The Swedish Club’s free reserves have shrunk by over $30m after a difficult year in the protection and indemnity insurance market.

According to the mutual club’s figures, its free reserves stood at $196.5m at the end of 2021, compared to $231.4m at the end of the previous year.

The Swedish Club’s net incurred claims increased from $138.5m to $163.4m over the same period.

The club’s combined ratio, which reflects the balance of claims premium and operating costs, was a loss-making 129%, compared to 123% in the previous year. It had been forecasting a combined ratio of 104% in 2021.

Among the claims to affect its balance sheet, the Swedish Club is the claims lead on the hull and machinery for the X-Press Feeders 2,743-teu X-Press Pearl (built 2021) which grounded and was lost off Sri Lanka.

It was also the P&I insurer for the 51,000-dwt bulk carrier Ambition Journey (built 2021) which was declared a total loss after grounding in the Philippines. The claim became a pooled claim under the International Group of P&I Clubs.

Overall, the Swedish Club reported an operating loss of $34.3m in 2021 compared to a profit of $3m in the previous year.

As well as a P&I mutual the Swedish Club also provides hull and machinery and other marine-related covers. Managing director Lars Rhodin, who will retire next year, said with the exception of the P&I markets all its markets are in balance.

It also managed to substantially increase its hull and machinery business cover. It participated in the cover of 4,780 vessels in 2021, compared to 3,999 vessels in the previous year. Its P&I business increased from 2,230 vessels to 2,375 vessels.

Financial standing

Rhodin said that the high level of claims was the feature of the last year. “In short, 2021 is a year that sticks out because of pool claims, a high number of larger claims, and the impact of the pandemic. Our strong financial standing enabled us to manage the situation,” Rhodin said.

He added that the club had maintained its A rating from S&P Global Ratings.

The Swedish Club also managed to increase its annual premium income from $178.8m to $200.5m in 2021.

Rhodin said that the premium in the P&I market is still inadequate to cover claims cost inflation.

“P&I clubs need to address this imbalance, because premiums are simply not at the level required to meet this kind of exposure,” he said.