It is pleasing to note that release call levels have again improved during 2015. This follows the pattern over the previous 6 years and the hope is that this trend will continue.
The Shipowners' Club continues to be unique with release calls set at zero. It specialises in smaller tonnage and arguably has a relatively predictable claims pattern. It is also subject to greater competitive pressure than any other member club in the IG consequently its position is even more commendable.
Skuld, Britannia, Japan and Standard should also be praised as the 'large ship clubs' that have moved closest to this model. It is similarly very positive to see the UK Club and Steamship reducing their release calls to below the market average in 2015.
There still seems room for improvement on a 6.8% market average release call level.
With a near doubling of the free reserves in the market since the last period of wide-spread unbudgeted calls, the market should now be in a stronger position to withstand a recurrence.
The three clubs with the highest release calls (American, Swedish and London) are the three smallest and with potentially the most volatile results. There is therefore some logic that they are at the higher end of the range, however if these clubs' release calls are a realistic reflection of their managements' expectations regarding unbudgeted calls, it would be somewhat worrying for their membership.
Gard however appear to be completely out of place, with the fourth highest release calls in the market. It is difficult to explain why the only S&P A+ rated club is at this level, in particular because over the last 5 years Gard has consistently charged less than their full estimated deferred call.
Over the seven years since half the IG clubs made unbudgeted calls following the 2008 stock market crash, market free reserves have increased by approximately 94%, similarly investment policies have evolved more conservatively. With a near doubling of the free reserves in the market since the last period of wide-spread unbudgeted calls, the market should now be in a stronger position to withstand a recurrence.
In such an environment, there still seems room for improvement on a 6.8% market average release call level.