London Club has released a short update on the drivers
and result for the /22 Financial Year and other recent developments in the
Club’s business. It said that further information would be provided in the
Annual Report & Financial Statements, which will be issued in the near
future.
Underlying gross earned premium income in /22
(excluding supplementary calls) was 11.0% higher on the prior year, attributed
to a combination of rate increases and volume growth for the core mutual
P&I product.
The Club reported “an exceptionally adverse claims outturn”.
There were 14 members’ claims in excess of $1m. compared with an average of six
such high severity cases experienced in the five prior years. In addition the
cost of these claims was particularly expensive by recent historical standards.
There was also a material escalation in the number and
cost of Covid-19 claims, with an almost three-fold increase in the cost of such
claims. Furthermore, claims on the IG Pool continued to run at high levels,
particularly so in the first half of the year.
The challenging claims environment was accompanied by an
investment loss of $2.0m following an upward adjustment in fixed income yields
and equity market sell-off towards the end of the year.
After including the supplementary calls, the result for
the /22 financial year was a surplus of $10.4m, increasing the Club’s free
reserves to $164.0m. The combined ratio was 92.4%. Excluding the supplementary
calls set in October 2021, the operating result would have been a deficit of
$65.8m and a combined ratio of 155.2%.
At the February 2022 Renewal, while the raising of
supplementary calls strengthened the Club’s capital position, it also
underlined the importance of other measures to improve technical performance.
Therefore the February 2022 renewal strategy involved “a tailored approach
to individual Members, focusing on loss records and risk profiles – and the
sufficiency of rating and deductible levels”.
This focus meant that there were some cases where the
Club declined to offer renewal terms, and that there were some where terms
could not be agreed. The Club said however that “there was strong support
from the vast majority of Members that were offered terms and, as a result, the
Club moved into the current P&I year supported by important improvements to
the rating and risk profile of the Membership base”.
