Steamship Mutual reports strong underwriting results

Steamship Mutual, a leading global P&I Club today announces strong underwriting results amid challenging financial times for many P&I insurers as the market experiences record investment losses.

Improvements in claims resulted in Steamship Mutual achieving an operating surplus of US$26.2 million, before taking account of investment income or recapitalisation. Total entered tonnage has continued to grow, rising to over 75 million GT including the gains at renewal.

This strong underlying operating result demonstrates that Steamship Mutual’s robust underwriting model is underpinning its steady growth as well as making a positive contribution to its financial results.

James Stockdale, CEO, commented,  

“The financial climate presented Steamship Mutual with huge challenges last year, when we faced investment losses of some US$78.5 million. Those losses reduced the Club’s reserves to a level which made it essential to raise additional capital and to reduce investment risk, in order to underpin our positive underwriting results and to secure Steamship Mutual’s financial future. The additional capital raised was just sufficient to achieve a US$2 million increase in free reserves and to meet the target set by the Board. The decision to raise additional capital was not taken lightly but was a highly regrettable necessity.”

“Despite this, the renewal proved to be very positive. Allowing for adjustment in terms, an overall increase in rates of 13.5% was achieved as well as a modest increase in tonnage. All in all a highly supportive response from the Membership and one much appreciated by the Directors and the Managers. However there is no room for complacency. We have to do our utmost to repay the trust and support our Members have shown through top quality service, prudent management and improved financial stability.”

Financial Highlights

• Positive underwriting results and new capital combine to achieve an operating surplus of US$1.9 million;
• Free reserves rise 1% to US$187.7 million;
• Financial year combined ratio falls to 90.3%, excluding additional premium;
• Net incurred claims for 2008/09 down by US$21 million year on year at the 12 month stage;
• Combined loss on investments of US$78.5 million, or 11.3%;
• Unrealised currency losses on investments, of US$22.7 million, substantially offset by equivalent reductions in the value of non-dollar claims.

2009 Renewal

• Overall combined increase in renewed premium in the region of 13.5%, against a 17.5% general increase set by the Directors;
• Additional entries generate new premium of US$8.5 million, net of premium for fleets not renewed;
• Owned entered tonnage increases by 300,000 GT, with 2.1 million GT of new entries being offset by 1.8 million GT where renewal was not offered or could not be agreed;
• Over the year as a whole owned entered tonnage increases by 3.0 million GT taking total entered tonnage to over 75 million GT.

Trading Outlook

It would not be prudent to assume that the reduction in the cost of claims seen over the last two years necessarily will continue in the forthcoming year. The Directors and Managers of Steamship Mutual take the view that, even though there is a marked overall decline in shipping activity and evidence of an improvement in the chronic shortage of experienced crew, it will take time for the reduction in activity to flow through to routine claims and may only have a marginal effect in 2009/10. Lower activity may also eventually reduce the overall level of large claims but where and when they occur will remain unpredictable. Consequently underwriting discipline must be maintained, particularly bearing in mind the risk of declining premium volumes as the result of increased levels of lay-up and scrapping, the latter particularly affecting vessels paying relatively high levels of premium.  

…ends…

Note to Editors: Photography and additional comments are available upon request 

Press contact:

Jackie Callard
+44 (0)20 7650 6515
jackie.callard@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 globally insures a diverse range of vessel tonnage, for both shipowners and charterers.

Steamship Mutual offers a comprehensive range of P&I products and ancillary covers. The Club consistently delivers a first-rate service to its members, providing exceptional claims management and servicing, backed by a stable financial position with strong free reserves.

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

For further information visit: www.simsl.com