North P&I Club has reported a big improvement in its underwriting performance ahead of its merger with the Standard Club.

North P&I’s combined ratio in the 2021 policy year was 107.4%, compared with 113.7% in the previous year. A combined ratio over 100% represents an underwriting deficit.

The club also increased its premium income to $429m, compared with $406.2m in the previous year.

It has previously been able to rely on its investment profits to make up for underwriting losses, but in 2021, it made an investment loss of 1.75%.

As a result, free reserves fell by $16.6m to $433.7m, but it retains its AAA capital adequacy rating.

The club said its recent diversification into the fixed premium market, through subsidiary Sunderland Marine, and the hull and machinery market, through North Hull, had contributed positively to its results.

Chief financial officer Ed Davies said key financial indicators have improved despite the difficulties caused by the pandemic and the changing geopolitical situation.

“North’s results demonstrate particular resilience at a time of volatile economic conditions and intensifying geopolitical turbulence, with Covid-19 continuing to provide challenges for global shipping,” he said.

North P&I and Standard Club members recently approved a merger between the two clubs. The newly merged P&I mutual, NorthStandard, is scheduled to open for business next February, subject to competition approval.

North P&I chief executive Paul Jennings said: “With 300 years of shared P&I heritage, the combined mutual insurer will provide cover for vessels equivalent to over 260m gt with an expected annual premium income of over $750m.”