In accordance with the Solvency II regulations Shipowners’ P&I Club has produced its Solvency & Financial Condition Report (SFCR) as of December 31st 2017.
The solvency capital ratio including contingent capital was 195%, up from 177% 12 months earlier. The solvency capital ratio excluding contingent capital was 145%, up from 127% on December 31st 2016.
Shipowners’ Club said that its business remained stable in terms of risks underwritten, its system of governance and its risk profile. At a Group consolidated level on a mid-market investment valuation basis, the Club recorded an underwriting surplus of $1.8m and an overall surplus of $47.7m for the year ending December 31st 2017. It closed the year with $341.7m of capital and reserves.
| 2017 | 2016 | |
| Total Club Members | 6,658 | 6,633 |
| Total Entered Vessels | 32,932 | 32,749 |
| Total Tonnage | 25,486,001 | – |
The Club is the sole owner of two reinsurance captives, Spandilux S.A. a Luxembourg-domiciled reinsurer and SOP (Bermuda) Limited, a Bermuda-domiciled reinsurer.
The Club uses a controlled distribution model through owners’ brokers, which introduce a strong majority of the Club’s premium income.
The Club has eight main vessel types with a focus on providing P&I coverage to small, regionally trading vessels.
Some 70% of the Club’s premium income is generated at the traditional P&I renewal date of February 20th. In 2017 more than 95% of Members decided to renew.
The Club said that “digital development is at the heart of our strategic planning. We have taken delivery of a new underwriting system and we are seeking to build on this technology as a platform for improved Member/broker links, targeted loss prevention data and greater use of online technology.”
2017 Group technical account
| $m | 2017 | 2016 |
| Net Earned Premium | 186.6 | 201.1 |
| Claims Incurred | (136.2) | (149.1) |
| Net Operating Expenses | (48.7) | (49.2) |
| Technical Account Balance | 1.8 | 2.8 |
The Club’s investment portfolio had a market value of US$ 597.0 million (2016: US$ 552.3 million) inclusive of accrued interest as at 31 December 2017.
2017 Group investment portfolio composition and performance
| Weight | Actual Performance | Benchmark Performance | Outperformance | |
| Fixed Income | 68.90% | 2.53% | 1.25% | 1.28% |
| Equities (Developed Markets) | 21.35% | 20.59% | 22.40% | (1.81)% |
| Equities (Emerging Markets funds) | 3.83% | 36.35% | 37.28% | (0.93)% |
| Equities (Developed Markets funds) | 3.02% | 13.06% | 10.82% | 2.24% |
| Cash | 2.90% | – | – | – |
| Total | 100.0% | 7.80% | 6.49% | 1.31% |
2017 Group investment returns
| 2017 | 2016 | |
| Investment Income | 12.5 | 10.4 |
| Fixed Income | 9.6 | 7.5 |
| Equities | 2.5 | 2.5 |
| Collective Investment Vehicles | 0.3 | 0.3 |
| Investment Management Charges | (2.5) | (2.3) |
| Realised and unrealised gains on investments | 37.5 | 3.7 |
| Result | 47.5 | 11.8 |
Taken together, the underwriting surplus and investment return produce an overall surplus for the period of US$ 47.7 million on a mid-market investment valuation basis. Table 5 provides a summary of the Club’s overall performance for the period ending 31 December 2017 together with a comparison to the prior period information.
2017 Group income and expenditure result
| 2017 | 2016 | |
| Technical Account Balance | 1.8 | 2.8 |
| Investment Return | 47.5 | 11.8 |
| Taxation | (1.5) | 0.1 |
| Other Income/(Charges) | (0.0) | (0.1) |
| Result | 47.7 | 14.7 |
https://www.shipownersclub.com/media/2018/06/Shipowners_SFCR_Report_150618.pdf