Underwriting surplus of $29.3m at Britannia

Britannia P&I Club has reported that total calls and premiums for 2019/20 were down marginally on the prior year. Lower claims incurred resulted in a “satisfactory” underwriting surplus of $29.3m and a net loss ratio of down 3.9 pp to 79.9%, from 83.8% in policy year 2018/19.

The investment portfolio produced a return of 7% overall. Equities generated a 16.5% return. Britannia noted that all asset classes produced a positive result. The overall investment gain was $61.9m, nearly twice Britannia’s long-term target.

Capital resources grew by $31.4m year on year, after taking account of the $25m capital distribution made to mutual Members in the year. This level was above the economic capital target set by the Board.

Britannia noted that, in the period immediately after the year end, investment markets were impacted by the uncertainty caused by the Covid-19 pandemic. This meant that much of the investment gain made during the year was reversed. Britannia said that, despite this “the Association’s strong financial position leaves it well placed to face the challenges posed by the uncertain global economic conditions likely to be experienced in the months and years ahead”.

Britannia said that the retained claims incurred during the 2019/20 policy year was in line with expectations. It was also $20m lower than the previous year at the equivalent stage.

The total number of claims notified by 20 February 2020 was 4,175, a reduction on the 4,364 reported in 2018/19. The number of notified claims was therefore 4% lower than in the previous year.

Reported Pool claims were higher in 2019/20 than in recent policy years, with 18 claims notified, at an aggregate estimated cost as of February 20th of $355m.

There were 20 retained claims that were currently estimated as being in excess of $1m, with an aggregate net value of $69.5m

Three retained claims notified in the 2019/20 policy year were currently projected to exceed the $10m Club retention.

While claims within the International Group Pool were higher than recent policy years, reserves held against Britannia’s share of those claims have been set at a level sufficient to absorb any further deterioration.

Commenting on the results for the year ended February 20th 2020 and the outlook for the current year, Britannia chairman Anthony Firmin said that Britannia had achieved another strong set of results. “We recognize that since February 20th 2020, Covid-19 has had a material impact on the world economy and the maritime sector. Despite the majority of our staff worldwide currently having to work from home, we are maintaining ‘business as usual’ standards of service and we do not anticipate that the effect of Covid-19 will have a material impact on Britannia’s own claims for the 2020/21 policy year.

Tonnage 20 Feb 2020 20 Feb 2019 20 Feb 2018
  (m gt) (m gt) (m gt)
entered tonnage (owned) 117.5 111.9 107.0
entered tonnage (chartered) 45.0 19.0 20.0
KPIs $000 2020 2019 2018
calls and premiums 201,185 204,415 208,147
net claims incurred (111,667) (119,599) (93,552)
investment income 61,868 (2,643) 48,626
net operating expenses (31,891) (28,649) (25,666)
net income after taxation 56,427 (9,296) 80,615
free reserves 422,088 390,661 429,957
net loss ratio 79.9% 83.8% 61.4%
average expense ratio 11.50% 10.90% 9.73%