Monday, 12th November 2001
Contact: Paul Jennings / Alan Wilson +44 (0)191 232 5221
The North of England P&I Association has set its general increase for the 2002/2003 policy year at 25% in order to protect its free reserves in a continuing weak investment market. The increase is in line with rises being sought by other clubs in the International Group.
According to finance director Alan Wilson: 'Increasing claims costs, downward pressure on premiums and a significant reduction in investment income have combined to produce falling free reserves for most of the International Group clubs. Although the North of England's underwriting result and investment returns compare favourably with other clubs, a general increase of 25% is needed to maintain our financial strength.'
During the 2000/2001 policy year the North of England outperformed most other clubs with an investment return of 4.33% - significantly better than the zero or negative returns achieved by some of its competitors but still below its own five-year average of 7.36%. The club believes that the 2001/2002 policy year is unlikely to show any improvement.
'Our primary concern is to provide continued stability for our members, both in terms of premiums and service,' says underwriting director Paul Jennings. 'This means protecting our free reserves and net assets, which currently stand at around US$ 80 million and US$ 320 million respectively.' The 35 million GT club is rated A- by Standard and Poor's, putting it among the world's top three interactively rated P&I mutuals.
The North of England has also streamlined its calling structure. It intends to dispense with the rather out-dated and potentially confusing terminology of 'advance' and 'supplementary' calls and require the total estimated premium to be paid within the policy year to which it relates. However, in view of difficult trading conditions in all sectors of the shipping market, the club has decided only 80% of the 2002/2003 call needs to paid in the policy year (in four equal instalments on 1 April, 1 June, 1 September and 1 December) with the remaining 20% not due until 20 November 2003.
The club has also warned its members that a further increase may well be needed to cover potentially higher reinsurance costs following the US terrorist attacks of 11 September, though the consequences of this are still unclear. Deductibles below US$ 15,000 will also be increased by 25% to take account of inflation over recent years.
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