The London P&I Club lost $50.5m last year as investment income fell and underwriting continued to run at a loss.
For the policy year ending on 20 February 2022, the club recorded a 3.5% negative investment return, while its combined ratio — which reflects the overall underwriting result — was at a loss-making 128%.
As a result, the London Club’s free reserves fell to $113.5m.
The club was hit by a difficult bonds and equities investment market.
However, the losses are unrealised and would be expected to recover when the markets rebound.
The P&I club’s underwriting result has also been affected by two International Group of P&I clubs claims last year, and three in the previous year. The International Group pools claims were in excess of $10m.
London Club chief executive Ian Gooch said the International Group claims tend to be volatile and the club has had an unfortunate run.
“Claims at the pool level are random in nature and while we’ve had a tough run in the last two years, our experience in the six prior policy years was much more favourable, underlining their fortuitous nature,” Gooch said.
In a more positive development attritional claims, which involve claims under $500,000, were at the lowest level since the 2018 policy year.
The underwriting should further be helped by a 13% increase in rates that the London Club achieved at this year’s renewal, including adjustments that have been made to deductibles. The London Club also underwent a derisking of its entered fleet at the last renewal.
“The positive outcome of the February 2023 renewal — involving increases in rates and deductibles and a degree of derisking — means that there’s been significant progress on that front,” Gooch said.
“This includes an encouraging picture at the first quarter, as well as growth in our mutual tonnage of over 1m gt in the year to date, providing a much-improved base for the club’s delivery of strong service and support to our members and assureds.”
