The American Club reported solid progress across all business lines at its recent annual meeting, held virtually due to the COVID-19 pandemic.
The insurer noted that while the pandemic caused challenges for the global supply chain during the first half of 2020, there was greater stability as the year went on. The American Club grew by 5% in premium during 2020, and that momentum continued into the new year.
Eagle Ocean Marine (EOM), the club’s fixed premium facility, saw its revenue and reach increase substantially in 2020.
“The 17% compound annual growth rate of premium recorded over the previous three years had been attended by sound underwriting results, producing an aggregate combined ratio since inception of under 80%,” the American Club said.
American Hellenic Hull, the club’s Cyprus-domiciled hull and war risks underwriting subsidiary, saw further price and balance sheet strengthening last year. The club said it expected the subsidiary’s profitability to rise in the months ahead.
The American Club’s attritional claims exposures during 2020 improved over 2019. However, the elevated loss trend’s experienced by the International Group’s pool in recent years continued in 2020. The American Club said that 2020 “was likely to emerge as the most expensive pooling year ever recorded.”
The club posted a 5.4% return on its investment portfolio for 2020. That contributed to a year-end GAAP surplus of only $3.75 million (around SG$5.04 million) less than was recorded on a restated basis for 2019. However, the year-over-year reduction in surplus was about $6.8 million on a non-restated basis.
The club’s combined ratio for 2020 was 112% (116% without the accounting charge). The club said the figure highlighted the need for greater sustainability in premium pricing.
The American Club adopted a 5% general increase for the 2021 renewal. This drove revenue growth of about 7.5%, accounting for deductibles and other changes to insuring conditions. The club also noted that the risk profile of the renewing membership was favourable, implying a positive claims outlook for the future. Growth continued into the early part of this year, with a 7% increase in tonnage entered for Class I (P&I) risks during the first three months of the policy year.
At the club’s annual meeting of directors, which took place immediately after that of the members, George D. Gourdomichalis of Phoenix Shipping and Trading S.A. and Robert D. Bondurant of Martin Resource Mgmt. Corp. were both re-elected as board chairman and deputy chairman, respectively. Dorothea Ioannou was re-elected as secretary and Lawrence J. Bowles was reappointed as general counsel.
“2020 was a uniquely difficult year,” Gourdomichalis said. “The disruption caused by the COVID-19 pandemic brought unprecedented challenges both to global commerce in general and to the conduct of insurance business in particular. Nevertheless, progress was achieved in every sphere of the club’s affairs, notwithstanding adverse operating conditions.
“The club remains well-placed to exploit the many opportunities it sees in its future. In doing so, it will rely, as it always has, on the enduring support of its members, to whom my fellow directors and I extend our sincere thanks and appreciation.”
“2020 was a year many people would prefer to forget,” said Joe Hughes, chairman and CEO of Shipowners Claims Bureau, the American Club’s manager. “The rapid onset of the COVID-19 pandemic created an especially difficult business environment for virtually everyone, everywhere. And nowhere was the impact of the pandemic felt more keenly than at sea. In looking back over 2020, a special thought must surely go to seafarers, upon whose work the livelihood of the entire maritime community depends.”
Hughes noted that technical underwriting results among P&I insurers remain under pressure, saying it highlighted the need for more sustainable pricing in the future.
“Nevertheless, despite the stresses of the past 12 months, the American Club looks forward with its characteristic optimism to a future of continuing opportunity,” he said.
