Despite a challenging trading climate, the American Club says it made excellent progress during its 2017 centennial year
New York: Members attending the 101st annual Meeting of the Club last week heard that its business had developed positively over the previous twelve months, and 2018 had started on an encouraging note.
Joe Hughes, Chairman and CEO of Shipowners Claims Bureau, Inc., the Club’s Managers commented: “2017 was a year to remember for the American Club. The celebration of its centennial proved to be an auspicious backdrop to the success it achieved in many areas of its activities. The Club has commenced its second century of service better placed than ever to exploit the opportunities of the future.”
Following vigorous tonnage growth in 2016, the Club experienced a further uplift of 8% in P&I entries and a 6% increase in FD & D business during 2017. Moreover, the portfolio renewed at February 20, 2018 continued to enjoy an outstanding profile, with a trailing five-year gross loss ratio of only 48%.
The Club recorded a net operating surplus of US$5.7M for the financial year to December 31, 2017 compared with a loss of just under US$2M in 2016. Incurred losses were significantly lower during the year (US$36.3M) compared with 2016 (US$70.8M).
Although reinsurance costs grew during the year, having an impact on net premium earned over the period, management allowances declined by more than 5%. Part of the increased reinsurance expense related to a new program covering the Club’s retained exposures, affording it excellent net claims protection for the current and future years.
Initial claims indications for the 2018 policy year were very favourable, with losses for the Club’s own account after the first four months emerging at a level some 35% better than the previous year at the same stage.
The Club’s investments had generated an overall return of 8.1% during 2017, the best result in nearly a decade. This was a substantial improvement on the return of 2.4% during 2016.
The Club’s Eagle Ocean Marine (EOM) fixed premium facility had performed strongly in 2017, and into the early part of 2018. Annual compound premium growth had been in excess of 20% since 2015. Gross income for the latest facility year, which was to conclude on June 30, was in excess of US$10M. Since inception, EOM had enjoyed a cumulative combined ratio of about 70%, inuring to the benefit of both the Club and its co-venturers at Lloyd’s.
In consequence of these trends, and reviewing the results of the 2015 policy year specifically, the Club’s Board resolved formally to close the year without call in excess of the original forecast. The surplus on closure, of approximately US$12M, would be transferred to the Club’s contingency account. At the same time, in view of its improving development, it was decided to reduce the release call margin for the 2016 policy year from 15% to 10%.
At the annual meeting of the Club’s Directors, which took place immediately after the members’ meeting, J Arnold Witte of Donjon Marine Co, Inc, and Markos Marinakis of Marinakis Chartering, Inc, retired from their positions as, respectively, Chairman and Deputy Chairman of the Board.
George D Gourdomichalis of Phoenix Shipping & Trading SA was subsequently elected as the new Chairman of the Board and Robert D Bondurant of Martin Resource Mgmt Corp was elected as Deputy Chairman.
Witte and Marinarkis were accorded the honour of continuing to hold their former offices emeritus on a special vote of thanks of their fellow directors.