AM BestTV: P&I Clubs Buoyed By Reserves, Face Commercial Headwinds, Says AM Best Senior Director

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FOR IMMEDIATE RELEASE

OLDWICK - MARCH 15, 2019 11:01 AM (EDT)
In this episode of ^AM BestTV, Catherine Thomas, senior director of analytics, AM Best, said renewals for protection and indemnity (P&I) clubs show a range of individual outcomes based on individual loss records and exposures. Click on http://www.ambest.com/v.asp?v=pandiclubs319 to view the entire program.

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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^AM BestTV covers exclusive AM Best and insurance industry information and reports, targeted topics and key developments in the insurance, reinsurance and related sectors daily. Sign up for alerts of episodes at http://www.ambest.com/multimedia/ambtvsignup.html . View ^AM BestTV episodes at http://www.ambest.tv .

AM Best is a global rating agency and information provider with a unique focus on the insurance industry.