No.5 2024/25 - Class 1 and Class 2 Policy Year Balances and Financial Position at 20 February 2024
The Report and Accounts for the year ending 20 February 2024 for The West of England Ship Owners Mutual Insurance Association (Luxembourg) were approved, on 15 May 2024, by the Board who are pleased to report a positive year for the Club with all key financial metrics showing an improvement on the prior year.
You can view our Financial Update video here and the full Report and Accounts 2024 will be published in due course.
Financial summary for year-ending 20 February 2024
- Combined ratio 94.5% (2023: 96.7%)
- Underwriting surplus USD 14.7m (2023: surplus USD 8.0m)
- Gross earned premiums USD 325.6m (2023: USD 293.2m)
- Earned premiums, net of reinsurance USD 268.7m (2023: USD 244.7m)
- Claims incurred, net of reinsurance USD 196.7m (2023: USD 187.7)
- Investment return gain of USD 30.8m (2023: loss of USD 28.3m)
- Free reserve USD 276.3m (2023: USD 230.8m)
- Capital - solvency coverage 195% (2023 176%)
Financial commentary
Gross premium increased by 11% to USD 325.6m reflecting both an improved rating environment and strong support from the Membership. Despite the increased size of the Club’s entry, Members’ own claims in 2023 are markedly lower in cost at the twelve-month stage than any year since 2019 at USD 112m.
The cost of IG Pool claims for Policy Year 2023 was lower than anticipated for the second consecutive year. While more claims were notified to the IG than in Policy Year 2022, their cumulative cost was less than expected. West’s Pool share remains at just 6.56% and the combination of these two factors meant the incurred cost of Pool claims to West was much lower than in recent years. This had a favourable impact on the Club’s operating performance.
The improvement in the Club’s technical performance resulted in an underwriting surplus of USD 14.7m and a combined ratio of 94.5%, the third year in a row it has improved, and the best result since 2017.
After two years of adverse investment performance caused by rising interest rates, falling inflation across the main developed economies and expectations for more accommodative monetary policies supported financial markets from late 2023. This resulted in strong performances across all asset classes and the Club’s investment portfolio returning a positive 4.6% for the year.
The Free Reserve increased to USD 276.3m and the Club’s capital position improved under all measures and the solvency coverage increased to 195%, the highest it has been since February 2020.
Policy Years and Release Calls
In setting the level of release call percentages for each open Policy Year for Class 1 and Class 2, the Board has taken into account the Club’s overall capital position and all the factors that are set out in Clause 8 of the International Group Agreement:
Class 1 (P&I)
2021/22 – Closed without further call
2022/23 - Release call reduced to 7.5% of the estimated total mutual call
2023/24 – Release call maintained at 15% of the estimated total mutual call
2024/25 – Release call maintained at 15% of the estimated total mutual call
Class 2 (FD&D)
2020/21 – Closed without further call
2021/22 – Release call reduced to 0% of the estimated mutual call
2022/23 – Release call reduced to 7.5% of the estimated mutual call
2023/24 – Release call maintained at 15% of the estimated total mutual call
2024/25 – Release call maintained at 15% of the estimated total mutual call
For: West of England Insurance Services (Luxembourg) S.A.
(As Managers)
T Bowsher
Group CEO