Tysers 2020 Marine Liability Report – The Clubs: #5, London Club

London Steamship Owners Mutual Insurance Association Ltd.

Managers A Bilbrough & Co Ltd

Tysers has not expressed a high opinion of London Club in recent years, and 2020 sees no change. It said that 2019/20 was another “dire” year on the underwriting front. A combined ratio of 137% equated to a technical loss of $36m, following a $34m loss in 2018/19. However, Tysers noted that for 2019/20 investment income came to the rescue, with a return of 9.1% producing $41m.

That figure included a “timely” $9m gain from the revaluation of the Club’s London office.

This helped free reserves to rise by $5m to $174m, but they remained well below the 2017 and 2018 levels.

Tonnage remained steady at a combined total of 66.7m gt, of which 47m gt related to owned mutual tonnage, 3m gt to fixed owned and 16m gt to chartered entries.

The Club reported that for 2019/20 the net burning cost of claims per entered ton was its highest for five years and 25% above the average of the past four years, said Tysers.

Gross premium for the financial year rose by $12m to $116m, but net incurred claims rose by $15m to $119m.

Tysers reported being told that the fixed business (chartered and small owned vessels) performed in line with expectations, while it was the owned mutual tonnage which performed worse than forecast.

Claims increased at all levels but mainly above the $500,000 level.

On a policy year basis, net claims at $89m were $18m higher than the previous year.

Tysers said that “the Club appears to be happy plodding along on the edge of the City of London, with no readily obvious plans to improve its underwriting results or its market profile”.

The broker warned that, “with investment income unlikely to come to the rescue in 2020, a significant reversal of claims’ trends will be needed to avoid erosion of the already comparatively fragile free reserves and to protect its potentially tenuous S&P rating of BBB (negative outlook).”

Gross Tonnage

Owned 50,700,000
Chartered 16,000,000

Free reserves

2020 173,891,000
2019 168,843,000
2018 194,642,000
2017 188,012,000
2016 160,707,000

Standard & Poor’s Rating   BBB (negative outlook)

Vessel type

Bulker 53%
LNG/LPG & Tankers 26%
Container 17%
Cargo 4%

Tonnage By Area

South Europe 51%
Far East 37%
North Europe 9%
Americas 3%

Results

Year 2020 2019 2018 2017 2016
Calls/Premium 116,175 103,660 101,728 102,891 110,072
Reinsurance Cost 18,502 19,671 20,393 20,181 22,670
Net Claims (incurred) 118,680 104,019 83,902 69,472 60,129
Operating Expenses 15,093 13,644 12,655 11,542 11,954
Net Underwriting Result (36,100) (33,674) (15,222) 1,696 15,319
Gross Outstanding Claims 334,851 326,160 298,144 298,867 332,037
Total Assets 526,501 511,570 512,840 501,916 505,479
Average Expense Ratio 10.41% 10.30% 9.68% 9.51% 9.52%
Solvency Margin 1.57 1.53 1.72 1.68 1.52
Reserves/GT Ratio $3.43 $3.30 $4.29 $4.28 $3.62

All figures $’000