Members attending the club’s 100th Annual Meeting in New York last week heard that its business was developing positively and that 2017, its centennial year, had started on an upbeat note.
Club tonnage grew substantially during 2016 – P & I entries by 16% and FD & D business by 19%. This year had also started well with both tonnage and premium growing by 6% over the four months since the February renewal.
It was also encouraging that the business renewed by the Club continued to enjoy a favourable risk profile, with a trailing five-year loss ratio of only 51%, the club reported.
The results of the financial year to 31st December, 2016 disclosed a small operating loss of just under $2 mill. Total premium was up 17% for the year at $95.3 mill, as were net investment income and net realised investment gains which, at just under $7 mill, were about 13% higher than 2015’s $6.2 mill.
However, losses and other expenses rose from $83.3 mill to $108.5 mill, mainly due to two claims of unusual severity during the 2016 policy year. This, combined with a small unrealised loss on investments of $2.9 mill, had generated a total members’ equity at year-end of $51.4 mill, just under $5 mill less than recorded at the end of 2015.
Encouragingly, however, the Club’s surpluses rose substantially as of 31st March, 2017, by which time the balance of premium for the 2016 policy year had been fully recognised.
The Club’s GAAP surplus had grown over the quarter by 17% to $60 mill, about 9% above that recorded 12 months earlier. Its statutory surplus also rose by nearly 10%, to $72.8 mill.
Loss development continued to follow the favourable trends seen in recent years. Claims for 2015 were still at comparatively low levels and had moved the year into a respectable surplus. Attritional exposures for the 2016 policy year were developing at a level largely the same as they had been for 2015 at a similar stage.
Claims for the 2017 policy year, albeit at a very early point of development, were following the positive emergence of 2015 in particular. Losses within the International Group’s Pool also continued to develop favourably.
Investments generated an overall return of some 2.4% during the period against a blended benchmark of 2.2%. This was a substantial improvement on the previous year’s return of only 28 basis points. This was a creditable result given the market uncertainties which prevailed during most of 2016, the club said.
The Club’s Eagle Ocean Marine fixed premium facility performed strongly in 2016 and into the early part of 2017. With an aggregate combined ratio of just over 60%, the facility was making a very healthy contribution to mutual results.
Taking all these circumstances into account, the club’s board resolved formally to close the 2014 policy year without call in excess of the original forecast. At the same time, in view of its continuing positive development, it was decided to reduce the release call margin for the 2015 policy year from 15% to 10%.
A highlight of 2016 had been the licensing of American Hellenic Hull by the Cypriot authorities. Fully capitalised and compliant under the EU’s Solvency II insurance regulations, American Hellenic Hull made excellent progress to date. Some 1,700 vessels are now insured by the new company, which continues to gain market share and promises to make a significant contribution to the club’s business from a variety of perspectives over the years ahead.
On the service front, the club’s managers opened an office in Houston, Texas in July, 2016 in order to extend its reach in the US Gulf and beyond.
The club’s chairman, Donjon Marine’s Arnold Witte, said: “2016 was yet another challenging period for the shipping industry and all those who serve its interests. But it was also a year of achievement for the American Club across a wide spectrum of activity. The club remains well placed to exploit opportunities in the future. In this special, centennial year, my fellow directors and I wish to thank the members, and all those who act on their behalf, for their continuing support as we move into our second century of service to the global maritime community.”
Joe Hughes, Chairman and CEO of the American Club’s Managers, Shipowners Claims Bureau, echoed Witte’s remarks: “Notwithstanding difficult business conditions, 2016 was a solid year for the American Club. It advanced its business in many areas as the year unfolded. It was particularly encouraging to see a solid increase in tonnage, a trend which has continued into 2017.
“Claims continue to develop favourably, revenue is growing despite a weak pricing environment, investments are performing well, membership is expanding, free reserves are increasing, and the club’s service capabilities continue to be enlarged,” he said.