Monday, 11th January 2010
Leading ratings agency Standard and Poor's (S&P) has confirmed North of England P&I club's ‘A' financial strength rating and stable outlook for a sixth consecutive year. According to the agency, the rating reflects the 100 million GT club's continued ‘strong competitive position', ‘very strong financial flexibility', ‘strong capitalisation' and ‘long-term track record of outperforming most of its peers'.
S&P analysts Ali Karakuyu and David Laxton say the stable outlook reflects their view that North will maintain its strength in the foreseeable future. ‘We believe the club's competitive position will continue to benefit from not having made a supplementary call in the run-up to the February 2009 renewal, unlike some of its peers.' They also predict the club is unlikely to make an unplanned call over their rating horizon of the next two years due to its strong capitalisation.
North's continuing out-performance of the market is attributed by S&P to its firmer underwriting of risks, including maintaining premium levels and tightening terms and conditions, as well as its low expense base. ‘This is best illustrated by the club's 12-year average combined ratio over 1998-2009, which stood at 105% compared with the International Group of P&I Clubs' weighted average (excluding the impact of unbudgeted supplementary calls) of 116% over the same period,' says the agency.
S&P also highlights the positive contribution made by North's management to the rating, with recently appointed joint managing directors Alan Wilson and Paul Jennings continuing, ‘to place a strong emphasis on quality of service and commitment to member support'. The agency adds the club has, ‘clear strategic goals', including a target to increase mutual market share from 10% to 12.5% over the next four years that, ‘will yield economies of scale for operational expenses.'
The agency confirms North is now the fourth-largest member of the International Group by total tonnage, which stood at 100 million GT at November 2009 (including 20 million GT chartered) - spread across 3750 ships and 360 members - compared with 61 million GT at February 2006. ‘We expect the club to carefully manage the additional growth and continue placing strong emphasis on the quality of its services,' says S&P.
Responding to S&P's comments, joint managing director Alan Wilson said, ‘I am delighted we have again maintained our ‘A' / stable rating, which is a testament to the continuing quality, diversity and international spread of our membership as well as to our financial prudence and service quality. It also demonstrates the importance of achieving the 5% general increase we have set for premiums at next month's renewal, both to preserve our economic strength and maintain our rating.'
North is based in Newcastle-upon-Tyne, UK with regional offices in Hong Kong, Piraeus and Singapore.