Claims and investment performance were the main factors behind The London P&I Club reporting a surplus of $25.9m and an increase of 22.4% in free reserves to $141.4m for the to year to Feb 20. This represents a 74.8% increase in free reserves since Feb 20 2008, the club’s annual report has revealed.
“The P&I industry had anticipated that depressed freight markets might lead to a moderation of claims and, indeed, we saw a significant reduction in the aggregate cost of our attritional claims in 2009,” writes chairman John M. Lyras.
“We also experienced ‘a cluster’ of larger claims during the first six months of the year, and this placed a strain on the underwriting result. However, the Association’s premium income has been increasing and, together with the implementation of other measures, including the adjustment of deductible levels, long-term technical performance should steadily strengthen.”
Mr Lyras draws particular attention to the management of risk in the context of underwriting and claims, as well as financial decision-making as something the committee “is giving careful consideration to as part of our preparation for the increased emphasis on the Association’s governance framework under Solvency II.” The European Union regime is due to come into effect in late 2012.
“The Committee is focusing increasingly on its understanding of risk appetite, measurement and modelling, along with management information,” he writes. “Since the scope of the Directive’s quantitative, supervisory and disclosure-related requirements are far-reaching, I am reassured that there is co-operation among the [International] Group over aspects of the forthcoming regulation that the industry can influence.”
Mr Lyras says other issues of concern to members include the blight of piracy and the debate over the deployment of properly trained military guards and a “wide variety” of international and regional legislative developments.