The London Club Announces Increased Free Reserves

The London P&I Club completed its 2002/2003 financial year in a healthy position. Free reserves increased to USD82.7m. In its Annual Report for 2003, The London Club confirms that the 25% increase in advance call rates achieved for 2003 has been designed to maintain its record of consistent Supplementary Calls, which have been stable for over a decade, despite the challenging conditions for the P&I industry in recent years. The London Club has made reference to the quality and strength of its Membership which once again showed itself in the low level of outstanding calls and premiums due from Members at the year-end. The Club consistently has the lowest year-end debtors in the International Group. The Club has seen a downturn in claims for the 2002 policy year. At 20 February 2003, claims for the 2002 policy year were 10% lower than the 2001 year and 30% lower than the 2000 year. During the course of the policy year, a total of 121 vessels, aggregating more than 4m gross tons, was entered into the Club for P&I risks. Of the ships attaching, 24 were new buildings and they were instrumental in reducing the average age of all the entries to 15 years. 40% of vessels entered in the Club are under 10 years of age, continuing to improve the age profile. The Club's total tonnage is about 30m gross tons. Although the world economy was beset by falling stock markets, fears of another Gulf War, and doubts generally about growth prospects, shipowners remained relatively confident and new building orders continued to be placed. 43 new buildings are entered for FD&D risks with a tonnage in excess of 2m gt. The London Club maintains the largest average ship size which, at the year end, was over 34,000 gt. The type and geographical spread of vessels has remained largely unchanged with tankers, bulk carriers and container vessels representing nearly 93% of the tonnage. Commenting on the Club's increase in reserves, John M Lyras, Chairman of The London Club, writes in the Annual Review, "This early and positive turnaround has come about for two main reasons: Firstly the firm action taken by the Committee to correct premium rates, which for some years had been set at low levels, accounting for expected investment income and secondly, because despite the Club suffering a major pollution claim, resulting from the loss of the Prestige off Spain towards the end of the year and the substantial spillage of her cargo, the overall claims experience has been benign." This all bodes well for the future of The London Club.