The London P&I Club has recorded a $20.3m operating loss due to a high level of claims.
The deficit in the 2020 policy year, ending 20 February 2021, compares with a $5m surplus in the previous year.
As a result of the deficit, its free reserves dropped to $153.6m, compared with $173.9m at the same point in the previous year. However, the London Club's financial reserves remain within the statutory requirement.
The club's result was affected by an increase in International Group of P&I Club pooled claims, and Covid-19 related claims. There was also an adverse development in prior year claims.
The London Club said: “Claims costs have now increased in five consecutive years, to the point that in 2020/21 they were twice the level of five years ago.”
The London Club’s combined ratio — which reflects the balance of premium income and claims related expenses — was 136.8%, indicating a loss.
The London Club said it had taken measures to address the underwriting losses at this year's February renewal by changing rates and terms for shipowner members with “challenging” records.
The London Club said there is still more work to be done.
“The recent renewal therefore represents an important step in the right direction for the club; although the discrepancy between rating and deductible levels and the prevailing risk environment is something which the board is committed to addressing and on which further work is ongoing,” the London Club said.
A more positive development for the club was a 5.3% return on its investments. It also said its business with fixed premium charterers and the small-ship cover had performed well.
The losses at the London Club are in line with almost all the other members of the International Group which have experienced a hike in claim values, leading to underwriting losses. At the same time, strong investment income has helped balance out the losses.
The Standard Club has reported a combined ratio of 121% for the last policy year and a 4.7% investment income. Free reserves stood at $360m compared with $393.7m at the end of the previous year.
The club said it is making “material progress” in its goal of achieving break-even on its underwriting activities.
