Tysers 2020 Marine Liability Report – The Clubs: #9, Standard

The Standard Club

Managers – Charles Taylor & Co (Bermuda)

Standard & Poor’s Rating – A

Gross Tonnage

Owned 130,000,000
Chartered 25,000,000

Free reserves

2020 393,700,000
2019 434,700,000
2018 461,500,000
2017 430,500,000
2016 390,100,000

Tonnage By Vessel Type

Tankers 31%
Cargo/Container 29%
Bulkers 23%
Offshore 13%
Passenger.Ferry 2%
Other 2%

Tonnage By Area

Europe 52%
Asia 26%
ROW 10%
USA 6%
Canada 6%

Tysers observed that “a small note in the Directors’ Report for 2019/20 caught our eye and sums up the turbulent times Standard has faced in recent years. The Club has a “chairman’s group” to assist the chairman and meet with the managers between board meetings and the note mentions that this group held a staggering 37 meetings over the last year”.

Although it has to be a matter of speculation, Tysers has assumed, reasonably, that one end result of these 37 meetings appeared to be the decision to move the Club’s management in house, leaving Charles Taylor with just limited management functions. These will include IT, investment management and internal audit.

The process of the management change began this year 2020 and will be concluded in 2021.

Standard’s relatively short-lived venture into the commercial market through its Lloyd’s Syndicate was termed by Tysers “a disaster”.

The Syndicate results for the past four years show a combined ratio over 150% in each year. Tysers understood the total cost to the Club of the Syndicate venture to be just over $100m (originally stated by Tysers to be “well over £100m”, but this sum has since been corrected to dollars).

The commercial market experiment is over, but Tysers said that the P&I results now looked to need urgent attention. In May this year, S&P revised its outlook for the Club to negative, citing a deteriorating underwriting performance as the reason.

The combined ratio for 2019/20 was 131%, an underwriting loss of $90m on P&I with a further $20m relating to disposal of the Syndicate.

A strong investment return of $69m (9.7%) reduced the overall loss to $41m, following on the previous year’s deficit of $45m. Free reserves are down to $394m, nearly $70m lower than the 2018 high of $461m.

Chairman Cesare d’Amico thanked the members for their commitment to the Club “in these uncertain times”. He insisted that “with its strong capital base, new management model and excellent management team, our club has a bright future.”

Results

Year 2020 2019 2018 2017 2016
Calls/Premium 353,500 386,400 334,300 338,800 354,300
Reinsurance Cost 96,000 80,700 80,800 77,000 90,100
Net Claims (incurred) 309,100 274,100 232,300 200,800 206,900
Operating Expenses 58,100 81,100 45,700 43,500 39,600
Net Underwriting Result (109,700) (49,500) (24,500) 17,500 17,700
Gross Outstanding Claims 929,500 883,600 967,900 971,100 976,000
Total Assets 1,416,700 1,466,300 1,538,400 1,477,100 1,426,400
Average Expense Ratio 12.90% 12.78% 12.50% 12.40% 12.20%
Solvency Margin 1.52 1.66 1.59 1.52 1.46
Reserves/GT Ratio $3.03 $3.34 $3.50 $3.42 $3.36

All Figures $’000s