Steamship Mutual Financial Update and 2021 Renewal

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At Steamship Mutual’s Board Meeting held virtually on 20 October 2020, the Directors reviewed the Club’s financial position and decided on the policy for the forthcoming renewal on 20 February 2021.

During the Board Meeting the following developments were reported:

• The Club has been working closely with its Members in connection with Covid-19 issues - notably those which have affected crew. Covid-19 related liabilities are expected to increase claims this year but are not projected to have a significant impact in future years.
• After six months through the current policy year the Club’s own incurred claims, including Covid-19 liabilities, are only marginally higher than at the same point last year. However, International Group (IG) Pool claims are notably higher than in any previous year after six months, and the Club’s projected contributions are higher than predicted. Premium is expected to be lower than forecast, a consequence of reduced activity and layup in some sectors including passenger vessel operations.
• In policy years prior to 2020 the Club’s own claims have developed in line with expectations, whilst claims in the IG Pool have deteriorated, most notably in the 2019/20 policy year.
• Investments have recovered strongly from early year falls and in the seven months ending September the Club has recorded a return of 2.0%, excluding currency movements, amounting to a gain of US$ 22.3 million.

Whilst acknowledging the need to achieve underwriting balance the Board recognised that the 2020/21 policy year was impacted by the extraordinary events of the pandemic. The Board also took account of the burden on the Club from Pool claims, reducing premium and the combined ratio in recent years. In light of these and other factors, the Board concluded that there should be a general increase of 5% in premium ratings for all classes of business.

The Board noted the Club’s continuing financial strength and capital position. The Board also reaffirmed its policy of continuing support and assistance to Members when the Club is in a position to do so. Overall, they concluded that it would not be appropriate to order a capital distribution at this time, given the volatility that may affect claims, investment and premium levels. The Board also considered regulatory guidance urging prudence with respect to capital management planning.

Standard & Poor’s again reaffirmed the Club’s A (stable) rating with the Club’s capital being expected to remain comfortably above the AAA requirement.
 

Stephen Martin, Executive Chairman of the Club’s managers, said:

“In reaching these decisions, the Board has balanced its wish to support Members through fair and reasonable rating, whilst accommodating present uncertainty and exercising caution when predicting the future impact of the pandemic.

To any insurer, the message is clear. Extreme events are hard to predict and may take us by surprise; but they will occur nonetheless and, when they do, insurers need to be sufficiently well capitalised, within reason, to absorb the claims and satisfy the expectations of their insureds. Our Members recognise that a strong club must have ample capital reserves, for these reasons. The Club's financial strength, I am pleased to say, is well established.

We believe that the Club strikes the right balance between maintaining a reasonable level of reserves, whilst avoiding the imposition of excessive premium demands. Notwithstanding very high levels of pool claims in the first half of the current year, the Club’s free capital reserves are expected to be comfortably in excess of regulatory and rating agency required levels. Despite the scourge of the pandemic, and record levels of claims upon the pool, the Club is well positioned to withstand significant headwinds.

We are grateful to our Members for their loyalty and commitment to the Club.”

**ENDS**

Notes to Editors:

Comments are available on request from Executive Chairman Stephen Martin ([email protected]) or Managing Director Chris Adams ([email protected])

For further details relating to the Club’s key statistics, financial highlights and updates concerning underwriting, reinsurance, claims, safety and loss prevention, please see Steamship Mutual’s 2020 Management Highlights, which can be accessed here.