The UK P&I Club (the Club), one of the oldest shipping protection and indemnity insurance mutuals, announces its results for the year ended 20 February 2012. Highlights Dino Caroussis, Chairman of the UK P&I Club, said: 
“We are very pleased that for the second financial year running, the UK Club is announcing a balanced underwriting result with a combined ratio, the ratio of claims and expenses to premium received, of 97 per cent. This very positive result demonstrates the Club’s commitment to its long term target of maintaining a combined ratio of 100 per cent or below. “This has meant that this year the Club has produced an operating surplus of $11 million for the 2012 financial year, generating a further increase in the free reserves and capital to $486 million. This level of capital puts our Club’s financial strength at the top level of its peer group in the P&I sector. “Continued improvement in previous policy years’ claims reserves has brought the average of the last four years into a position of underwriting balance, with average combined ratios below 100%. Early indications are that 2011 will be a relatively low claims year. “Our return to the top level of the P&I market has been rewarded by increased support from new and existing Members. Tonnage was up over the year and now stands at 112 million gross tons of owned tonnage and around 80 million gross tons of chartered tonnage.” Hugo Wynn-Williams, chairman of Thomas Miller P&I, the Club’s managers commented,: “These results are particularly satisfying as they come in a year that has seen results elsewhere in the market adversely affected by an increase in claims and volatile investment returns. “Since 2008, the ongoing shipping recession has significantly dampened the volume of claims. While this has been beneficial to the Club, we have actively contributed to this improvement through careful management of our risks: carefully monitoring the Club’s entry criteria, running an extensive loss prevention program, and maintaining strong claims management. “Finally, these ongoing activities are backed up by specialist reinsurance designed to avoid potential future claims spikes, which may arise from increased shipping activity.” Reduced Claims Frequency Offsets Claims Inflation The improved claims position on all policy years since 2008 was supported by an overall reduction in the number of claims. The 2011 policy year saw 5 per cent fewer claims than 2010, itself a low year for the number of claims, and some 30 per cent fewer than in 2007. During the high claims levels of 2006 and 2007, the UK Club’s share of claims on the International Group Pool was well below its share of the total Pool fleet. The UK Club has maintained the largest credit balance on the Pool. Despite an improving claims position, the Club has maintained a prudent approach to claims reserving. The underlying long-term average cost per claim has been inflating at approximately 5 per cent each year. Some categories of claims, e.g. death and personal injury, have been inflating at rates of up to 15 per cent. Where shipping markets remain depressed, the total cost of claims is expected to remain lower. While improvements in regional markets e.g. intra-Asian trade or in particular shipping sectors could change that outlook, the Club will ensure that premium levels match likely claims trends at subsequent renewals.