UK Club relies on strong reserves

Despite reporting an overall loss for the year ended 20 February 2002 the UK P&I Club remains ?articularly well placed to deal with the challenges?posed by the increased reinsurance costs and unprecedented investment market volatility faced by the entire insurance industry. At 128 per cent, the ratio of assets to outstanding claims was still within the Board? target band and no claims were made on the Club? long-term reinsurance contract with Swiss Re. The adverse economic climate resulted in a return on investments of ?2.8 per cent in the year ended 20 February 2002, compared with ?0.8 per cent the previous year. The fixed income portfolio produced a return of 5.2 per cent but this was more than offset by a loss of 19 per cent on equities. In the current year the proportion of equities had reduced to 25 per cent by the end of June, the remainder of the invested funds being held in bonds and cash. Combined with the weakness of the dollar, investment performance had begun the new year with a positive return. To reduce the Club? reliance on investment income and balance the underwriting deficit incurred in recent years, a general increase of 20 per cent in premium ratings had been sought for the 2002/03 policy year. ?t is satisfying to report that the 20 per cent increase overall was achieved,?said UK Club Chairman Aleco Kairis. ?hough increases of this nature are never welcome, there has been a wide understanding amongst the membership of the need for this move.?In its annual report for 2001/02, published this week, the UK P&I Club (the United Kingdom Mutual Steam Ship Assurance Association) reported total funds of US$955 million (US$1,083 million the previous year), a fall of less than 12 per cent. Against this, outstanding claims, including the forecast of unreported claims, were US$744 million (US$734 million in 2000/1), an increase of only 1.5 per cent.