Oslo based protection and indemnity insurer Skuld has reported a $15m loss for the policy year to 20 February 2022, compared with a $25m profit in the previous year, as investment returns could not cover its underwriting deficit.
Skuld’s underwriting activities registered a $30m loss in the 2021/2022 period. Its combined ratio — which reflects the balance of premium income and claims costs — was 107%, an improvement on the 108% reported in the previous term.
In its 2020/2021 financial return, the protection and indemnity mutual leaned on a healthy investment income return of 9.8% to help cover underwriting losses.
In the latest policy year, Skuld said its investment return was negative.
As a result of the losses, Skuld’s contingency reserve stood at $430m at the end of the 2021/2022 year, compared with $459m at the end of the previous term. Its financial reserves remain well within capital solvency requirements.
Skuld is a diversified insurer with a growing hull and machinery business. Skuld said its non-P&I insurance lines had contributed positively to its latest earnings.
“I am pleased to see that the positive contributions from our commercial operations continue as our overall diversification and growth strategy remains, as does our careful selection of quality tonnage,” said Skuld chief executive Stale Hansen.
Skuld blamed inadequate premium income to cope with a costly year for International Group of P&I Clubs pooled claims, and the impact of Covid, for its losses.
Hansen added the club had been able to address its underwriting deficit by raising rates at last February’s renewal, but more work needs to be done.
“The generally hardening market alone is insufficient to maintain balance. We are intent on bolstering Skuld’s robust financial position, so our diligent work to optimise our portfolio and return to positive underwriting results continues. Keeping service levels high for our membership and clients also in challenging times is always a priority for Skuld,” he said.