American Club Seeks Premium Hike

press release
Wednesday, November 23, 2011

The American Club is seeking a 5% increase in all classes of premium (mutual and fixed-premium) for both P&I and FD&D for the 2012 policy year that starts on February 20 next.

 

• S&P rating upgrade
• Steady growth in tonnage continues
• Solid operating results maintained
• Claims inflation a longer-term trend

 

This was decided by the directors when they met in New York. There is no expectation of any unbudgeted supplementary calls for any open year. However, the directors ordered the levying of the 25% supplementary call, as originally forecast, for 2011, for both mutual P&I (Class I) and FD&D (Class II) entries. The release call for the year will remain at 25% over and above the supplementary call.

 

Last week, it was announced that S&P had raised its counterparty credit and financial strength rating on the American Club a full notch to BB+, with a stable outlook, from BB. S&P referred, inter alia, to the club’s improved risk-based capital adequacy, improved underwriting results and its prospects for future growth, given what S&P considered to be a good competitive position for the club.

 

Specifically, the agency noted that the club’s statutory surplus had grown significantly, from $48.2m to $71.4m, from year-end 2009 to year-end 2010.

 

In a post-board meeting circular to members that focuses on the club’s recent performance and prospects. Joe Hughes, chairman and ceo of Shipowners Claims Bureau Inc., the managers, notes that freight markets continue to languish. He says: “The current imbalance between supply and demand appears unlikely to experience a positive readjustment any time soon. Thus, shipping industry earnings are unlikely to rise significantly over the short term.

 

“However, depending on the extent to which the global economy avoids a further downturn and continues to expand, however modestly, over the next two years, there is hope that prospects will improve for 2013 and beyond.” Discussing underwriting, Mr Hughes reports a steady – and deliberately prudent – growth in tonnage since last February’s renewal in all classes of business. By mid-November, P&I tonnage had grown by about 6%, while tonnage entered under Class II (FD&D) and Class III (charterers’ insurance) had also increased. (At present, total tonnage for P&I is approaching 17m gt and 11m gt for FD&D. The Asian portfolio has grown substantially, now accounting for about one-third of total entered tonnage.)

 

At the same time, the club’s claims development for the current year was broadly tracking that of 2010, justifying a cautiously optimistic view for the future, notwithstanding the volatile and contrarian features of the current investment markets in which the club had been successful in achieving a 3.1% return since the beginning of the year.

 

As to the outlook, Mr Hughes says the club’s positive experience over the last several months is to be welcomed, reflected in the S&P rating upgrade. “However, and as was noted a year ago, higher claims volumes may well begin to reassert themselves over the medium to longer term.”

 

There are several drivers of such claims inflation, notably a growing systemic risk implied by the continuing expansion of the world merchant fleet coupled with increasing ship utilisation and rising commodity prices. Mr Hughes also notes that levels of investment earnings will remain uncertain. “Accordingly, the need to ensure the appropriate pricing of risk as the basis for self-sustaining results at the operating level will continue to assume great importance over the years ahead,” he says.

 

In a final comment, Mr Hughes says the unrelenting hostility of the political, regulatory and judicial environments will continue to assert a baleful influence on future P&I exposures. “These adverse circumstances will be compounded by the creeping extension of levels of shipowner liability under existing conventions and those likely to come into effect in the future.”

Maritime Reporter September 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

Henderson, Hanes & Associates Opens Doors in Miami

Ocean Engineering/ Naval Architecture Firm Brings Innovation to the Mega Yacht Community The Miami-based ocean engineering and naval architecture firm of Henderson & Associates, Inc.

DOF Installer Sells Offshore Vessel

DOF Subsea AS subsidiary, DOF Installer ASA, reported the sale of one of its three sister ships, an anchor handling tug supply (AHTS) vessel, to an international buyer.

Scanjet Secures 30-ship Tank Management Order

Scanjet Group has followed up its Tank Management order from Stolt-Nielsen with a series of contracts for its ITAMA Intelligent Tank Management concept including Tankcleaning,

Finance

DryShips: Public Offering of Its Senior Secured Notes

DryShips Inc. announced today that it intends to offer senior secured notes due 2017 (the “Notes”) pursuant to its effective shelf registration statement. The Company

DOF Installer Sells Offshore Vessel

DOF Subsea AS subsidiary, DOF Installer ASA, reported the sale of one of its three sister ships, an anchor handling tug supply (AHTS) vessel, to an international buyer.

Port City Plans for New Cargo Taxes Angers Kenya Govt, Shippers

Proposals by a local authority to impose new taxes on cargo at Kenya's main port has drawn opposition from the government and shippers, saying it will hike import

Insurance

ITIC Urges Shipbrokers to Put it in Writing

ITIC has warned shipbrokers that they face the risk of serious financial loss if they fail to ensure that all parties to fixture agreements are in possession of full,

YoungShip Young Corporation Award 2014

For its efforts to promote young employee development, marine insurer GARD has been awarded the 2014 YoungShip Young Corporation Award. The shipping industry

Coast Guard: Investigations Underway in Cutter Collision

The Coast Guard is conducting a series of formal investigations after Tuesday’s collision involving a Coast Guard cutter and a fishing vessel off the coast of Puerto Rico.

 
 
Maritime Contracts Maritime Security Maritime Standards Offshore Oil Pod Propulsion Ship Repair Ship Simulators Shipbuilding / Vessel Construction Sonar Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.2211 sec (5 req/sec)