UK P&I Club (‘the Club’) is to redeem its $100m hybrid bond following the approval of the UK Prudential Regulation Authority and agreement of the Club board.
In 2008 the Club was the first to raise $100m of new capital in preparation for the introduction of the EU Solvency II directive in 2012. The Club said that “the hybrid bond was a cost-effective way of increasing the Club’s regulatory solvency capital over and above free reserves and allowed greater flexibility in its investment strategy”.
The Club noted that its capital had improved by $300m over the past 10 years, with free reserves rising to $540m as of February 20th 2018. The Club said that it could meet its risk appetite for capital both with and without the Hybrid capital.
UK Club Chairman Alan Olivier said: “We have come a long way in the last decade, and now the financial strength of the Club is amongst the best in the industry. Hybrid capital helped the Club to strengthen its capital base to where it stands today”, adding that “the Club will still hold sufficient capital to retain its indicative “AAA” rating under the Club’s S&P model once Hybrid is redeemed.”