Financial Highlights year ending 20th Feb 2010


 

TIDM51EN 
 
RNS Number : 4471L 
United Kingdom Mutual Steam Ship As 
06 May 2010 
 

 
 
                                                              PRESS INFORMATION 
6th May 2010 
 
Results show increased 
financial strength for UK P&I Club 
 
UK P&I Club has successfully weathered the storms of the last 18 months and 
looks to the financial and regulatory future with confidence. The Club's results 
for the year ended February 20th 2010 were reported to the board in Genoa last 
week. 
 
Highlights 
 
·    Free reserves and capital increased to $409 million from $334 million 
·    Investment return over 8% 
·    Policy year deficits of 2006 and 2007 effectively eliminated 
·    General increase for Club members in 2010 levied at 5%, lower than previous 
years 
·    Confidence and loyalty to the Club remain high; 1.5 million gross tons of 
new entries have joined in the past three months 
·    Increased claims retention----the threshold for Pooling claims with 
International Group clubs----raised to $8 million each claim 
·    New comprehensive reinsurance programme to protect against single major 
losses and adverse aggregation of claims at Club and Pool level 
·    Club well prepared for Solvency 2 
·    Strong focus on risk management and corporate governance 
·    Maintenance of S&P A- (Stable outlook) rating with strong capitalization 
and very strong capital adequacy. 
 
 
Dino Caroussis, Chairman of the UK P&I Club, commented: 
 
"The UK Club moved closer to underwriting breakeven and continued to rebuild its 
capital position over the last year despite continuing uncertainty in the world 
economy and a tougher regulatory background. With a new and comprehensive 
reinsurance programme and robust financial models to ensure the requisite levels 
of capital, the Club is facing the future with confidence." 
 
Supplementary premium and investment boost 
Free reserves and capital at 20th February 2010 increased by $75 million to $409 
million ($334 million at 20th February 2009) 
 
The Board's decision last October to levy the supplementary premium on the 2008 
policy year at 20 per cent, as estimated has removed the deficits across the 
policy years of 2006, 2007 and 2008. The surplus generated on 2008 effectively 
eliminated the remaining deficits on the two earlier policy years. 
 
A positive investment return of more than 8 per cent - equivalent to $79 million 
- further strengthened the Club's financial position. 
 
By increasing its equity weighting from 3 per cent to 15 per cent, reducing its 
cash position and investing in government backed securities, the Club added 
considerable value to its portfolio in 2009. 
 
The Club is currently rated A- (stable outlook) by Standard & Poor's. According 
to the rating agency, the Club's strong capitalisation is supported by very 
strong capital adequacy. Progress towards underwriting breakeven and achieving a 
full A rating are key financial targets. 
Reduced claims 
In the 2009 policy year, claims reduced significantly in most categories when 
compared with 2008 policy year. Levels have begun to show the expected reduction 
stemming from the slowdown in most world shipping markets. 
 
Net notified claims on the 2009 year after 12 months were lower by $26.9 million 
or 14 per cent, compared to 2008; and by $47.8 million or 23 per cent, compared 
to 2007. Despite an increase in the final quarter, the net ultimate claims 
projection for 2009 (both retained and Pool) is lower than for the three 
previous heavy claims years of 2006 - 2008. 
 
Facing regulation with confidence 
Solvency 2 regulations will require insurers to hold higher levels of capital, 
backed by comprehensive risk management processes.  This is clear from 
consultation papers and quantitative impact studies, in which the UK Club has 
participated. While the International Group has made some progress in discussing 
the structure and calibration of capital models with regulatory authorities, 
each club must face the challenge of ensuring that its own capital assessment 
and risk management remain appropriate for its size and complexity.  The UK Club 
is well placed to meet this challenge, with robust financial models, increased 
capital and a new reinsurance programme. 
 
New comprehensive Pool reinsurance 
As past years have shown, claims levels are difficult to predict in advance of 
any policy year. After an extensive review of reinsurance protection for its own 
claims, the Club has put in place for the 2010 policy year a more comprehensive 
reinsurance programme than ever before. It is designed to protect the Club 
against single major losses and an adverse aggregation of claims, within Club 
retention and at Pool levels.  It should reduce claims volatility substantially, 
restraining the Club's combined ratio----the percentage of premiums an insurer 
pays out in claims and expenses--- while having a beneficial effect on the 
capital requirements of regulators and rating agencies. 
 
Notes to editors: 
 
UK P&I Club 
The United Kingdom Mutual Steam Ship Assurance Association (Bermuda) Limited is 
generally known as the UK P&I Club.  Since its establishment in 1869, the Club 
has existed solely for the benefit of its members. Its structure as a mutual 
insurance association enables it to respond to the changing needs of its 
assureds and allows it to provide superior service, attention and coverage. 
 
The UK P&I Club is directed by the members. Overall control lies with the 
directors, elected by the members from amongst themselves. The directors 
normally meet four times a year to formulate policy on calls, the scope of 
cover, finance, underwriting and claims matters, reinsurance and issues 
affecting the P&I world. They resolve specific claims which may not fall clearly 
within the cover. 
 
 Thomas Miller, the Club's managers, are organised to respond promptly to 
requests for assistance and to provide informed advice and help with members' 
claims. Individual support goes far beyond that normally provided by a 
commercial insurer.  The UK Club's size and the scale of the managers' 
operations has enabled the latter to develop specialist skills and expertise 
seldom seen in marine P&I. 
 
In 350 ports around the world, on-the-spot help and local expertise is always 
available to members and the masters of their ships from the Club's 460 
correspondents and claims handling services and advice from the network of 
offices and branches in London, Piraeus, New Jersey, San Francisco, Hong Kong, 
Singapore, Tokyo, Beijing and Shanghai. 
 
Thomas Miller 
The Thomas Miller Group manages a number of world-leading mutual insurance 
organisations or "clubs," providing insurance for shipping, transport and 
professional indemnity risks; and captive insurance companies in the Isle of Man 
and Bermuda. Thomas Miller provides risk management consultancy services and, 
through its regulated specialist subsidiaries, delivers a full investment 
management service to mutual clubs, captives and other clients. The firm 
incorporated in 1999 and is owned and controlled by its 550 employees 
worldwide. 
 
For further information please contact: 
Thomas Miller P&I Ltd 
Hugo Wynn-Williams/Nick Whitear 
Tel: +44 (0) 20 7283 4646 
Smithfield Consultants Ltd - (Financial Press Enquiries) 
Will Swan 
Tel: +44 (0) 207 350 4900 
 
Dunelm Public Relations - (Trade Press Enquiries) 
Martin Rowland 
Tel: +44 (0) 20 7345 5232 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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