West of England P&I Club reports first underwriting surplus in five years

The club said it had recorded its first underwriting surplus for five years owing to “substantially lower” claims than forecast in the first six months including no claims across the International Group Pool.

“Additionally, the claims for prior years have developed more favourably than expected notwithstanding latent Pool claim development from other Clubs,” said West P&I.

The club reported a combined ratio of 97.9% at its 2022 mid-year point.

West’s investments took a hit in the first half of 2022 as central banks moved to curb inflation, leading to fixed income and equities returning negative results. West’s reported investment return was minus 2.9%.

The club said it remained protected from the turbulent market owing to 165% solvency coverage thanks to its asset-liability matching strategy.

Late in 2021, West committed to de-risking and announced a 15% General Increase for 2022 as a means of facing rising costs and lower returns from investments. The club hailed the difficult renewal as a success, with retention of 98% of those offered renewal terms.

Francis Corrigan, CFO at West, commented: “There is no doubt that the robust and decisive action taken at the 2022 renewal has had the desired effect on the Club’s operating performance and we are pleased to report a combined ratio of 97.9%. It is not a time for complacency, however. Inflationary pressures are growing and West’s result, like all Clubs, benefits from what is an exceptional Pool year so far. While this is welcome for the industry, it cannot be expected to be repeated.”

Related:In conversation with Dorothea Ioannou incoming CEO of the American P&I Club

Tom Bowsher, Group CEO at West, commented: “The decisions taken at the 2022 renewal were extremely difficult for a Club that prides itself on the strength of its relationships but our members understood the reasons. This has been backed by strong support in the current Policy Year with our gross premium increasing to its highest ever level at around $285m.”