UK Defence Club saw its gross written premiums increase by 10% between policy years 2016 and 2017, while the surplus rose from £780,000 to £4.89m (post-premium reduction for credit continuity scheme). GWP rose to £22.9m last year, from £19.8m in 2016.
The number of ships entered reached 4,200, up 7% year on year. Free reserves were £34.1m. The club’s continuity credit scheme returned capital, up 9% on the previous year.
UK Defence Club, managed by Thomas Miller and the leading provider of FD&D insurance to the maritime industry, said in its annual reportthat claims experience was “currently benign compared with prior years”.
The club is establishing a presence in Cyprus to continue writing European business, ahead of the UK exiting the EU in March next year.
UK Defence Club chairman Petros Pappas said that it had been “an exciting and successful year for the Club”, but he foresaw “significant issues ahead for owners and operators which could result in a significantly volatile claims environment. Future changes in regulations, particularly as regards low sulphur fuel oils, have the potential to give rise to many issues.”
Pappas said that “as with the collapse of OW Bunkers, owners and operators should not underestimate the significant cost that some of these disputes will certainly bring.”
Daniel Evans, Club Manager, Thomas Miller Defence, said that the club continued to be in a strong financial position, “ensuring it is well-placed to support Members in dealing with the challenges that may lie ahead”. He added: “Following a volatile claims period during the 2008 – 2011 policy years, and increased claims cost in 2014 policy year, subsequent to the OW Bunkers insolvencies, claims have been more benign. However, as the Chairman warns, there are potentially significant issues which could affect the claims environment in the future.”
He noted that the Club had supported in excess of 90% of cases to the full extent and had no mandatory deductibles.
The UK Defence Club provides cover to ship owners and operators for legal and other costs incurred in relation to disputes that are uninsured. It is the largest defence club in the world with over 182m GRT entered.
The 2017 policy year was the third year during which the Club was able to reward Members with a reduction in premium under our continuity credit scheme.
Collectively this provided Members with a £1.8m reduction in premium. Cumulatively, across the last three years, the value of continuity credits has amounted to £4.8m
Evans noted that, while the value of claims had been lower than in recent years, there had been an increase in claims numbers, attributable in part to increased enquiries in relation to matters such as sanctions. All policy years have developed better than, or roughly in line with, expectations with the 2015 – 2017 policy years developing significantly better than expected.
The net surplus for the year of £4.9m increased free reserves from £29.2m to £34.1m. Total capital resources for solvency purposes stood at £40.6m, and the combined Associations’ balance sheet had assets of £65.5m and a “robust” ratio of assets to liabilities of 220%.
|Gross written premium||22,940||19,790|
|Net claims incurred||(10,279)||(16,670)|
|Expenses and tax||(4,689)||(4,478)|
|Investment return and expenses||811||3,000|
|Exchange gains / (losses)||(1,616)||1,047|
|Surplus for the year||4,888||780|