2017/18 marks Skuld’s fifteenth consecutive year of delivering a below 100% combined ratio.
A 99.4% combined ratio in 2017/18 is a slight deterioration from 97.2% in the previous year. The 2017/18 technical surplus was achieved despite a USD 9.6m premium rebate in the policy year; without the rebate Skuld’s combined ratio would have been 96.7%.
Skuld do not publish financial year figures for the Syndicate, though clearly from the policy year results (shown overleaf) this continues to make a negative contribution to the overall result of the club (very roughly, the Syndicate result would equate to a 3% negative difference in the overall combined ratio).
| 2015/16 | 2016/17 | 2017/18 | |
|---|---|---|---|
| Income and Expenditure | |||
| Calls and Premiums | 409,980 | 398,515 | 403,159 |
| Reinsurance Premiums | -56,663 | -71,636 | -57,363 |
| Operating Expenses | -87,971 | -88,510 | -92,244 |
| Operating Income | 265,346 | 238,369 | 253,552 |
| Gross Paid Claims | 235,648 | 247,647 | 273,777 |
| Net Paid Claims | 224,197 | 235,696 | 244,248 |
| Net Change in Provision for Claims | 19,079 | -6,552 | 7,333 |
| Net Incurred Claims | 243,276 | 229,143 | 251,580 |
| Technical Surplus (Deficit) | 22,070 | 9,226 | 1,972 |
| Investment Income | -9,035 | 36,619 | 45,979 |
| Overall Surplus for Year (Deficit) | 13,035 | 45,845 | 47,951 |
| Balance Sheet | |||
| Net Assets | 859,756 | 901,269 | 969,767 |
| Net Outstanding Claims | 511,526 | 507,194 | 527,741 |
| Free Reserves | 348,230 | 394,075 | 442,026 |
Skuld provide no breakdown of the financial year figures for their Lloyd’s Syndicate, which are included within the overall results summarised above. The only indication of perfomance disclosed by Skuld is their policy year statements. The latest Syndicate policy year report is summarised below. Evidently, the Syndicate continues to provide a negative contribution to the club’s overall (otherwise very positive) results.
| Syndicate result - Policy Year Basis (USD ,000’s) | |||
|---|---|---|---|
| 2015/16 | 2016/17 | 2017/18 | |
| Premiums | 83,863 | 101,317 | 68,757 |
| Reinsurance | -8,918 | -25,994 | -26,810 |
| Operating Expenses | -30,961 | -31,833 | -24,876 |
| Operating Income | 46,984 | 43,490 | 17,071 |
| Net Incurred Claims | 60,747 | 58,449 | 26,386 |
| Technical Deficit | -13,763 | -14,959 | -9,315 |
| Investment Income | 9,395 | 5,820 | 4,435 |
| Deficit for year | -4,368 | -9,139 | -4,880 |
| Entered tonnage (GT, millions) | 2016 | 2017 | 2018 |
|---|---|---|---|
| Owned / Mutual | 78.0 | 85.0 | 90.0 |
| Skuld do not advise the entered tonnage on charterers business. The premiums on this class are as follows: | |||
| Chartered Premium (USD millions) | 50.0 | 38.0 | 43.0 |
| S&P Rating History | 2016 | 2017 | 2018 |
| A | A | A | |
| Average Expense Ratio (AER) | 2016 | 2017 | 2018 |
| Five years ending 20 February | 12.8 | 12.8 | 12.7 |
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) |
|---|
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 |
(Operating expenses x 100) |
|---|
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.