Notices to Members

No. 10 2019/2020 - Class 1 (P&I) and Class 2 (FD&D) Policy Year Balances and Financial Position

October 2019

Dear Sirs,

The Board reviewed the latest Class 1 and Class 2 figures and the Club’s mid-year financial position at their meeting on 16 October 2019.

1) Financial Overview 

Members’ claims have developed as forecast in the year to date but a higher than expected cost of other Clubs’ Pool claims, on Policy Year 2018 in particular, continues to put pressure on the Club’s underwriting result. The operating performance is forecast to be better than both the preceding financial years but the prolonged softening in premium rates experienced across the market mean that a combined ratio above 100% is forecast.

The investment return in the first six months of the year has been strong and the return as at 20 August 2019 of 3.9% is more than sufficient to cover the forecast underwriting deficit so a modest increase in Free Reserve is anticipated.

The Club’s capital position remains very strong, a point reflected in the recent re-confirmation of the Club’s Standard & Poor’s rating of A-. However, the Club is mindful of a reliance upon investment return to subsidise underwriting deficits and therefore adjustments to premium levels will be required in the future across the industry to address this unsustainable trend.

2) 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)

2017/18 – Release call maintained at 0% of the advance call
2018/19 – Release call maintained at 7.5% of the estimated total mutual call
2019/20 – Release call maintained at 15% of the estimated total mutual call

Class 2 (FD&D)

2016/17 and 2017/18 – Release calls maintained at 0% of the advance call
2018/19 – Release call maintained to 7.5% of the estimated total mutual call
2019/20 – Release call maintained at 15% of the estimated total mutual call

A further Notice to Members will be issued later in the autumn to detail the Club’s approach to renewals for the year beginning on 20 February 2020 and any changes in the Group reinsurance rates and limits.

Yours faithfully,


For: West of England Insurance Services (Luxembourg) S.A.

(As Managers)

T J Bowsher
Group CEO