The West of England has reported an increase in underwriting losses in the last policy year as an "unprecedented" high level of claims hit earnings.
The protection and indemnity insurer said its combined ratio — a measure for the balance between premium income and claims expenses — was a loss-making 139.8% for 2020.
That compares to a narrower deficit of 107% for the previous policy year of 2019.
The West of England said its underwriting performance was hit by a high level of International Group of P&I Clubs pooled claims, which stood at $478.1m at the end of the year. Claims above $10m are shared between the International Group’s 13 members and their reinsurers.
The West of England's own retained claims also increased, and there were additional claims related to the Covid-19 pandemic in the year.
The underwriting losses were reflected in a drop in the West of England's free reserves to $291.1m. At the same point at the end of the 2019 policy year, free reserves stood at $338m.
West of England's results were helped by a strong investment return of 7%, which earned $33m in total.
The P&I club said it had already made progress in addressing its underwriting deficit by raising premium at the last February’s renewal.
Chief executive Tom Bowsher described the club’s 2020 policy year as “robust”.
He said the mutual and its shipowner members had been through an “extremely difficult year” because of the pandemic. The West has maintained its A- rating with S&P Global.
“I am also pleased that West’s strong capital base and positive investment performance mean that we are well placed to continue supporting our members as we hopefully begin to return to normality,” Bowsher said.
