Marine insurer North P&I Club has announced its annual results, confirming a 7% rise in total entered tonnage to 190 mill. GT, an increase in free reserves to 431 mill. $ and a combined ratio of 96% for the year ended 20 February 2017.
Positive contributions to the financial year result were an investment return of 2.8%, producing 25 mill. $ and an underwriting surplus resulting in a combined ratio of 96%. Following the 5% mutual premium return (approximately 14 mill. $), a small surplus of 2.4 mill. $ was achieved and free reserves increased to approximately 431 mill. $.
A negative factor has been an increase in the defined benefit pension scheme deficits. Members may recall an improvement of 18 mill. $ in 2015, but due to the volatility in UK corporate bond yields, the position has deteriorated by approximately 30 mill. $, increasing the combined deficit to 57 mill. $ for the North Group. It is hoped that the deficit will unwind in the medium term if the interest rate environment improves.
The Club returned 5% of mutual premium to Members for the 2016 policy year in recognition of the continuing difficult trading conditions facing many in the global shipping community.
Claims levels remained relatively stable in what the Club called »a year of two halves«, with a steady first six months of 2016 followed by a number of larger claims in the second half of the policy year. »Although not as positive as 2015, which was an exceptionally benign year in terms of claims numbers, 2016 seems to represent a return to a more typical claims level by historical standards«, the Club said in a statement
Total tonnage rises to 190 mill. GT
Paul Jennings, fellow Joint Managing Director of North P&I Club, said: »We are very satisfied with the Club’s performance in 2016, which was concluded with a highly successful renewal period that resulted in 99% member retention and a further 7% controlled growth in our membership. This sees our total tonnage rise to 190 mill. GT, of which over 140 mill. GT is owned tonnage. We are also gratified that the majority of this tonnage growth came from existing members, which is testament to their confidence in our financial strength and service delivery.«
»The age of ships entered in the Club remains well below the world average, and we also remain focused on improving the quality of entered tonnage, which we know is important to our membership. We believe that strength comes from diversification and we are also proud of the breadth of vessel type and global distribution within the Club.«
»Testament to our rigorous underwriting approach«
Pratap Shirke, Chairman of North P&I Club, explained the proactive approach taken by the Club in working with members to reduce their risks through working with loss prevention: »Our strong results for 2016 are testament to our rigorous underwriting approach and our proactive claims and risk management ethos. In particular, our Loss Prevention team has been working with members for several years now to reduce the number of claims through improvements in their systems and processes.«
The past year has seen North widen its global office network, with the opening of a subsidiary office in Shanghai in November, to support the Club’s Asia-based membership and all members trading in the region.