Steamship Mutual focuses on strong underwriting results as investment markets fall

The Club has issued the following Press Release:

Steamship Mutual, a leading P&I Club providing marine liability insurance worldwide, today released its annual Mid Year Review providing a clear up to date assessment of the Club’s position in the current testing market conditions. 

In the Review, Steamship Mutual reports steady growth in owned entered tonnage, up by 3.4 million GT since 20^th February, and significant improvements in pure underwriting results for both 2006/07 and 2007/08 thanks to improved claims performance. 

Against the background of unprecedented levels of turbulence in the global financial markets, the Club reveals that it is facing a negative return on investments for the year unless markets recover. Despite a market leading underwriting performance, this will result in a decline in the Club’s free reserves at year end. Negative investment results in the current year and the prospect of continuing market volatility in 2009 have compelled the Directors of Steamship Mutual to eliminate any future reliance on investment income to subsidise underwriting results and to set a policy year combined ratio target of 100% for 2009 onwards. In future, any investment income will be allocated entirely to reserves. 

In order to meet the new target, Steamship Mutual has announced a standard premium increase for 2009/10 of 17.5% for P&I and 15.0% for FD&D, backed up by an increase in deductibles for both Classes. 

James Stockdale, Steamship Mutual’s CEO, said,

“I am pleased to say that the hard work we have put in on the Club’s underwriting base over recent years is paying off in steadily improving results. At the same time, the conservative reserving approach we have developed, over the last decade and more, has resulted in our statisticians being able to identify significant surpluses over best estimate in the Club’s outstanding claims reserves, in addition to improvements in the prior years.   While I am delighted by these results, the volatile investment markets have hindered real financial progress. In areas where we can exercise a degree of control, we have done well, but that success has, this year, been negated by extreme financial market conditions and a deteriorating global economy. Nevertheless, in the longer term, the Club’s strong underwriting position will stand it in good stead.” 

“At present, the investment markets are testing the industry’s capital adequacy models to their limits. It is to be hoped that regulators will allow a reasonable degree of flexibility in the rebuilding of capital over time and will take account of the degree of trapped value in investment portfolios. Otherwise, if markets fall further, few P&I Clubs will be immune from the pressure to raise additional capital.” 

…Ends… 

Note to Editors: Additional comments are available upon request. The accompanying photograph of James Stockdale (CEO) can be used for publication.

Press contact:

Richard Stace
+44 (0) 7917 410 320
richard.stace@simsl.com   

About Steamship Mutual

Steamship Mutual (managed by Steamship Insurance Management Services Limited) is a leading provider of Protection & Indemnity (P&I) insurance. As one of the largest P&I Clubs in the International Group, Steamship Mutual insures a diverse range of shipping around the world, for shipowners, managers and charterers.

Steamship Mutual provides a comprehensive and adaptable range of P&I and ancillary insurance covers backed by a stable financial position, strong free reserves and a carefully constructed reinsurance programme. The Club consistently delivers exceptional service to its Members, providing high quality professional claims management and services.

With offices in London, Bermuda, Hong Kong, Brazil and correspondents in every major shipping port worldwide, Steamship Mutual employs highly professional and experienced staff including qualified lawyers, ex-senior mariners, and specialist insurance and claims experts.

For further information visit: www.simsl.com