In broker 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, UK Club.
Tysers noted that chairman Alan Olivier was “perfectly happy” with the 2016 results which, he felt had met the Club’s main objectives of underwriting discipline and delivery of a consistent and predictable financial result for the Members.
The combined ratio was 104%, but an investment return of 4.6% saw free reserves rise by just over $10m to $558m (including hybrid capital). Owned tonnage rose by four million to 139m GT, making free reserves equivalent to just over $4 per owned GT, similar to the ratio over the past five years, and so achieving the “consistency” objective and certainly preferable to loading the free reserves to unnecessarily high levels. Total returns in recent years have reached $25m, including 3% for the 2015 year.
Tysers said that UK Club has a reputation for underwriting discipline, and is not the home for borderline tonnage or for silly pricing. The Club declined the opportunity to quote for around 10m GT of potential new business in 2016.
On the claims front, 2016 net claims after 12 months were higher than the previous year, but still lower than the three years before that. Collision claims were particularly significant in 2016, accounting for 12 of the total 36 claims over $500,000. The Club laid the blame for these on the failure of bridge teams to maintain a proper radar look-out.
The Club calculated that the average cost of attritional claims (under $500,000) continued to grow by 4% a year, but that the impact of this was concealed by reduced frequency.
Olivier said that the Club entered 2017 in a strong position and well placed to meet the challenges of the future. 2017 will involve a full strategic review of everything from capital efficiency to the use of data analysis and how the Club can differentiate its product.
Tysers observed that Olivier again mentioned the disappointment of the failed merger with Britannia and, whilst this was a bold strategic initiative by both Clubs and has probably left some open wounds, the diversification of products and services via Thomas Miller Specialty might, in the longer term, prove to be more than a consolation prize.
Results summary (all figures $’000)
*excludes $99m hybrid capital
UK P&I Club tonnage by vessel type
UK P&I Club tonnage by area