Tysers 2020 Marine Liability Report – The Clubs: #4, Japan P&I

The Japan Ship Owners’ Mutual Protection & Indemnity Association.

Self-Managed.

Gross Tonnage

Owned 98,800,000
Chartered 12,600,000

Standard & Poor’s Rating   BBB+

Free reserves

2020 235,935,000
2019 237,876,000
2018 226,524,000
2017 208,423,000
2016 187,130,000

Tonnage By Vessel Type

Bulk Carriers 53%
Tankers 21%
Car Carriers 8%
Container Ships 14%
General Cargo/Other 4%

Tysers observed that “it appears to have been a rather dull financial year for the Japan Club”. Net claims remained stable at $118m and premium was down $11m to $183m. A combined ratio of 113% was partly offset by a small investment surplus. Free reserves fell, in US$ terms, by $2m to just under $236m.

On a policy year basis, Tysers said that 2019 looked poor, with the Club warning that, while the overall number of claims continued to reduce, there had been an increase in serious claims over $1m, with two exceeding $10m and hitting the Pool.

Owned tonnage rose by more than 2m gt to nearly 99m gt, but Tysers said that the increase was less than had been hoped for and that this had prompted the Club to review its products, services and organization.

Chairman Tadaaki Naito reported that 2020 was the start of the Club’s Second Action Plan – 2020 to 2023. This is aimed at becoming more customer friendly, a recovery of its share of the domestic market. and “to obtain good quality contracts in overseas markets”.

Tysers said that this would be difficult, and the broker recommended they focus more on the domestic market, in which Japan Club was facing severe competition from many stronger IG Clubs.

Although 2020 saw the Club celebrating its 70th anniversary, Tysers observed that  the Club was going to be very busy dealing with the ramifications of the grounding of the Wakashio, and its subsequent breaking up,  causing extensive oil pollution along the Mauritius coastline. Tysers warned that this was “likely to be the Club’s largest ever claim and a serious test of its claims handling abilities”.

Results

Year 2020 2019 2018 2017 2016
Calls/Premium 183,078 194,384 214,241 221,126 226,280
Reinsurance Cost 46,174 42,351 50,681 49,132 59,229
Net Claims (incurred) 118,370 118,734 121,533 122,604 125,416
Operating Expenses 25,710 25,739 26,536 25,441 25,556
Net Underwriting Result (7,176) 7,560 14,164 23,949 16,079
Gross Outstanding Claims 468,556 435,842 398,057 367,501 371,395
Total Assets 659,533 643,569 645,160 626,834 584,276
Average Expense Ratio 7.42% 6.52% 6.21% 5.46% 5.18%
Solvency Margin 1.41 1.48 1.62 1.71 1.57
Reserves/GT Ratio $2.39 $2.49 $2.42 $2.28 $2.03

All figures $’000