Shipowners’ Club reports 195% solvency ratio

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.

Total Club Members6,6586,633
Total Entered Vessels32,93232,749
Total Tonnage25,486,001

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

Net Earned Premium186.6201.1
Claims Incurred(136.2)(149.1)
Net Operating Expenses(48.7)(49.2)
Technical Account Balance1.82.8

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

 WeightActual PerformanceBenchmark PerformanceOutperformance
Fixed Income68.90%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%

2017 Group investment returns

Investment Income12.510.4
Fixed Income9.67.5
Collective Investment Vehicles0.30.3
Investment Management Charges(2.5)(2.3)
Realised and unrealised gains on investments37.53.7

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

Technical Account Balance1.82.8
Investment Return47.511.8
Other Income/(Charges)(0.0)(0.1)