Significant growth for The Swedish Club in H1, but high CR hits bottom line

The Swedish Club has reported “continued progress in business development” for H1 2021, with P&I running at 60m gt (4,400 vessels insured).

Gross premiums earned rose to $92.3m, from $85.9m in the same period last year, with premiums net of reinsurance up to $72.2m, from $66.9m in H1 2020.

The Club said that the growth provided “an indicator that the Club continues to be an attractive marine insurance service provider”.

However, claims were high, with volatility being experienced in both P&I and Marine concurrently. This led to a combined ratio of 132%, up from 107% in H1 2020.

Swedish Club said that the 31,629 gt X-Press Pearl (IMO 9875343) fire off Sri Lanka and its subsequent total loss provided “a notable example of the nature of claims faced on the hull side of the business”, while in P&I the high level of Pool claims seen in recent times had not abated. The X Press Pearl is entered with London Club and will likely be an International Group Pool Claim.

The result before appropriations and tax for H1 2021 was a loss of $13.7m, compared with a loss of $3.4m in the same period last year. The underwriting result fell to a loss of $23.2m, from a loss of $3.3m in H1 2020

However, the financial result was significantly stronger at plus $9.5m. Net premiums increased by 8%, generated by price and volume adjustments in both Marine and P&I.

While the trend of Marine attritional claims was rather stable, “a small number of high profile claims affected the Marine result negatively beyond expectations”. Concurrently, the high level of P&I claims in recent times did not taper off. Instead, there were more P&I claims comparing to the same period last year.

When timed closely together, the combination has a strong impact on the combined ratio.

The investment portfolio delivered a return of 2.8% (0.5%) primarily driven by supportive conditions in equity markets, while returns in money markets had been broadly low.

Free reserves sat at $217.7m, down from $225.0m at this point last year.

The Club also said that it had “made significant progress with plans to expand its Asian operation and is on track to establish a new full-service office in Singapore, beginning 2022”.

The Club said that this would enable the Hong Kong office to intensify its focus both locally and in China.

KPI

$m H1 2021 H1 2020
Gross premiums earned 92.3 85.9
Reinsurance premiums -22.1 -21.7
Reinsurance commissions 2.0 2.7
Premiums net of reinsurance 72.2 66.9
Investment income transferred from NTA 0 1.4
Claims net of reinsurance -80.3 -58.3
Acquisition costs -12.1 -10.9
Administrative expenses -3.0 -2.4
Underwriting result -23.2 -3.3
Financial result 9.5 -0.1
Result before appropriations and tax -13.7 -3.4
Free reserves 217.7 225.0
Combined ratio 132% 107%

Cliff Notes

Continued progress in business development

Free reserves, $218m

Operating deficit, $13.7m

Return on investments, 2.8%

Increased focus on loss prevention webinars and training;

Geographical expansion – Singapore office, beginning 2022.

https://www.swedishclub.com/news/club-news/half-year-report-2021-business-growth-for-the-swedish-club