American Club experiences stability with 2024 P&I renewal, despite challenges

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American Club experiences stability with 2024 P&I renewal, despite challenges

The American Club has reported relatively moderate drops from the year-on-year renewal results, which reflects overall stability within the context of recent challenges as well as its de-risking strategy.

Gross tonnage for the Club’s Class I (mutual P&I) entries stands at 22.5 million, down by approximately 2.5 million compared to inception one year earlier, with a relative premium income drop of 6.5% over the period. Its Class II (mutual FD&D) portfolio followed a similar shift, while its Class III (charterers’ liability) business is poised to increase by about 5% in 2024 by comparison with the previous twelve months. Initial combined loss ratio for the 2023/2024 policy year is tracking at 103% as of December 31, 2023 with an improving trajectory.

Eagle Ocean Marine, the Club’s fixed premium facility, which serves the operators of smaller vessels in local and regional trades, continues to benefit the mutual membership, with its overall historical net loss ratio now standing at 85% with the 22/23 and 23/24 facility year running below 70%, while the current 23/24 facility year relatively benign but still in an active period of development.

The Club’s Board had mandated an overall target increase in expiring premium of 7.5% for the 2024 policy year. As the overall combined loss ratio of renewing tonnage has continued to improve, the cash rise year on year on renewing business achieved was 4.2%, net of the downward adjustment in the IG reinsurance program cost for 2024 passed on to the Members in the usual manner. Augmenting the premium position were terms changes calculated to have a value of another 1% against net premium resulting in an overall increase of 5.2% on renewing premium. In terms of the average premium dollar per gross ton from expiry of the 2023 policy year to inception of the 2024 policy year, this increased by 6.4%.

Speaking in New York earlier today, Tom Hamilton, the Chief Underwriting Officer of SCB, Inc., the Managers of the American Club, said: “The 2024 renewal campaign for the American Club built on the successes of recent renewals, focusing on rate adequacy and continued refinement of its portfolio and evidenced the support of its core, loyal membership. This is highlighted by a high retention rate amidst challenging times. We are grateful for the support of members and brokers around the world.

“The American Club commences the 2024 policy year in a solid position with premium income for P&I, FD&D and charterers’ liability classes, along with the contribution from Eagle Ocean Marine, in excess of $130 million and we are encouraged by the expectation for growth across all classes over the course of 2024/2025.

Dorothea Ioannou, the Chief Executive Officer of SCB, Inc., also commented on the Club’s recent results: “While the growth of the two preceding renewals has slightly retreated, this was partly deliberate through de-risking strategies, and partly natural as a result of S&P’s downgrade. The Club’s premium and tonnage volume remains at historically high levels, reflecting 30% more in premium and 20% more in tonnage as compared to the 2021 policy year, with consistently improving combined loss ratio results.

“Furthermore, the high retention levels of renewing tonnage, in the face of extraordinary disruption, is a testament to the strength of relationships within the Membership and acknowledgment of the American Club’s service. The Club represents a significant and important voice in the industry, and in the International Group. We have and will continue to ensure that it is heard.”

 

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