Credit rating agency Standard & Poor's (S&P) has maintained Britannia P&I's 'A' rating for financial strength and its outlook as stable, suggesting it is well positioned to tackle a difficult market.
Britannia welcomed the positive commentary on the club's financial position.
It comes at a time when many protection and indemnity clubs are facing a raft of expensive claims and four years of premium erosion that may force them to hike rates.
“It is a snapshot of our financial position at this point in time, but what we take greater comfort from is that they expect us to be in a very strong financial position over the next two years,” chief financial officer Jo Rogers said.
Capital levels
In its report S&P said: “The outlook is stable because we expect Britannia will maintain current levels of capital and results that are at least in line with those of its non-life European peers.”
Britannia, in common with many other P&I clubs, ran at an underwriting deficit in the last year, with a combined ratio of 114%.
However, S&P found that its technical profitability over the past five years had outperformed the industry average.
It added that Britannia also has one of the healthiest free reserves of all 13 members of the International Group of P&I Clubs.
It last reported reserves of $391m, with a further $197m held in its investment arm Boudicca.
It is a snapshot of our financial position at this point in time, but what we take greater comfort from is that they expect us to be in a very strong financial position over the next two years
Jo Rogers
S&P also highlighted Britannia's accounting policy of "prudent reserving” against ongoing claims, which, it said, should provide the club with a financial bonus if final claim settlements came in below budget.
Core strategy
Rogers welcomed S&P’s endorsement of the club’s strategy of focusing on its core P&I business, rather than diversifying. “As you know, we have not diversified as many clubs have done and I think with hindsight that has proven to be a very wise decision.”
S&P said: “The stable outlook reflects our view that Britannia will sustain its competitive position by keeping its underwriting focus on its core P&I business.
This also reflects our expectation that the club’s capital position will remain extremely strong over the next two years.”
