Tysers and Gallagher individual club summaries: Steamship Mutual

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:

Steamship Mutual Underwriting Association Limited

Managers: Steamship P&I Management LLP

Gross Tonnage

Owned 85,600,000
Chartered 74,500,000

Free reserves

2019 467,049,000
2018 515,968,000
2017 510,290,000
2016 440,321,000
2015 376,187,000
Standard & Poor’s Rating A

Tysers said that it approved of the attitude of Steamship in the face of what was not the best of years in 2018/19. A combined ratio of 116% (prior to any distribution), equivalent to a loss of $41m (including currency losses) was only partly offset by a net investment return of $14m, but the Club still went ahead with a capital distribution of $22m to renewing members, so pushing up the overall loss after tax to $49m for the financial year.

Free reserves fell from $516m to $467m, but Tysers said that the message from the Club was clear enough – that after three solid years it could afford a loss and that free reserves remained very healthy; “indeed, at $5.46 per owned GT, they are the envy of most Clubs”, said Tysers.

Since 2017, the Club has made returns to members totalling $74m.

Owned and chartered tonnage remained constant, with a total increase of 1.5m gt.

Premium prior to capital distributions was down $14m. Owned claims under $250,000 have remained consistent over several years while the frequency of larger claims increased but total values were down. Tysers said that this was due, perhaps, to the Club not suffering any claim large enough to hit the Pool.

There were 67 claims in excess of $250,000, totalling an estimated $106m. This compared to 50 claims the previous year, with a total estimate of $173m.

The Club has said that the lack of volatility in attritional claims was an encouraging sign for claims trends.

The chartered entry of 75m gt was responsible for the most frequent and severe exposure, with 15 large claims producing a total exposure over $42m, the majority involving fires on container vessels.

New CEO Stephen Martin has reiterated that the Club is not interested in diversification and feels its monoline approach is successful enough.

Gallagher observed that, although Steamship continued its programme of returning funds to Members in 2018/ 19, it changed the methodology under which these returns were made. In the previous two years, funds had been distributed to Members by way of returns of ETC and allocated against the oldest open policy year. In 2018/119 the return of $21.9m) was treated as a capital distribution and was not allocated to any particular policy year, although it was based on 10% of the 2018? 19 Class 1 premium.

Gallagher said that this difference should be borne in mind when reviewing policy year premium data. The other difference was that the return of capital was contingent upon renewing at February 2019.

Gallagher said that it was the recent increased financial strength built up over the past five years that had continued to allow the Club to arbitrage their position and, once more, to reduce their spend on reinsurance.

The Club has maintained its stance of no longer needing to buy protection for retained owners claims below $10m, but coverage remained in place for non-pooled risks and ancillary covers / charterers entries.

Tonnage by vessel type (Tysers)

Bulkers 37%
Tankers 23%
Container ships 19%
Cruise/Ferry 12%
General Cargo 6%
Other 3%

Tonnage by vessel type (Gallagher)

Bulker 37%
Container/General Cargo 25%
Tanker/Gas Carrier 23%
Passenger/Ferry 12%
Other 3%

Tonnage by Area (Tysers)

Far East 40%
Europe 37%
North America 16%
Middle East/India 5%
Latin America 2%

Tonnage by Geographical Area (Gallagher

Asia/Pacific 40%
Europe 37%
Americas 18%
ROW 5%
Year 2019 2018 2017 2016 2015
Calls/Premium 306,661 295,318 305,642 350,329 365,341
Reinsurance Cost 50,522 52,089 56,033 64,830 69,002
Net Claims (incurred) 246,358 241,369 168,455 167,930 187,614
Operating Expenses 41,623 40,570 39,219 41,397 45,421
Net Underwriting Result (31,842) (38,710) 41,935 76,172 63,304
Gross Outstanding Claims 827,408 830,826 765,386 908,028 1,024,708
Total Assets 1,343,120 1,378,037 1,301,995 1,372,979 1,445,909
Average Expense Ratio 12.40% 12.20% 12.10% 12.10% 11.8%
Solvency Margin 1.62 1.66 1.70 1.51 1.41
Reserves/GT Ratio $5.46 $6.06 $6.03 $5.66 $5.06

All figures $’000