Steamship Mutual has seen $38m wiped off the value of its free reserves after a difficult claims year and a negative investment return.
The protection and indemnity insurer reported at the end of the 2021 policy year that its free reserves stood at $473m, compared with $511m a year earlier.
The mutual remains in a financially strong position, with an S&P Global Ratings AAA solvency rating. The club said its level of free reserves “remains one of the strongest in the International Group”.
The combined ratio, which reflects the profitability of its underwriting, stood at a loss-making 112.7% in the period.
The loss was attributed to a high level of International Group of P&I Club pooled claims and Covid-related claims. Over the past six years, Steamship Mutual’s average combined ratio is 105%.
The club did manage to increase its premium income by 11.6% at the last renewal to help address its underwriting deficit.
Over recent years, P&I insurers have relied on investment income to make up for underwriting losses, but the investment market turned in 2021. Steamship Mutual recorded a $2.8m loss on its investments last year.
Mutual growth
Despite the difficulties in the market, Steamship Mutual has grown its owned mutual insured fleet by 14.8% to 110m gt.
It won an additional 9.5m gt of new business at February’s renewal from China, Greece, Japan, Norway, Denmark, Cyprus, the US and Hong Kong.
Including chartered tonnage, its total entered fleet amounted to 195m gt at the end of the reporting period.
