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 March 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Offshore

Nations Convene for Arctic Maritime Discussion

Citing an increasing need to ensure safety, security and stewardship of Arctic waters, member countries of the Arctic Council gathered at U.S. Coast Guard Headquarters

Advanced Drillships a Burden for Owners as Business Slows

Not so long ago, advanced drillships costing more than half a billion dollars each and capable of operating in ever-deeper waters practically guaranteed big profits for oil-rig operators.

Russia May Allow More Firms to Offshore Oil

Russia may allow more oil companies to access its offshore projects, Energy Minister Alexander Novak said on Friday.   "In general, the access can be extended," Novak told reporters in Moscow.

Finance

NORDEN CEO: Bulk Market Challenges to Continue

Klaus Nyborg, interim CEO at Denmark-based dry bulk and product tanker shipping company Dampskibsselskabet NORDEN A/S, expects difficult dry cargo market conditions

Turkey Maritime Sector Alive & Kicking

Located on the periphery of two great continents, Turkey has benefitted from being in a favored position right at the center of an assertive and fast growing economic area.

Advanced Drillships a Burden for Owners as Business Slows

Not so long ago, advanced drillships costing more than half a billion dollars each and capable of operating in ever-deeper waters practically guaranteed big profits for oil-rig operators.

 
 
Maritime Contracts Maritime Security Naval Architecture Pod Propulsion Salvage Ship Electronics Ship Repair 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: 0.1550 sec (6 req/sec)