Thursday, November 8, 2012

Specialist and Cargo Vessel P&I Club Receives First Credit Ratings

Two Agencies Give Approval to Shipowners Protection
Shipping News Feature

UK– WORLDWIDE - The Shipowners’ Club, which provides Protection and Indemnity (P&I) marine liability insurance to over 33,000 small and specialist vessels globally including barges, dry cargo, and tankers, has announced that it has received its first interactive ratings assigned by two leading credit agencies, Standards & Poors (S&P) and A.M. Best, after deciding to apply for an interactive assessment earlier this year.

S&P’s Ratings Service assigned its 'A-' long-term counterparty credit and insurer financial strength ratings to the insurer which has offices in London, Singapore and Vancouver. The second ratings agency, A.M. Best gave a financial strength rating of A- (Excellent) and an issuer credit rating of A- to the Shipowners’ Mutual Protection & Indemnity Association. Both agencies credited the Shipowners’ Club with a stable outlook following a thorough review of its activities.

S&P said that it based its rating, in part, on very strong capital adequacy that has improved significantly in recent years as a result of the club’s recent strong earnings. Regarding its stable outlook, the rating agency stated that it reflects S&P’s view that the Shipowners’ Club will maintain its strong capitalisation and operating performance over the medium term. On the company’s financial strength, A.M. Best commented:

“The Club reported excellent pre-tax earnings of USD 47.5 million in the year to February 2012 (2011: USD 53.8 million), reflecting a strong technical result and solid investment earnings. In 2013, a good pre-tax profit is expected, albeit lower than in 2012 due in part to favourable prior year reserve development in 2012, which reduced the loss ratio by nearly 10 percentage points.

“The Club has a good underwriting record with a five-year (2008-2012) average combined ratio of 92.3%, although there has been some volatility in underwriting results. Investment earnings also have been volatile due to the high proportion of equity investments, the Club’s investment strategy having a target asset allocation of 25% equities."

In welcoming the news Charles Hume, Shipowners’ Chief Executive, said that the company had resolved to up-grade to an interactive rating with two agencies whose reputations as influential, independent authorities on financial performance are well established across the world. He added:

“We are very happy that our first review with both agencies has resulted in A – ratings, reflecting our own view of the strength and stability of the Club’s underwriting record and the size of our free reserves. We are sure that our Members and their brokers will be pleased to note that the overall strength of the Club has been recognised by these ratings.”