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 Today


The Maritime Industry's original and most viewed E-News Service

Maritime Reporter June 2016 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

Xeneta: No Silver Lining for Container Shipping in Brexit Storm

Xeneta, a  global benchmarking and market intelligence platform for containerized ocean freight, believes that the UK’s decision to leave the European Union will

PALFINGER Finalizes Harding Acquisition

The PALFINGER Group closed the acquisition of 100 percent of the shares in Herkules Harding Holding AS, i.e. the globally operating Harding Group, supplier of lifesaving

ClassNK Amends IGC Code Rules and Guidance

Classification society ClassNK has amended its Rules and Guidance for the Survey and Construction of Steel Ships in response to the latest industry developments,

Finance

Baltic Index Rises on Increased Demand Across Segments

The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry bulk commodities, rose on Thursday on higher demand across all vessel segments.

PALFINGER Finalizes Harding Acquisition

The PALFINGER Group closed the acquisition of 100 percent of the shares in Herkules Harding Holding AS, i.e. the globally operating Harding Group, supplier of lifesaving

Beijing Slams South China Sea Court Proceedings

Permanent Court of Arbitration ruling set for July 12. An international court said it would deliver a hotly anticipated ruling in the Philippines' case against

Insurance

MAST, AMSA Partner for Risk Management Services

Maritime security company Maritime Asset Security Training (MAST) has announced their partnership with Astbury Marine Services & Associates (AMSA), a specialist

UK P&I and Britannia Clubs Call off Merger Talks

The boards of the UK P&I and Britannia Clubs since February 2016 have been in discussion regarding a potential merger between the two clubs.     While a number

Tanker Contamination Claims

One of the most common areas of bulk oil cargo claims is cargo contamination which occurs during the transfer of bulk liquid cargoes, says  Captain Paul D. Hall,

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Standards Naval Architecture Offshore Oil Port Authority Salvage Ship Electronics Ship Simulators Shipbuilding / Vessel Construction
rss | archive | history | articles | privacy | 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: 0.1225 sec (8 req/sec)