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 come to:
London Steamship Owners Mutual Insurance Association Ltd
Managers A Bilbrough & Co Ltd
|Standard & Poor’s Rating||BBB|
Tysers noted that Chairman John Lyras had reported a challenging year for the Club, with increased claims and continued downward pressure on premium levels, These resulted in an underwriting loss of nearly $34m and a combined ratio of 140%, the highest in the International Group by some margin.
Investment returns of 3% reduced the loss by $8m. Free reserves fell from $195m to $169m, equivalent to what Tysers termed “a still reasonable” $3.30 per gt, down from $4.29 per gt 12 months earlier.
Net incurred claims for the financial year totalled $104m, up 24% year on year, and 46% higher than the average of the three preceding years.
There were two claims on the Pool in 2018/19, one involving the grounding of a container ship and consequent pollution by bunkers, the other relating to a bulk carrier which hit a riverside berth.
Gross premium income rose by $2m to nearly $104m, down to an increase in mutual tonnage of 7%. Premium rates across all business lines continued to fall. Mutual owned tonnage grew by over 3m gt to 48.6m gt. Fixed small tonnage of 2.5m brought total owned tonnage stands to just over 51m gt.
Both chartered business and the Club’s fixed premium facility for small owned vessels saw growth during the year with 21 new accounts. Tysers said that this was not surprising as London Club offered “competitive pricing on these lines”.
Tysers said it had come away with the impression that the Club was willing to give generous discounts on existing rates when faced with the threat of losing business, but warned that this was “not a practice the Club can afford to continue.
Tysers predicted that London Club “should certainly announce a general increase in 2020”, opining that the Club had to adopt a disciplined underwriting approach “as results need to improve quickly”.
Gallagher noted that London Club’s technical underwriting result had continued to deteriorate at a constant rate – about $15m for the third consecutive year. Gallagher said that this represented “a disturbing trend, which, if continued into 2019/ 20 would start to pressurize its investment income and capital base”.
Gallagher noted that since 2015/16 financial year claims incurred had risen by 73% during which period premiums had fallen 6%, from $110.1m to $103.7m.
Tonnage by vessel type (Tysers)
|LNG/LPG & Tankers||26%|
Tonnage by vessel type (Gallagher)
Tonnage by geographical area (Tysers)
Tonnage by Geographical area (Gallagher)
|Net Claims (incurred)||104,019||83,902||69,472||60,129||104,277|
|Net Underwriting Result||33,674||(15,222)||1,696||15,319||(29,915)|
|Gross Outstanding Claims||326,160||298,144||298,867||332,037||346,993|
|Average Expense Ratio||10.30%||9.68%||9.51%||9.52%||8.78%|
All figures $’000.