Norway’s Gard has been going through a five-year growth spurt that shows little sign of slowing down judging by its latest annual report.
A 15-year high in technical underwriting performance headlined its recent earnings announcement, but a closer look into its figures shows it is also consolidating its position as a marine insurance market leader.
A commitment to the principles of corporate social responsibility is also starting to come through in its financial performance.
For the financial year starting 21 February 2022, Gard’s gross earned premium came in at a whopping $1.16bn, compared with $1.036bn in the previous year, and $798m five years ago. Since 2019, Gard has added a total of $369m in premium.
Gard operates on a different scale to most of its fellow members of the International Group of P&I Clubs because it is both a mutual protection and indemnity business and a commercial marine and energy insurance provider made up mostly of hull and machinery cover.
Its figures show that its P&I business earned $612m in premium last year, while its marine and energy business earned $383m.
Gard’s segmental figures represent a short year of just over 10 months because the club switched its financial reporting from a policy year running from 21 February to a calendar year.
But, overall, those figures are enough to earn it a market leading share of 19.3% of the P&I market and an 8.1% share of the hull and machinery market.
Both sectors are also earning more in premium than they are paying out in claims. The combined ratio, which reflects the balance of income and claims costs, last year was a profitable 92% for its P&I business and 66% for its marine and energy business.
Investment losses have been a setback for the insurer, but they represent a paper loss — and chief executive Rolf Thore Roppestad said there are already signs they will be reversed.
“The majority of losses are market-to-market losses and we expect to get most of that back quite soon,” he said in an interview with TradeWinds. “We are already starting to see some recovery.”
It is also growing strongly in the emerging renewal and clean energy sector. It generates around 35% of its premium from the offshore wind energy business.
Gard provides 64% of hull and machinery and 24% of P&I cover to the world’s LNG fleet. The growth in these sectors is helping it develop its sustainable business plan.
Gard decided to include environmental, social, and corporate governance (ESG) as a core part of its strategy in 2018. Roppestad said its ESG makes a natural fit for insurers because the business is all about reducing damage to people and the environment.
“I think the way we have worked ESG into our core operation has been useful and successful,” Roppestad said.
“It is also a good way of limiting claims costs in the current environment, if we can avoid damage to people, and to the environment, it is very good for our members and also for Gard.
“So I think we can integrate ESG very naturally in our core business and that is what we have been focusing on over the last five years.”
Gard was one of the founding members of the Poseidon Principles for Marine Insurance and is committed to seeing an improvement in the emissions performance of the portfolio of ships operating under its hull and machinery policies.
In the first year of the scheme, its entered hull and machinery fleet’s CO2 emissions performance was 8.2% higher than the International Maritime Organization’s decarbonisation target and 16.6% higher than the Paris Agreement’s target of full decarbonisation by 2050.
There is an equality and diversity policy at Gard. It admits it “could do better” to improve the gender balance in its top and middle management, but it has defined targets on recruitment across all levels in its business, most of which it is meeting.
Roppestad also confirmed Julian Clark will be joining Gard after his departure from law firm Ince, where he was senior global partner. Roppestad said the move is intended to boost its in-house expertise.
“We welcome Julian to Gard, he is a competent lawyer and has some core strengths, which we will benefit from,” he said. “Developing the organisation with maritime expertise and having even more resources in-house is something we focus on at Gard.”
