American Club enjoys positive 2021 P&I renewal season

The club performed well amid challenging business conditions

American Club enjoys positive 2021 P&I renewal season


By Ryan Smith

The American Club posted solid performance over the 2021 P&I renewal season despite challenging business conditions, the club’s board said at its virtual meeting last week.

The club’s mutual and fixed premium portfolios performed well, while American Hellenic Hull continued to consolidate its market position. Year-over-year annualised premium for the Club’s mutual P&I class grew by a little under 8% as of February 20, while revenue for its freight, demurrage and defense (FD&D) business rose by more than 10%. Taking into account the club’s charterers’ business, total income on renewal is expected to be 8% higher for 2021 than the previous year.

Premium attributable to renewing P&I entries for 2021 increased in cash terms by about 5%, a rise conforming with that ordered by the board in November. However, taking into account increases in deductibles and changes to other insurance conditions, the overall premium increase, as if expiring terms had applied, was closer to 7.5%, the American Club said.

Tonnage in the club’s mutual P&I class increased by about 5% annually to approximately 18 million gross tons overall. Its FD&D entries rose by about 14% to 12.2 million gross tons. There was also an increase in daily tonnage on risk in regard to the club’s charterers’ business.

Regarding the performance of the American Club’s funds under investment, the club saw a 5.4% return over the year to December 31. While not as high as the previous year’s earnings, this was “a creditable result in view of the market uncertainties which characterised the period,” the American Club said.

Retained claims for 2020 are emerging more favourably than those for 2019.

“The latter year experienced several unusually large exposures below the pooling threshold, but has been able to take some benefit from reinsurance protection as a hedge against further deterioration,” the American Club said. “Pool claims for 2020 are developing in an above-trend direction in a manner similar to the experience of 2018 and 2019.”

As in every year since 2016, the American Club had no claim on the pool for its own account during the year, but its contributions to pooling continue to form a significant part of its overall claims exposure.

Eagle Ocean Marine (EOM), the American Club’s fixed premium brand, continued to make progress into the beginning of this year. Premium for the 2020-21 policy period to date has grown by about 10% from the same point in the previous year, and is forecast to set a record, exceeding US$16.5 million for the current facility year. Aimed at the operations of smaller vessels in local and regional trades, EOM has enjoyed a cumulative combined ratio of about 75% since its inception.

Preliminary results for American Hellenic Hull – the club’s hull and war risks underwriting subsidiary – disclosed a small loss for the financial year to December 31. However, its balance sheet strengthened at year-end, with net assets (equity) increasing by 29% over the previous year. There were also improvements in other key ratios, including American Hellenic Hull’s solvency capital requirement at 130%. American Hellenic Hull’s performance also gained momentum going into the early part of 2021, with vessels insured, underwriting income, operating profitability and balance-sheet strength all on an upward trajectory.

“Although certain business conditions prevail in both the shipping and insurance sectors, the American Club’s recent experience has been encouraging,” said Jon Hughes, chairman and CEO of SCB, Inc., the club’s manager. “The 2021 renewal of the club’s mutual P&I and FD&D portfolios proceeded in a positive direction, while both EOM and American Hellenic Hull have performed with credit over recent months. Although we live in challenging times, my colleagues and I are certain that the difficulties of the present will generate opportunities for the future. These opportunities will be found across the increasingly broad marine insurance landscape, which the American Club, by virtue of its diversified capabilities, is richly equipped to develop over the year to come.”

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