Tysers and Gallagher individual club summaries: American

In the recently published reports on the Group P&I scene, brokers Gallagher and Tysers both issued commentaries on the individual Group Clubs. IMN has, for the purposes of brevity, to report the two brokers’ commentaries into a series of articles, one per club. In alphabetical order, we begin with:

American Steamship Owners Mutual Protection & Indemnity Association, Inc. (American Club)

Managers: SCB Inc, (Eagle Ocean Management LLC)

Tysers said that the 2018 financial year was not a good one for the Club Premium levels, which fell by more than $2m to $96m, while net incurred claims rose by nearly $10m to $46m. Operating costs remained stable.

An underwriting loss of $12m plus a small investment loss saw free reserves drop from $57.6m to $45.2m.

Owned tonnage was up 1.6m to 18.7m gt at the February 2019 renewal and a strong investment recovery in the first part of 2019 has aided some recovery in the free reserves.

On a policy year basis, 2018 retained member claims were at their lowest level since 2002, but Pool claims from other Clubs rose steeply to their highest since 2013.

The Club’s fixed premium facility, Eagle Ocean Marine, in which American Club covers 55% of the first $10m of exposure, increased its tonnage by 450,000 to nearly 2.5m gt, and premium by $2.75m to around $14m.

Tysers noted that it was currently re-staffing following several moves to North.

The Club’s hull offering – American Hellenic Hull Insurance Co. Ltd – was now in its third year of trading but was yet to make a profit.

The 2018 financial year showed a loss of $1.8m while GWP for the year was just over $11m, a 10% rise on 2017.

Tysers observed that American Club was “optimistic

[that]

profitability is on the horizon as the market hardens and capacity reduces”, while noting that such analyses had been heard before, without such a result ensuing.

American Club has said that its own claims were running at acceptable levels, but reserves had been hit by Pool claims and volatile investment markets.

Tysers noted that, at the accounting date, free reserves per ton had dropped to $2.42 from $3.37 last year and $4.22 in 2015/16. “This is a concern and the Club will need more than a decent investment year if it is to return to a position of comfort in better than crab-like fashion.”

Gallagher said that Eagle Ocean Marine, the Club’s small vessel facility, had been established for 7 years, with modest, but growing, penetration into a still overcapitalized market. From July 2018 the Club renewed its participation on the primary $10m programme at 55%, with Lloyd’s co-insuring the remainder. Year-on-year premium for EOM increased by more than 40% as of February 20th 2019, while its claims performance continued to develop favourably, with a cumulative combined ratio of a little over 70% since it commenced underwriting in 2011.

American Hellenic Hull recorded a small loss of about $1.8m on GWP of $11m for the 2018 financial year, but this result was a significant improvement on the previous year. “Additionally, the hardening of the hull markets, anticipates sustainable profitability for American Hellenic Hull by year-end 2019”, said Gallagher.

American Club also reported that the decline in its surplus incurred in the year to December 31st 2018 had largely been recouped in the first months of 2019.

American Club

Tonnage by vessel type  
Bulkers 35%
Tankers 40%
GC/Pass/Cont 16%
Tugs/barges/small_craft 1%
Tonnage by geographical distribution  
Europe 54%
Asia Pacific 24%
Americas 21%
ROW 1%

Gross Tonnage

Owned 18,700,000
Chartered 2,200,000

Free reserves

2019 45,225,000
2018 57,614,000
2017 51,418,000
2016 56,410,000
2015 58,600,000
Year 2019 2018 2017 2016 2015
Calls/Premium 95,951 98,389 109,493 97,504 114,798
Reinsurance Cost 22,546 24,194 14,168 16,128 20,553
Net Claims (incurred) 45,905 36,302 70,761 49,364 65,962
Operating Expenses 39,805 40,300 37,744 33,978 34,795
Net Underwriting Result (12,305) (2,407) (13,180) (1,966) (6,512)
Gross Outstanding Claims 192,689 193,493 222,214 212,260 228,457
Total Assets 308,060 322,228 334,996 314,387 326,897
Average Expense Ratio 26.60% 27.90% 25.70% 24.20% 21.60%
Solvency Margin 1.60 1.67 1.51 1.48 1.43
Reserves/GT Ratio $2.42 $3.37 $3.32 $4.00 $4.22