HSBC: P&I Clubs Must Improve Underwriting Performance

Thursday, January 02, 2003
Inferior underwriting results and inadequate or even negative investment income continue to haunt P&I clubs, says Lloyd's broker and P&I specialist HSBC Insurance Brokers in its Protection & Indemnity Review 2003. HSBC says the market environment for the traditional February renewal will be hard. "Realistically," it notes, "there is some way to go before the clubs move back into an underwriting surplus, or even underwriting balance."

HSBC says the clubs relied too heavily on investment income made during the long bull markets of the 1990s which, rather than being regarded as a bonus and employed to bolster free reserves, was instead used to subsidise new underwriting business. It adds that the clubs were more assiduous in their quest to attract new business or tonnage at the expense of existing and established members, whose money had been used to earn the healthy investment returns in the first place. Nigel Russell, Managing Director of the Marine Division of HSBC Insurance Brokers, concludes, "The plain and simple fact is that the clubs must improve underwriting performance. They must also bolster free reserves, and cannot rely on investment income."

HSBC also predicts that, if there is a serious stand-off between the International Group of P&I Clubs and the lead underwriters of the Group reinsurance contract, it is quite probable that the pool limit will be increased from its current level of $30m. "Even the smaller clubs should be able to withstand an increase in pool limit, even if it were to be doubled," says the broker. "The smaller clubs would find it far harder to withstand a significant increase in retention. Only four clubs do not buy separate reinsurance to protect their retention of $5m, and these four are amongst the strongest in financial terms. All the smaller clubs buy reinsurance to protect their retention. This low level of reinsurance is costly and is likely to be more costly and harder to buy in the immediate future. A significant increase in retention could be detrimental, especially to those clubs with a lower capital base."

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

Offshore

Transnet National Ports Authority Orders 9 Voith Water Tractors

In South Africa’s largest local shipbuilding contract Transnet National Ports Authority has ordered nine new Voith Water Tractors (VWT) for use in several ports across the country.

DNV GL’s Arctic Map Shows Complex Risk Picture

The world’s need for energy is driving interest in further industrial activity in the Arctic, yet the region’s conditions are highly variable depending on the type of activity,

OP/ED: The State of Piracy

Piracy’s gone away, right? You’d be forgiven for thinking that.   The predominant narrative for the Indian Ocean is that Piracy has been suppressed to an extent

Finance

Seadrill's Q2 2014 Revenue Holds Nearly Steady

Revenues for the second quarter of 2014 were US$1,222 million compared to US$1,221 million in the first quarter of 2014, according to the company's financial report.

COSCO Resorts to Rate Restoration for F. East to S Africa Trade

COSCO Container Lines would like to announce Rate Restoration for all shipments (include reefer cargo) from Far East to South Africa Trade and take effect from September 1, 2014.

MN 100: Crowley

9487 Regency Square Boulevard Jacksonville, FL 32225 Tel: (800) 276-9539 Email: corpcomm@crowley.com  Website: www.crowley.com Chairman & CEO: Thomas B.

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Security Navigation Port Authority Salvage 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: 0.6686 sec (1 req/sec)