The American P & I Club has recently issued a circular containing a progress report highlighting some of the latest Club metrics in regard to tonnage, premium, claims, investment income and free reserves as the 2019 renewal draws near.
Most of the Club’s key operational indicators show positive progress. Premium and tonnage have maintained their upward trajectory, claims have remained subdued – both in relation to attritional exposures and larger losses – and, despite heavy turbulence in the financial markets toward the end of 2018, the Club’s funds under investment have held up well.
Tonnage and premium development
– The Club’s profile in this respect has remained broadly stable over the past twelve months
– Class I (P & I) tonnage has grown by about 3%, Class II (FD & D) by 1%
– Premium has increased by about 2% in regard to P & I entries, and by 1% for FD & D business
– Grounds for optimism that these trends will continue into 2019 as the prospects for the maritime sector improve.
Development of retained claims
– Frequency and severity of losses have shown a downward trend in recent years
– Incurred claims at December 20, 2018 were 17% lower than those for 2017 at the same point of emergence
– Figures augur well for 2018 policy year’s ultimate claims outturn going forward.
Development of Pool claims
– 2014 through 2016 policy years continue to develop favorably
– 2017 and 2018 are emerging at higher levels of aggregate loss
– More a reversion to historical mean than indication of above-trend inflationary pressure.
Development of premium per gross ton (GT) and retained claims per GT
– Important driver of premium pricing has been a steady decline in the average cost of claims
– But average premium per ton has moved slightly upward since the beginning of 2018
– Encouraging sign which reflects the Club’s policy of prudent risk pricing.
– Return of 8.1% for 2017 was the best the Club had achieved in nearly a decade
– Earnings for 2018 were challenged by the considerable turbulence experienced in the investment markets
– Fund performance was flat at year-end, demonstrating resilience of the Club’s asset class selection.
Development of statutory surplus/free reserves per GT
– Remains consistent over recent years
– Supported by a benign claims environment, prudent levels of risk pricing and respectable investment returns.
Eagle Ocean Marine (EOM)
– American Club’s fixed premium facility, Eagle Ocean Marine, continues to complement Club activity
– EOM compound premium growth over last three years nearly 20% per annum
– Aggregate combined ratio less than 70% since 2011 inception to year-end 2018.
American Hellenic Hull Insurance Co. Ltd. (AHHIC)
– AHHIC shows steady growth over first thirty months of operation
– At year-end 2018, about 2,300 vessels within AHHIC portfolio, with broad range of domiciles and vessel types
– Aggregate gross loss ratio for 2018 very favorable, aided by rising premium rates and growing profitability
– American Club continues to benefit from substantial cross-selling opportunities.
Joe Hughes, Chairman & CEO, Shipowners Claims Bureau, Inc., Managers for the American Club said that the New Year’s report was intended to provide Members, their brokers and the Club’s many other friends and associates with a useful picture of the Club’s affairs – and those of its related businesses – at this important juncture in its continuing development.
He added: “As the American Club moves further into its second century of service to the global maritime community, it looks forward with its characteristic energy and enthusiasm to growing success in its expanding fields of enterprise over the years ahead.”
Source: The American Club