Best’s News & Research Service - December 02, 2016 09:08 AM (EST)
A.M. Best Affirms Credit Ratings of The Shipowners’ Mutual Protection and Indemnity Association (Luxembourg)
- December 02, 2016 09:08 AM (EST)
London //BestWire// - A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of The Shipowners’ Mutual Protection and Indemnity Association (Luxembourg) (the Club). The outlook of these Credit Ratings (ratings) remains positive.
The positive outlook for the Club’s ratings reflects its generally strong operating performance in recent years, as demonstrated by a five-year average combined ratio of 93.8% to December 2015 (following a change of accounting date), together with A.M. Best’s expectation that the Club will maintain excellent risk-adjusted capitalisation. Although the Club is a mutual, A.M. Best believes that the members are supportive of its business approach, which is to focus on underwriting profitability and retain operating surpluses.
Good operating performances over six of the past seven reporting periods have increased free reserves to USD 279.4 million at December 2015 from USD 95.6 million at February 2009. For the period to 31 December 2015, substantial unrealised investment losses and foreign exchange losses offset the modest technical surplus and led to a post-tax loss of USD 20.9 million (20 February 2015: profit of USD 1.4 million), bringing to an end a run of six consecutive years of profitable operations, which had increased free reserves to USD 300.3 million at February 2015. Whilst recognising that volatility in global stock markets could again lead to substantial investment losses having a significant impact on future operating performance, A.M. Best expects that the Club will maintain risk-adjusted capitalisation at a level in excess of that required to support the current rating, in part due to continued enhancement of its risk management processes.
The Club has a good niche business profile providing protection and indemnity (P&I) insurance for over 32,000 small and specialised vessels operated by 6,400 members worldwide. It is the only one of the International Group of P&I Clubs to focus on smaller vessels. Its consistently high levels of policyholder retention, coupled with underwriting profitability over several years, demonstrate the Club’s ability to compete successfully in challenging conditions within the International Group and the broader marine market. These factors continue to exert positive pressure on the ratings.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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