Half-Year Financial Update

CIRCULAR REF: 2015/021

CIRCULATED TO ALL MEMBERS, BROKERS AND DIRECTORS

We are pleased to report that the first six months of the 2015/16 financial year have been positive for North’s financial development. The value of claims incurred on the current policy year is at low levels and the development on prior years has been better than expected.  As a consequence of these factors, we are forecasting a free reserve for North Group of in excess of US$360 million for the financial year ending 20 February 2016.

As at 20 August 2015, the 2015/16 policy year had only incurred 11 claims in excess of US$1 million compared to 21 at the same development point in the previous policy year, which highlights the beneficial impact of our robust renewal strategy at 20 February 2015.  

The claims experience in this volatile category of claims is similar to that incurred in 2010, albeit that North P&I Club is now over 30% larger in terms of entered tonnage. In addition, the claims progression on the 2013/14 policy year, which had disappointed at February 2015, has developed more favourably post the financial year end and is now in line with expectations.

Alongside the favourable claims experience this year, there has been a reduction in the value of the group pension liabilities of approximately US$10 million as at 20 August 2015. The performance of the P&I Class investment portfolio over the first six months however reflects the difficult global market environment, with a negative investment return of -1.29%

The freight markets remain unpredictable for our Members and the economic climate is also volatile. North therefore remains focussed on providing the highest levels of personal service, whilst maintaining the financial stability of the Club and the group for the benefit of the membership.

A more detailed analysis of the half year position will be published in early November.

AA WILSON and PA JENNINGS

JOINT MANAGING DIRECTORS

The North of England P&I Association Limited