Tysers club by club analysis – London Steamship Owners Mutual Insurance Association

In Tysers’ 2017 report on the International Group Clubs, the broker included a club-by-club analysis, which IMN is covering on a one-club-per-day basis. Today, London P&I Club.

Tysers said that 2016 saw a further improvement in London’s finances, although it noted that this was due almost entirely to an investment return of 8.4%, which produced $26.7m. This compared with an investment return of minus $11.5m the previous year. But the underwriting surplus for 2016 was under $2m, from $15m the previous year – a net combined ratio of 97.9% (2015: 82.50%). Free reserves grew year on year from $161m to $188m.

London chairman John Lyras reported that 2016 saw a continued benign claims environment, but then asserted that the big contributor to the positive operating result was the Club’s “controlled adjustment to our underwriting strategy, involving the spreading of the Member base for our mutual P&I and other lines of business”.

Tysers said that it had “some difficulty finding the factual justification for this assertion, given that almost the whole surplus for the year came from investment income and the underwriting result was far worse than for 2015”. However, the broker accepted that two years of underwriting surplus, no matter how small, was a positive.

Owned tonnage declined slightly year on year to just under 44m gt, Contrariwise, chartered tonnage, which the Club has said it is keen to develop, grew by over 2m gt and is now close to 10m gt. This includes nine new chartered entries. Tysers observed that “the Club appears happy that these entries have increased its presence in markets such as Qatar, Russia and Ukraine”.

However, Tysers said that it was worried that the Club, which has the lowest premium income in the International Group, might be “desperate to grow its market share but cannot make inroads on mutual business against the stronger A rated Clubs”, and was thus having to focus more on fixed premium small vessels and chartered entries of a type and from areas in which it has little experience and at rates which many feel are unsustainable.”

London results summary (All figures $’000)

Year20172016201520142013
Calls/Premium102,891110,072111,290106,895101,951
Reinsurance-Cost20,18122,67024,44520,75422,175
Net-Claims-(incurred)69,47260,129104,27792,95682,691
Operating-Expenses11,54211,95412,48311,92111,483
Net-Underwriting-Result1,69615,319(29,915)(18,736)(14,398)
Gross-Outstanding-Claims298,867332,037346,993322,827357,279
Total-Assets501,916505,479517,374492,489521,630
Average-Expense-Ratio9.51%9.52%8.78%8.36%9.63%
Solvency-Margin1.681.521.491.531.46
Reserves/GT-Ratio$4.28$3.62$3.59$3.71$3.72

London Club tonnage by vessel type

Bulkers 52%

LNG/LPG & tankers 29%

Container 16%

Cargo 3%

London Club tonnage by area

South Europe 53%

Far East 31%

North Europe 14%

Other 2%