Protection & Indemnity

Shipowners | www.shipownersclub.com

2016/17 financial year results

  • Owned tonnage stable
  • Premiums reduced by approximately -5.3%
  • Net incurred claims reduced by -8.7%
  • USD 1.76 million underwriting surplus
  • Combined ratio almost unchanged between 2015, 2016 and 2017
    (98.2%, 98.6% and 99.1% respectively)
  • 8.4% return on investments
    (much improved on the 3.5% return in 2016)
  • Overall surplus USD 47.7 million
    (increased considerably from the USD 14.7 million surplus in 2016, entirely due to the improvement in investment return)
  • Assets and Free Reserves increased by 9.2% and 16.2% respectively

Shipowners P&I Club recorded a combined ratio of 99.1% in 2017, recording an underwriting surplus for the eighth year in succession.

Consolidated Financial Year Summary (USD 000s)

2015 2016 2017
Income and Expenditure
Calls and Premiums 209,881 209,881 216,341
Reinsurance Premiums -27,870 -27,527 -29,706
Operating Expenses -42,704 -49,164 -48,709
Operating Income 139,307 151,889 137,926
Gross Paid Claims 139,226 194,674 138,215
Net Paid Claims 120,633 144,395 123,417
Net Change in Provision for Claims 15,427 4,692 12,748
Net Incurred Claims 136,060 149,087 136,165
Technical Surplus (Deficit) 3,247 2,802 1,761
Investment Income -24,142 11,861 45,924
Overall Surplus for Year (Deficit) -20,895 14,663 47,685
       
Balance Sheet
Net Assets 658,348 677,570 740,186
Net Outstanding Claims 378,970 383,829 398,460
Free Reserves 279,378 293,74 341,726
Entered tonnage (GT, millions) 2016 2017 2018
Owned / Mutual 24.63 25.44 25.49
Chartered / Fixed 0.35 0.35 0.35
Total 24.98 25.79 25.84
       
S&P Rating History 2016 2017 2018
  A- A A
       
Average Expense Ratio (AER) 2016 2017 2018
Five years ending 20 February 21 22 22

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:

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.