West of England reports improved operating performance for 2021/22

Ahead of the publication of Group Club West Of England’s full report and accounts, which will arrive in the coming months, West has said that, despite the Club’s claims position being impacted by an increasing cost of Covid claims and the large Pool losses suffered by the International Group, the operating performance for policy year 2021/22 “improved significantly compared to the previous twelve months”.

The combined ratio remained above 100%, coming in at 114.4%, although this reduced to 100.7% if Covid-related claims were ignored. For 2020/21 the corresponding percentages were 139.8% and 132.8% – an indication that Covid-related claims hit harder in the most recent policy year than for 2020/21.

West noted that the IG Pool continued to suffer from record levels of incurred costs, with policy year 2021 incurring a cost significantly higher than the 2018-2020 Policy Years at the same development point. West had no claims large enough to impact on the IG Pool during the year. This, combined with a reduced entry following the de-risking strategy at renewal (22m gt was “de-risked”) and a Pool loss ratio below 100%, will result in the Club’s Pool share reducing from 10.3% to 7.3% for the current Policy Year.

CEO Tom Bowsher noted that West’s Board was determined to show market leadership in addressing the continuing industry underrating of premiums when setting the general increase. The Board also approved a strategy to actively de-risk the Club’s portfolio by selectively choosing not to offer renewal terms to those Members whose operational profile or claims performance did not contribute positively to the Club’s financial result.

The 22m gt that was not offered renewal had a combined six-year net loss ratio of 170%. “Our existing Members continued to show strong support, with vessels totalling nearly 2m GT being transferred from other Clubs at renewal, and a 99% retention rate for those fleets offered renewal terms”, said Bowsher. Total mutual tonnage was forecast to reduce from 106.9m gt to 90.1m gt for 2022. Gross premiums were forecast to rise by $3.2m year on year to an estimated $267.6m for 2022.

Investment return suffered from the gradual increase in US interest rates, and the overall investment return was minus 0.3%.

The Free Reserve came in at $251.2m.

The release call for 2020/21 was reduced to 10% of the estimated total mutual call. For 2021/22 and 2022/23 the release call was maintained at 15%. The same percentages applied to Class 1 (P&I) and Class 2 (FD&D).

https://www.westpandi.com/publications/notice-to-members/2022-2023/no-1-2022-2023-class-1-and-class-2-policy-year-bal/