Despite a challenging economic climate, the Club’s business had developed favourably, and 2015 had started on a positive note, it said at its recent AGM.
Tonnage and revenue grew strongly at the beginning of 2014, but faded slightly later in the year, as freight markets struggled. However, premium pricing remained firm, despite the enduring effect of ‘churn’ as older, higher-rated vessels continued to be replaced by younger, lower-rated ships.
Claims for the Club’s own account developed at a moderate pace during 2014, extending the favourable trend of recent years. International Group pool claims were also showing a benign emergence at year-end.
Net premiums earned during 2014 were about 5% higher than the figure for the previous year, although total income was down slightly, to $102.3 mill, owing to a lower realised investment gain. Incurred losses, at $65.9 mill, were marginally higher than the $65.1 mill recorded in 2013.
After-tax, comprehensive income for the year was $1.3 mill, generating an increase in total members’ equity to $58.6 mill as of 31st December, 2014, 1% higher than the figure a year earlier. Statutory surplus grew to $64.8 mill at year-end, compared with $63.6 mill for 2013.
The Club’s investment earnings provided a solid contribution to its overall results. Its fixed income portfolio performed well during 2014 so that, despite lower stock market returns, an overall gain of just under 4% was achieved.
The trends noted in 2014 were asserting themselves with growing vigour into 2015, the club said. As of 31st March, 2015, its statutory surplus had increased by 9% to $71 mill, while its GAAP free reserves were up 11% to $65 mill. Statutory free reserves per tonne were around $4.65 at the end of last year. A further increase, to $5.03, was recorded by the end of the first quarter this year.
Members were also told that the 2012 policy year was being closed as originally budgeted. The small deficit for the year of just over $3 mill would be subvented by the Club’s contingency fund, which stood at a record figure of nearly $90 mill as of 31st March, 2015.
Eagle Ocean Marine (EOM), the American Club’s fixed premium facility, which focuses on the operators of smaller vessels in local and regional trades, was also performing well, making a strong contribution to overall results.
EOM continued to expand its market footprint during 2014, particularly in Asia. Its combined ratio to date was less than 70%. This holds the promise of growing success over the years ahead, the Club said.
In assessing the performance, the Club’s chairman, Arnold Witte of Donjon Marine, said: “2014 was a difficult year, not least for the shipping community itself. Nevertheless, the American Club made excellent progress. This is being sustained into 2015.
“Many challenges lie ahead. The slump in the drybulk markets continues to cause concern. It is to be hoped that freight rates will rise decently, at least over the medium term, as the global economy improves. The board remains optimistic about the future and the Club will remain committed to an exceptional level of solidarity with its members,”he concluded.
Joe Hughes, chairman and CEO of the American Club’s managers, Shipowners Claims Bureau, added: “Notwithstanding a difficult business environment, 2014 was a good year. Claims exposures continued to develop favourably, premium pricing stayed firm and investments performed well. In addition, EOM saw its profits rise, the Club’s surpluses increased and free reserves per tonne strengthened considerably.
“Our loss prevention and ERM (enterprise risk management) initiatives advanced energetically and our service capabilities were expanded. These positive trends have continued into 2015. It is especially encouraging to see a further increase in the Club’s surplus during the first quarter.
“The Club’s recent progress will provide a firm foundation for the further development of our agenda over the years ahead. Its business plan anticipates a range of exciting opportunities to expand its outreach further throughout the global maritime community. In this, as in everything else it does, the American Club stands ready to embrace the challenges of a changing world and growing competitive pressures,”he concluded.