Protection & Indemnity

Britannia | www.britanniapandi.com

2017/18 financial year results

  • Owned tonnage increased by 6.1%
  • Premiums reduced by -7.8%
  • Gross and net paid claims reduced by -11.4% and -7.7% respectively
  • Net incurred claims increased by 26.2% (though incurred claims are still materially lower than they were in 2015/16)
  • Underwriting surplus of USD 7.1 million
  • 4.6% investment return
  • Positive technical result combined with strong investment return led to an overall surplus of USD 70.5 million
  • Assets and free reserves increased by 2.4% and 6.7% respectively
  • Britannia made two capital distributions to members in 2017/18 totalling USD 30m (USD 20m in May 2017 + USD 10m in October 2017) These capital distributions were made from the club asset base, rather than via rebates of premiums. This consequently does not affect the income and expenditure statement (and explains why the increase in free reserves is lower than the overall income and expenditure result of the club in the 2017/18 financial year)
  • A further capital distribution of USD 20m was also made in May 2018

 

“Britannia’s reported net combined ratio for 2017/18 was a creditable 96%.”

Consolidated Financial Year Summary (USD 000s)

2015/16 2016/17 2017/18
Income and Expenditure
Calls and Premiums 260,272 225,854 208,147
Reinsurance Premiums -43,413 -39,498 -30,507
Operating Expenses -26,986 -25,719 -25,666
Operating Income 189,873 160,637 151,974
Gross Paid Claims 248,054 290,362 257,142
Net Paid Claims 198,512 163,748 151,106
Net Change in Provision for Claims -6,236 -48,959 -6,278
Net Incurred Claims 192,276 114,789 144,828
Technical Surplus (Deficit) -2,403 45,848 7,146
Investment Income -30,468 42,498 63,369
Overall Surplus for Year (Deficit) -32,871 88,346 70,515
       
Balance sheet
Net Assets 1,406,583 1,406,583 1,440,819
Net Outstanding Claims 805,541 805,541 799,263
Free Reserves 601,042 601,042 641,557
Britannia is entered into a reinsurance contract with Boudicca Insurance Company Limited, located and regulated in Bermuda.
Boudicca Insurance holds assets in a way that cannot be dissipated to the detriment of the reinsurance contract with Britannia.
This is intended to be a tax efficient vehicle for a proportion of Britannia’s reserves.
For the sake of effective comparison, we have consistently included Boudicca’s assets in the figures set out in our summary page for Britannia.

Entered tonnage (GT, millions) 2016 2017 2018
Owned/Mutual 106 101 101
Chartered/Fixed 36 15 15
Total 141 116 116
       
S&P Rating History 2016 2017 2018
  A A A
       
Average Expense Ratio (AER) 2016 2017 2018
Five years ending 20 February 9.12 9.42 9.73
NB the above figures include the combined figures of Britannia and Boudicca to show the complete group picture
The Assets of Boudicca included in the combined results above, are as follows:
Boudicca Assets 2016 2017 2018
166,300 221,700 211,600

Combined Ratio

Combined ratios provide a direct comparison of club underwriting performance. The combined ratio is essentially the net loss ratio for the club and is defined as follows:

Net combined ratio =

(Net incurred claims + operating expenses)
(Premium – reinsurance costs)
  • A combined ratio of 100% represents an underwriting break-even position
  • Anything in excess of 100% would be an underwriting loss
  • A combined ratio less than 100% would represent an underwriting surplus.

Average Expense Ratio (AER)

Average Expense Ratios (AERs) were introduced in 1999 following pressure from the European Commission in an attempt to enable direct comparisons of operating costs between clubs within the International Group. The formula that all clubs are required to adhere to when calculating their AER figure is as follows:

The AER formula is the
five-year average of:

(Operating expenses x 100)
(Premium income + Investment income)

In principle the AER is a reasonable idea, but in reality it is only ever a very approximate guide to the relative operating costs of individual clubs. For example different membership profiles, disproportionately high levels of premium or investment, whether the club owns or rents their office space, how much the club spends on loss prevention, global office network, member portals etc all have an impact on the AER.