Shipowners’ Club “in a strong position” at end of 2021

Shipowners’ Club, the International Group Club that focuses on the smaller and specialist vessel sector, was in “a strong position” at the end of 2021, according to chairman Philip Orme. The Club’s financial year follows the calendar year rather than the policy year to February 20th.

For the 2021 financial year the Club reported a combined ratio of 98.7%, which it said was slightly ahead of budget. Gross written premium rose by 7.3% year on year to $249.0m.

The Club reported an overall surplus of $17.4m, partly as a result of the modest underwriting gain of $2.9m, but primarily driven by a gain of $15.6m on the investment portfolio (reflecting a return of 3.5%).

The Club’s free reserves rose to $396.4m.

Shipowners’ has an ‘A’ (stable) rating with Standard & Poor’s.

CEO Simon Swallow said that the Club had been “active throughout the year in supporting those members who had Covid-19 claims. We have also had to manage Covid-19 collateral risks arising from incidents, such as dealing with delays in responding to casualties, as restrictions prevented salvors and surveyors from attending onsite.”

Britt Pickering, Claims & Legal Director, said in the annual report that, at the beginning of 2021, the Club had hoped that the impact of Covid-19 would reduce and, in turn, the operating environment for Members would start to improve.

He noted that, “whilst that did prove to be the case in many sectors and geographic areas, it certainly was not the same for all members”. He said that, as was the case in 2020, the passenger sector continued to be adversely affected in many areas across the globe, and consequently the Club observed a reduced level of operations and associated claims in that sector. “However, that reduction was more than offset by a higher number of Covid-19 outbreaks experienced on Members’ vessels generally, resulting in the overall frequency and quantum of claims for 2021 exceeding that for 2020 by some 10% and 20% respectively”.

Asia was a particular hotspot for Covid-19 in 2021, Pickering said, in contrast to Europe, which had been more adversely affected during 2020.

Just under 40% of all Covid-19 files had an incurred value of less than $10,000.

Pickering said that it was important to recognize the effect that Covid-19 had on claims generally. Logistical challenges, such as the movement of people and equipment across borders, had been “particularly problematic” and this had impacted claims handling and, as a result, had generated additional costs.

In 2021 a total of 56 condition surveys were delayed and affected by Covid-19, either due to a vessel being inaccessible because of port entry restrictions or due to a delay in the rectification of defects as a result of unavailability of spare parts or third-party experts. Pickering said that the number of delayed surveys had now decreased significantly as Covid-19 restrictions started to ease.

The yacht sector had the highest increase in business underwritten with a year on year premium growth, equating to 15% in each of the last two years. The larger proportion of this was attributable to new business and more Members purchasing optional Personal Accident (PA)/ Medical Expense cover.

The application of the 5% General Increase for Policy Year 2021, the impact of organic growth where existing Members have added additional vessels to their fleet and the writing of new business for new Members culminated in the Club exceeding its income target for the year.

In 2021 the Club’s claims, rather like 2020, had been characterized by extreme weather events across the globe. In particular, the Club was impacted by weather events in India such as Cyclone Tauktae, a category 4 cyclone that initially generated 10 notifications to the Club, the report stated, noting that only one claim was significant in terms of quantum. This claim occurred in May 2021 and involved one of Shipowners’ Member’s accommodation barges operating offshore of Mumbai. The vessel ultimately sank and led to 75 deaths. This event was notified to the IG Pool.

In July 2021 a cargo vessel operating off north-west India encountered adverse and deteriorating weather conditions and subsequently sank.

Pickering noted that these two incidents represented complex wreck removals in their own right. “However, the quantum associated with these claims was also impacted by the restrictions that Covid-19 brought”.

Other geographical areas were also affected by extreme weather, with Typhoon Maring and Typhoon Odette in the Philippines at the end of last year both resulting in multiple notifications to the Club.

Financial and Member data summary:

  2021 2020
Combined ratio 98.7% 101.0%
Underwriting surplus $2.9m ($2.0m)
Earned premiums, net of reinsurance $223.2m $207.2m
Incurred claims, net of reinsurance $161.2m $154.0m
Investment gain $15.6m $49.8m
Capital and free reserves $396.4m $379.1m
Entered Members 8,263 8,182
Entered tonnage 28.7m 27.8m
Entered vessels 34,167 33,831
Data 2021 2020 2019 2018
Net earned premiums ($m) 223.2 207.2 200.9 195.0
Capital & Free Reserves ($m) 396.4 379.1 340.0 303.8
Combined Ratio (%) 98.7 101.0 105.1 104.2

Members by region:

Europe 3,942
Australia, New Zealand & the South Pacific 1,357
Southeast Asia & the Far East 1,069
Central & South America 1,005
North America 394
Middle East & India 292
Africa 204

Vessels by sector

Harbour 8,659
Barge 6,218
Fishing 5,060
Passenger 4,722
Offshore 3,758
Yachts 3,074
Tankers 1,406
Dry Cargo 1,235
Autonomous 35