjustments to rates as might be necessary to achieve an equitable level of premium income over the medium term, reflective of their record and exposure to risk. Individual Member deductibles would also be reviewed as part of the renewal process.
London Club said that. while the Club’s sub-100% combined ratios in the 2015/16 and 2016/17 financial years were below target, the combined ratio for 2017/18 had exceeded its target. “Our objective remains to produce more balanced underwriting results over the medium term, while allowing for a reasonable contribution from investments. Our experience in H1 of the current policy year and projections on a full-year basis confirm the progress being made towards that goal”, the Club concluded.