PERFORMANCE FOR THE YEAR TO FEBRUARY 2011
This year has seen the Club build on the success of last year and deliver a surplus after taxation of $63 million, raising the free reserves and capital to $478 million. A key feature of this year’s surplus was the achievement of a combined ratio of 98 per cent, reflecting improved underwriting discipline while maintaining a prudent approach to claims reserving. The Club now has $1.6 billion in total assets and with a free reserve ratio (asset to liability) of 158 per cent is one of the strongest clubs in the International Group.
UNDERWRITING
The Club experienced a favourable underwriting year, seeing improved loss ratios, a reduction in the average age of the entered fleet and sustained levels of owned and chartered entries. The Club was able to welcome more than 25 new Members.
World ship building activity remains above historical averages despite the delays to many scheduled delivery dates. Scrapping and sales levels have been equally elevated and the Club experienced nearly 20 per cent fleet turnover when assessing the combined
impact of sales, scrapping and additional new buildings entered. The high level of underwriting activity has the favourable result of improving the age profile of the entered fleet but, unsurprisingly, newer ships will tend to come on risk at lower rates than older ships.
The table below sets out the average age profile of the entered owned fleet immediately after the 20th February 2011 renewal. A third of ships entered in the Club are below five years of age, with roughly 65 per cent of all owned ships in the Club below ten years of age.
Table 1: Age profile of Club owned entered tonnage as of 20th
40% 35%
5% 10% 15% 20% 25% 30%
0–4 years 10 5–9 years 10–14 years 15–19 years 20–25 years Over 25 years February 2011
The excellent underwriting result has been supported by an investment return of 6.2 per cent, which outperformed the benchmark portfolio whilst balancing the risk of the various asset types in what is still an uncertain investment market for both fixed interest and equities. The Club has successfully rebuilt its capital position through careful management and continues to deliver the highest quality of service to Members in what have been volatile and challenging times.
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