American P&I Club reports “steady progress”

JUNE 22, 2012 — At its annual meeting in New York yesterday, the American P&I Club reported “steady progress” during 2011, and into the first half of 2012

Entered tonnage grew last year. But premium levels were reduced to an extent by the replacement of older, higher-rated vessels with newer ships paying lower rates.

Retained claims emergence had been subdued during the early part of 2011, much in line with 2010, but trended up in the second half. However, it was noted that 2012 was developing favorably, early results being even better than those of 2010 at the same stage.

The level of claims on the International Group’s pool during 2011 was a source of concern. Whether the exposure for the year emerged as an exceptionally adverse one-off or as part of a rising longer-term trend, remained to be seen.

Club’s funds under investment generated a return of 3.5 percent overall during the 12 months to December 31, 2011, a respectable result given the extreme volatility of the capital markets over the period. A measured lowering of the risk in the portfolio was undertaken during the second half of the year.  

An unrealized $5.8 million loss on investments recorded at year-end reversed itself in the first quarter of 2012, but nonetheless eliminated a small operating profit for the 2011 financial year, resulting in a small reduction in members’ equity compared with the figure of 12 months earlier. This stood at $60.2 million at December 31, 2011 ($63.6 million at December 31, 2010). However, by March 31, 2012, the figure increased to $66.2 million.

Free reserves per ton at the end of the first quarter were approximately $4.10. This was higher than 12 months earlier and compared favorably with free reserves of other International Group clubs at a similar stage of development.

Arnold Witte, president of Donjon Marine Co., Inc. and chairman of the board of the American Club, told the annual meeting: “2011 was a challenging year for the American Club – as it was for its members who continue to feel the effects of a lethargic global economy and desperately anemic freight markets. Nonetheless, and with its characteristic energy, the club continued to make progress across a wide variety of areas, operationally, financially and, most importantly, in the provision of service to its members. The club remains optimistic as to its future which continues to hold many exciting prospects.”

Joe Hughes, chairman and CEO of the club’s managers Shipowners Claims Bureau, Inc., said: “The American Club did well in all its core constituencies during 2011 despite an extraordinarily difficult economic climate, especially for the shipping industry itself. The club’s business remained steady throughout the period: tonnage and membership grew modestly, pricing remained solid despite some reduction in overall revenue because of the “churn effect”, and retained claims developed in line with expectations. Pool exposures for 2011 were high, but whether this year proves the exception rather than the rule remains to be seen.  

“One of the highlights of the year was a steady growth of the club’s fixed-premium facility, Eagle Ocean Marine. The initiative has got off to a good start, and its early success augurs well for the further development of the club – and in particular its product diversification – over the years ahead. Overall, the progress made during the year, and within the first half of 2012, has provided a firm foundation for future success. We look forward with optimism to the club’s centennial, now less than five years away. And we remain dedicated to the service of our members.”.