Press Release - MARCH 15, 2019
AM BestTV: P&I Clubs Buoyed By Reserves, Face Commercial Headwinds, Says AM Best Senior Director
FOR IMMEDIATE RELEASE
OLDWICK - MARCH 15, 2019
Thomas spoke about how unique the P&I clubs are and how they function.
“The P&I sector is dominated by members of the international group of P&I clubs, which collectively insure approximately 90% of the world’s ocean-going tonnage,” said Thomas. “Each of these P&I clubs is an independent, not-for-profit mutual insurer that covers third-party liabilities of their members in respect to the use and operation of ships. The P&I clubs also mutually reinsure each other through the international group pooling arrangement, as well as buy a reinsurance cover in the open market.”
Additionally, Thomas spoke about the environment in which these companies operate.
“The free reserves of the P&I clubs are at a high level, bolstered by several years of positive operating results. At the same time, their ship-owning members are facing difficult commercial conditions, which are putting pressure on prices. This together with a challenging claims environment means that the P&I clubs are struggling to achieve underwriting profitability,” she said.
Looking forward, Thomas said she believes that, “Since free reserves have grown in recent years and the sector as a whole is well-capitalized, with a buffer to absorb performance pressures, companies are well-positioned. However, with interest rates still low and equity markets volatile, the P&I clubs really do need to increase their focus on underwriting discipline in order to maintain their financial strength.”
To access a copy of this special report, titled, “P&I Clubs’ Balance Sheets Strong but Performance Under Pressure Amid Strong Competition,” visit http://www3.ambest.com/bestweek/purchase.asp?record_code=282928 .
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