On 14 July 2022, Standard & Poor’s (S&P) ratings services reaffirmed its ‘A’ rating on Assuranceforeningen Skuld (Gjensidig). It has a Negative outlook, in common with many other P&I Club ratings at the moment.
S&P said that Skuld had “a strong reputation and market position in the marine and protection and indemnity insurance (P&I) market”.
“While a loss in fin. yr. 2021-22 saw Skuld’s capital levels fall below our ‘AAA’ benchmark at year-end, we expect that the club will rebuild its capital levels in 2022”, said S&P.
The rating agency also observed that “although The P&I market will likely remain challenging over the next two years, the club has historically recorded less volatility in results than its P&I club peers”.
S&P considers a key risk over the next two years to be the challenging state of the P&I market. It also noted that the club was exposed to the volatility of other International Group (IG) clubs’ claims through the IG’s pooling system.
The negative outlook reflects the potential for a one-notch downgrade over the next two years if Skuld is unable to bring its underwriting performance back to breakeven levels or if its capital were to fall prospectively below our ‘AAA’ level. S&P said that it could revert the outlook to stable if it were to see the Club returning “to at least breakeven levels of underwriting performance over the next 12-24 months while retaining at least ‘AAA’ levels of capital”.
S&P expects that the shipping sector will continue to benefit from elevated rates. These should aid the P&I sector to improve its technical performance over 2022-2024. It anticipates 6.7% inflation in the US and 6.4% in the eurozone in 2022.