Lars Rhodin said: “The Swedish Club continues to lead the way in creating a new Hull market, built for long-term sustainability. Overcapacity, however, remains the major barrier to achieving a more sustainable environment for Hull insurance. Nevertheless, there are encouraging signs – including a growing recognition within the international shipowning community of the benefits of a long-term relationship, as opposed to short-term advantage, in the Hull sector. The Swedish Club will continue to make progress towards sustainability.” In presenting his overview, Lars Rhodin told the Board that the conditions were right for a reduction in the Hull claims inflation which had characterised the market in recent years. Hard evidence of a slowdown in claims inflation, however, had yet to appear. In contrast, there are indicators that this year may see fewer large claims (exceeding USD 10 million). Lars Rhodin added: “We have yet to see any firm evidence of reduced frequency in claims of less than USD 10 million, although this is likely, given a global shipping market influenced by extensive idle time, lay-ups and slow-steaming. “At this point we see no impact on claims costs from falling steel and other commodity prices. This must have a significant effect on claims costs at some stage. The lack of evidence so far may be due to the fact that many yards still have substantial newbuild portfolios to complete. A large number of new ships must be delivered before these yards return to a more traditional balance between newbuild and repair work. The lay-up situation, of course, reduces risk overall and, therefore, this must also reduce claims frequency, but we must also take account of its inevitable impact on premium base, within the financial equation.” Other factors are also shaping the new Hull market. Lars Rhodin said the world financial crisis had focused minds on profitability and combined ratio, rather than “cash flow underwriting”. He observed: “In this respect, The Swedish Club continues to benefit from its approach under the Hull Action Plan.” Lars Rhodin concluded: “The general trend of higher Hull rates will continue, as the market still has some way to go before premiums match exposure. Premium income is eroded by lower insured values and overcapacity acts as a brake on market correction. Nevertheless, this correction will continue to unfold. The Swedish Club sees many opportunities at this point in the market cycle. Our Hull lead business volume is down by 4.5% and following business is down by 21.3%. This is the result of our determination to further stiffen underwriting discipline, together with our natural focus on Hull lead business in the current climate. Yet, we continue to play a role in the following business sector. We remain totally committed to building the Club’s Hull business overall, whenever that business is priced appropriately.” Contact: The Swedish Club As at 1 October the Club covered 1,200 vessels for P&I, 578 vessels for FD&D and 1,370 vessels for Hull & Machinery.
The primary goal of The Swedish Club’s Hull Action Plan is within reach this year. Managing Director Lars Rhodin told members of the Club’s Board, meeting in Athens yesterday, that the outcome for the first eight months of 2009 holds out the real prospect of achieving a combined ratio of 100% or less for the full accounting year.
Henric Gard, The Swedish Club, Telephone: +46 31 638 400
TRS Public Relations, Telephone: +44 1304 813 366
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.