The Swedish Club’s strategy for future development is progressing well. We have successfully navigated a challenging year the Managing Director Lars Rhodin told the Board, when meeting in London on December 3.
Lars Rhodin said: “The Swedish Club has emerged from a challenging period in good shape and with an appetite for progress. We now intend to accelerate
that progress during 2010 and we will set some tough targets for enhanced performance. These goals are ambitious, but the Club will bene-fit greatly from the stimulus of this challenge. We now note an increased interest in the Club and we will explore opportunities, but with no compromise on quality, at this renewal and beyond. Our greatest asset here is the drive and determination of our people. We have a strong base and we are ready to move forward with confidence.”
The Managing Director then presented his overview, with particular emphasis on the P&I position. He told the Board that every International Group Club must now take account of the increase in shipowner liabilities. As an example, he cited the so-called “Rotterdam Rules”, which will reduce shipowner defences to cargo claims and also introduce significantly higher limitation amounts. Adverse changes to the burden of proof will make life more difficult for shipowners and their Clubs, whilst benefiting claimants. Over the past year, the regulatory climate on the environmental front has also hardened, with tougher enforcement of existing rules adding to shipowner challenges.
Lars Rhodin added: “The one positive note is the slowdown in claims inflation. This was expected but we now have clear evidence that it is happening. At the same time the slowdown is a product of world recession. We can expect claims costs to begin to escalate, once again, when economic recovery takes hold.”
The Swedish Club’s Managing Director also had positive news on Pool claims. The experience of the International Group’s membership in 2008 and so far this year is much improved on the Pool claims picture in 2007 and 2006. The improvement in The Swedish Club’s Pool record has been even more encouraging. As at end-October this year, the Club had been spared Pool claims for 24 months. The Swedish Club also achieved a substantial financial recovery in the CMA CGM Aegean case, which was settled earlier this year. This will also reduce the Club’s Pool claims liability associated with neutralising deficit.
Lars Rhodin described The Swedish Club’s technical results as “promising”. The global financial shockwave and the rapid evaporation of investment income prompted most clubs to revisit financial models and focus on achieving a combined ratio of 100% or less. The Swedish Club aims for a combined ratio of 100% or better. He stressed that more attention is now paid to individual members’ records and expenses, taking account of positive as well as negative developments. He identified various external factors contributing to positive trends, including the reduced exposure resulting from current activity levels. He then observed, however, that such factors also have an impact on the premium base. He concluded: “It is too early to talk in terms of a shift in underlying trends. All that can be said, at this stage, is that the Club has benefited from positive volatility. In plain English, we have found ourselves at the ‘lucky end’ of the big claims picture.”
Reporting on the Club’s progress overall, Lars Rhodin pointed to a satisfactory recovery in volume, setting the scene for further portfolio expansion. He said: “The Swedish Club now has a much higher profile in the market. This has already paid dividends, with the addition of more tonnage from existing members and the attraction of new members.”
This time last year the board agreed a 15% General Increase. Twelve months on, circumstances have changed and the General Increase proposed for 2010/11 is 2.5%. Lars Rhodin said: “We have made this recommendation to reflect the slowdown in claims inflation, currency considerations, positive volatility factors and our satisfactory combined ratio figures for the past two years. In this difficult economic environment, we must also do what we can to support our loyal shipowner members.”
At the December 3 meeting the Board of The Swedish Club agreed:
- A General Increase of 2.5% for P&I, together with adjustments for changes in reinsurance costs.
- A minimum deductible increase of USD 1,500 in respect of crew liabilities, so adjusting for inflation.
- The methodical assessment of each Member’s exposure and claims record, with particular attention being paid to large claims.
- An estimated Release Call of 25% for 2010/2011.
Contact:
Henric Gard, The Swedish Club, Telephone: +46 31 638 400
TRS Public Relations, Telephone: +44 1304 813 366
The Swedish Club
The Swedish Club was founded in 1872. It is a leading mutual marine insurance company, owned and controlled by its members. The Club writes Protection & Indemnity, Freight Demurrage & Defence, Hull & Machinery, War Risks, Loss of Hire, and any additional insurances required by shipowners. The head office is located in Göteborg, Sweden, and branch offices are located in Piraeus, Hong Kong and Tokyo.
As at 1 December the Club covered 1,206 vessels for P&I, 659 vessels for FD&D and 1,364 vessels for Hull & Machinery.