The UK P&I Club has reported an increase in underwriting losses and a fall in its free reserves.
The Thomas Miller-managed insurer said its P&I combined ratio was 149% in the 2020 policy year, compared with 120% the previous year. A combined ratio in excess of 100% represents an underwriting loss.
The mutual said it was hit by Covid-19 related claims and an expensive year for shared International Group of P&I Clubs pool claims. The International Group’s 13 members share claims above $10m.
The UK Club said its underwriting performance in 2020 was “above the acceptable range”. However, it described the conditions in the last year as “exceptional”.
The underwriting losses have affected its free reserves, which stood at $507m at the end of the 2020 policy year, compared with $559m at the same point in the previous year. It said its free reserves remain well above capital adequacy requirements.
The UK Club made a strong investment return of 5.6% in 2020, earning $59m.
It is currently handling another costly claim as the P&I insurer of the 20,388-teu Ever Given (built 2018), which grounded in the Suez Canal in March. The casualty has resulted in a $600m claim.
UK P&I will have to pay the first $10m of the claim before the remaining amount is pooled with other International Group members.
“The club is well placed to deal with future challenges and remains focused on its key aims of delivering balanced underwriting and providing excellent service to members,” chief executive Andrew Taylor said.
