Norwegian marine insurance group Skuld announced an $11m profit for its latest financial year, logging a positive technical underwriting result for the 16th consecutive year.
Premiums from all of its business lines for the financial year ending 20 February 2019 totalled $402m.
Although profit is down on the $58m that Skuld earned in the previous year, it exceeded expectations amid a backdrop of lower protection-and-indemnity premiums, falling investment income and increased claims.
'Challenging' conditions
Skuld chief executive Stale Hansen described the market conditions as “challenging”.
He said: “Skuld has delivered another strong result, relative to the environment in the international marine insurance market. The P&I side of the business continues to grow, with a net increase in entered tonnage.”
Overall, Skuld’s business lines made a technical underwriting profit with a combined ratio of 98%. A combined ratio under 100% demonstrates income from premiums exceeded expenses and claims.
But some lines of business did better than others. The traditional P&I mutual business recorded a combined ratio of 101%, indicating an underwriting loss.
We have been able to smooth out volatility in the P&I market through diversification
Stale Hansen
But Skuld's recently diversified lines in hull and machinery, offshore, charterers and fixed premium business logged a combined ratio of 95%, bringing P&I overall back into profit.
Smoothing losses
Hansen conceded the diversified business streams had helped make up for underwriting losses at the P&I mutual.
“We have been able to smooth out volatility in the P&I market through diversification,” Hansen said.
Income from offshore and fixed premium businesses also helped mitigate losses from Skuld’s Lloyd’s of London syndicate.
The Lloyd’s syndicate is now switching to the company market by putting its portfolio into Skuld Marine Agency (SMA), where Hansen said it would benefit from hardening rates and improved efficiency.
Skuld’s figures were also helped by a recovery in the investment market in the first two months of this year.
New Year upturn
As Skuld’s financial year runs to the end of February, it was able to include the improved investment return in its figures. An investment profit of $3m topped up Skuld’s financial reserves to $453m, their highest ever.
Another factor that weighed heavily on Skuld’s P&I results were “a high number of large claims submitted to the International Group of P&I Clubs joint pooling arrangements”, it said in its earnings statement.
