Despite the economic challenges of the COVID-19 pandemic and a shipping year that saw a record level of International Group (IG) pool claims, North P&I Club reported positive returns for its 2020-2021 financial year.
North’s recently published annual review reported robust growth across several diversified lines and a return on investments of 6.67% (equivalent to US$64.5 million) – its highest return on investments in years.
In continuing its shift from a monoline P&I club to a diversified global marine insurer, North posted premium income growth of US$60 million across its mutual and diversified business lines, reaching US$406 million.
“Year on year, premium increases were especially notable for Sunderland Marine Hull, P&I and aquaculture lines and the newer, diversified owners’ fixed premium P&I as well as North’s hull facilities,” said Thya Kathiravel, chief underwriting officer for North.
“Prudent growth through diversification provided shelter during a year when 19 claims were made via the pooling arrangements shared between the 13 IG clubs with an unprecedented value of US$463 million,” said Ed Davies, North’s chief financial officer. “North absorbed over US$90 million in pool costs for the financial year despite experiencing no pool claims in that period.”
Davies said North’s 113.7% combined ratio – down from a peak of 125% for 2019-2020 – represented a “positive achievement given the twin pressures of pool claims and COVID-19.”
The pandemic made 2020-2021 “a year like no other for all of us, and especially for seafarers,” said Paul Jennings, CEO of North. “COVID-19 variants also mean that crew transfers are again becoming complex, while the pandemic’s long-term impact on the global economy is uncertain. Working lives at North also changed in 2020-2021, although our offices have gradually reopened, with North’s Newcastle head office due to follow in the weeks ahead. Despite COVID-19 and an extraordinary level of pool claims, North’s core financial strength and diversification continue to inspire confidence.”
Jennings also said that North’s free reserves had risen by US$6 million to a total of US$450 million.
Economic conditions brought challenges for achieving 2021 P&I renewal objectives, but North achieved an equitable rating increase in lines with business plans, Jennings said. Future rates are expected to reflect the increase in claims and the hardening reinsurance market.
“We will continue to take the essential actions we know are needed to maintain our financial resilience in the years to come,” Jennings said. He said that North was prioritising investments in technology, talent and sustainability.
“Through a period of exceptional change, we have supported all members of North while continuing to be driven by our core purpose – enabling members to trade with confidence,” said James Tyrrell, North P&I Club chair.