The Oslo based insurer reports a $20.4m bottom line surplus for the first nine months of the year but also talks of a $5m premium credit, which suggests that although the P&I year still has two months to run there is confidence of a good, full year result.
Skuld promised a guaranteed premium credit of at least 2.5% of a member’s mutual premium in November but also indicated that 20% of the current year’s result would be allocated to the scheme.
Reference to a $5m credit points to Skuld being pretty confident that the bottom line for the full year will reach $25m.
But if the final quarter is as profitable as the third quarter the premium credit would be rather higher.
The premium credit marks the beginning of Skuld making a payback to members who have supported diversification from a P&I mutual into a wider insurance group. Skuld writes hull and other marine and energy business through Lloyd’s of London syndicate 1897 and has even dipped a toe in the non-marine market.
Skuld’s bottom line result at the nine months stage stands at $20.4m, up from $9m at the half year and $5.1m at the same stage of 2014.
Premium income for the 9 months was $0.9m ahead of the same period of last year at $308.5m.
Claims were, however, $25.3m lower at $172.2m.
The improved claims environment fed through to the underwriting result, where the profit rose to $20.4m from a loss of $6.5m through the first nine months of 2014
The mutual P&I business made a small underwriting loss, with a combined ratio of 102%. But Skuld's commercial activities were healthily profitable - with a combined ratio of 86%, to give an overall combined ratio of 93%, which is a big improvement on the 99% of the previous three years.
The investment income was marginal but still the right side of the line at $0.8m, down from $11.9m.
Skuld’s free reserve stands at a record $354m, up from $334m at the start of the year, although the latter figure has been restated to recognise a reserve writedown of $12m. This arises from recognition of an increase in pension liabilities, as a result of a move from Norwegian NRS6 accounting principles to the IAS19 international standards.
“Skuld’s chosen path of diversification is bearing dividends and we are seeing a positive contribution from the commercial lines of business and a positive run-off on older claims years,” declared Skuld chief executive, Stale Hansen. “These are all drivers for the positive bottom line result.”
Hansen said Skuld’s mutual tonnage was growing, although fierce competition for newbuildings continued.
“Although we have seen fewer claims in excess of USD 1 million this year, compared with 2014, the pressure on premium levels challenges the ambition for a balanced result for the mutual P&I cover,” he added.
The overflow of capacity in the insurance industry continues to put pressure on premium levels for the commercial products as well,” said Hansen. “However, a benign claims environment in 2015 has contributed to a strong performance from this line of business.”
The Skuld chief executive said earlier policy years for Skuld’s Lloyd’s syndicate are developing positively and contributing to bottom line profitability.
