Swedish club combined ratio hits 108% for H1 from other clubs’ pool claims

The Swedish Club has reported an underwriting result of minus $2.2m for the first half, compared with a gain of $4.7m in the same period last year. However, solid investment returns meant that the result before appropriations, tax and discount was $16.9m, representing an annual return on free reserves of 16.6%, up from $200,000 in H1 2018.

The combined ratio was 108% for H1, up from 96% in H1 2018. Retained claims developed largely in line with expectations and the Club incurred no significantly large Marine or P&I claims.

However, although the Club did not itself notify any claim to the IG Pool, other clubs’ Pool claims pushed the combined ratio of the Club above 100%.

On the investment side both dollar- and euro-denominated interest-bearing debentures gained value, following a fall in interest rates. Equity holdings benefited gains in stock markets. The Club’s investment portfolio delivered a return of 6.3%, compared with a loss of 0.4% in the same period last year. The reported financial result as a gain of $19.0m, compared with a loss of $4.5m in the same period last year.

Six months to 30 June 2019 (unaudited)

Amounts in USD millions H1 2019 H1 2018
Gross premiums earned 72.8 72.5
Reinsurance premiums -18.6 -19.0
Reinsurance commissions 0.9 2.2
Premiums net of reinsurance 55.1 55.6
Investment income transferred from NTA 2.1 2.7
Claims net of reinsurance -47.6 -41.7
Net operating expenses -11.8 -11.9
Underwriting result -2.2 4.7
Financial result 19.0 -4.5
Result before appropriations, tax and discount 16.9 0.2
Free reserves 220.7 209.6
Combined ratio 108% 96%

Managing director Lars Rhodin said that the Club continued to grow according to plan. Although the combined ratio was 108% (the result of other clubs’  International Group Pool claims) on a 10-year average the combined ratio remained below 100%. Free reserves were $221m, up from $210m.

Rhodin said that an S&P ratings upgrade was “a recognition of what we believe we already had in place – quality members and operating stability”.

https://www.swedishclub.com/about/finance/half-year-report/