The American Club experienced an encouraging 2022 P&I renewal season. Both its mutual and fixed premium portfolios performed well, with increases in rating for its mutual business somewhat exceeding Board mandates, and its EOM fixed premium book continuing to show growth in both revenue and market share.
Although tonnage entered for Class I (P&I) risks diminished slightly over the renewal period (by about 3%), the average rate per ton on renewing business, excluding the effect of the substantial rise in the International Group’s market reinsurance costs, grew by a margin of about 3.5% above the Club’s minimum requirement of 12.5% as mandated by its Board last November.
Taking this into account in conjunction with a 13% growth in P&I tonnage over the twelve months since February 20, 2021, the Club begins the 2022 policy year with projected income about 20% higher than that at the commencement of the previous year. Moreover, increases in deductibles and the variation of other terms of cover will provide additional value to these rises in premium by comparison with expiring revenue and expiring terms.
The Club’s renewing Class II (FD&D) business remained, in tonnage terms, largely the same as it had been twelve months earlier, but net premium income grew by approximately 11% year-on-year. Similar growth is expected to emerge during 2022 in relation to the Club’s Class III (Charterers’ insurance) portfolio.
Eagle Ocean Marine (EOM), the American Club’s fixed premium brand, has continued to make progress into 2022. Premium development for the current policy period indicates a year-on-year revenue growth of about 8%, implying a compound increase in income of about 15% per annum over the last five years. Most importantly, EOM continues to make a profitable contribution to the Club’s mutuality.
Commenting on the outcome of the recent renewal, Tom Hamilton, Chief Underwriting Officer of SCB, Inc., the American Club’s Managers, said: “Despite very challenging conditions, both the American Club and EOM experienced a positive outcome to the 2022 renewal season. Against a background of rising losses and increasing reinsurance overhead, we were successful in implementing a policy aimed at creating a better balance between income and expenditure in every sector of our underwriting activity.”
Speaking in conjunction with Mr Hamilton, Joe Hughes, Chairman and CEO of SCB, Inc., said: “The last several years have been a stressful period for all clubs as rising claims have combined with falling premiums to seriously disrupt underwriting equilibrium. However, our experience over the recent renewal with the aim of reversing this trend has been positive. Accordingly, there are grounds for optimism that operational results will show improvement over the forthcoming period.
“Above all, we extend our thanks to the Club’s Members, their brokers and all others who were involved in the recent renewal for their enduring support of the American Club and EOM. Although challenging business conditions persist, my colleagues and I are certain that the difficulties of the present will generate opportunities for the future.”