Protection & Indemnity

Gard | www.gard.no

2017/18 financial year results

  • Owned tonnage marginally increased by 0.5%
  • P&I premiums reduced by -12.1%
  • P&I reinsurance premiums reduced by -9.5%
  • Gross paid P&I claims reduced by -2.6%, however net incurred P&I claims increased by 9.8%
  • USD 41.7 million P&I underwriting loss (though putting this in context the reduction in the 2017/18 deferred call from 25% to nil equated to a USD 79 million premium reduction).
  • On the basis of the original estimated total call there would be a P&I underwriting surplus of USD 37.1 million
  • Invesent return of 6.3%
  • Gard Group tmassets increased by 2.1%, free reserves increased by 10.1%

Combined Ratio

The 2017/18 P&I combined ratio on the basis of the premium actually charged was 111.5%.


Had Gard debited on the full estimated total call basis the P&I combined ratio would have been 91.6%.


From a Group perspective (P&I and Marine and Energy) Gard’s Group combined ratio on the basis of premium actually charged was 103.7%.


The Gard Group combined ratio ‘as if’ the full estimated total call had been made would have been 90.6%.

“Had Gard debited on the full estimated total call basis the P&I combined ratio would have been 91.6% ”

NB Gard’s basis of disclosure

Gard changed their basis of reporting the P&I class of cover in 2010/11. Gard P&I underwriting results continue to be partially provided, but the club has progressively reduced the amount of information disclosed.

Since 2014/15 Gard has only published the combined Gard Group results for net paid claims, net change in the provision for claims, investment return, assets and free reserves (i.e. the combined results for P&I, Marine and Energy). In the table above we show the Gard P&I class underwriting results to the fullest extent disclosed. We therefore use Gard ‘Group’ figures for investment income, assets and free reserves.

To provide a meaningful comparison, the figures used in the financial graphs opposite represent Willis analysts’ estimates of solely the P&I proportion Gard’s investment income, assets and free reserves.

Consolidated Financial Year Summary (USD 000s)

Gard P&I only 2015/16 2016/17 2017/18
Income and Expenditure
Calls and Premiums 607,260 531,601 467,425
Reinsurance Premiums -137,214 -117,371 -106,201
Operating Expenses -50,494 -50,752 -45,490
Operating Income 419,552 363,478 315,734
Gross Paid Claims 411,716 437,152 425,855
Net Paid Claims  n/a   n/a   n/a 
Net Change in Provision for Claims  n/a   n/a   n/a 
Net Incurred Claims 351,938 325,585 357,388
Technical Surplus (Deficit) 67,614 37,893 -41,654
Investment Income  n/a   n/a   n/a 
Overall Surplus for Year (Deficit)  n/a   n/a   n/a 
 
Gard Group
Balance Sheet
Net Assets 2,255,363 2,287,205 2,336,244
Net Outstanding Claims 1,245,249 1,152,343 1,087,214
Free Reserves 1,010,114 1,134,862 1,249,030
Entered tonnage (GT, millions) 2016 2017 2018
Owned/Mutual 198.8 199.7 207.3
Owned/Fixed 16.4 16.9 16.0
Chartered/Fixed 90.0 90.0 85.0
Total 305.2 306.6 308.3
(MOU: Mobile offshore units)
       
S&P Rating History 2016 2017 2018
   A+*   A+*   A+* 
       
Average Expense Ratio (AER) 2016 2017 208
Five years ending 20 February 11.8 12.0 11.2

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.