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Financial Profile

WE PUT FINANCIAL STRENGTH AND STABILITY FIRST

Our strategy is as straightforward as it is simple. We make sure that we hold enough capital to provide our Members with a high enough level of security to meet their claims. A strong balance of capital also offers greater certainty of what costs might be, not least because it all but eliminates unbudgeted calls. In fact, we haven’t had to make an unbudgeted call in over 40 years.

On February 20, 2017, our capital stood at USD 379m. But we also benefit from a reinsurance arrangement with Boudicca Insurance Company Limited, which is based in Bermuda. Boudicca’s surplus investment assets – that is to say, those that are not backing actual reinsurance liabilities – are available to support future claims by Britannia. This means that, in effect, these surplus investment assets act as an additional general reserve. On February 20, 2017, these surplus assets were valued at USD222m. So, if you add Britannia’s capital to Boudicca’s surplus assets, you will see that we have total reserves of USD601m to call upon.

AN ‘A’ CREDIT RATING FROM STANDARD & POOR’S

Standard and Poor’s are regarded as the world’s leading independent credit ratings agency. In August 2017, they confirmed their ‘A’ long term financial strength (‘AAA’ capital) and counterparty credit ratings for our P&I Club. Standard and Poor’s went on to say that the outlook for Britannia ‘looks stable’. This is based on their expectation that our capital adequacy will remain at a level that is consistent with S&P’s ‘AAA’ benchmark. Our stronger than ever balance sheet also led S&P to revise its assessment of Britannia upwards, from ‘strong’ to ‘exceptional’.

WE’RE CONSERVATIVE WITH OUR INVESTMENTS

We employ a cautious investment strategy. Our aim is always to preserve capital yet, at the same time, achieve a respectable rate of return, one that supports our underwriting activity. As you might expect, this calls for us to invest in a diverse range of assets. In detail, these are cash, to maintain liquidity, and five types of bond: government, conventional, index-linked, corporate and absolute return. In addition, we invest in diversified growth funds. On February 20, 2017 these investments reached a total of USD 952.3m. Look at the chart below to see a breakdown of the different asset classes that make up this total.

In the year to February 20, 2017, the return generated by our investment portfolio was USD 28.7m. That equates to a gain of three per cent.

WE’RE COST EFFICIENT

Because we are efficiently managed, our cost base is one of the lowest amongst international P&I Clubs. As of February 20, 2017, our average ratio of expense was 9.42 per cent.

 KEY FINANCIAL DATA


20 FEB 2018
(GT million)


20 FEB 2017
(GT million)


20 FEB 2016
(GT million)

ENTERED TONNAGE (OWNED) 107.0 100.9 105.9
ENTERED TONNAGE (CHARTERED) 20.0 15.0 35.5
USD(000) USD(000) USD(000)
CALLS AND PREMIUMS 208,147 225,854 260,272
NET CLAIMS INCURRED (93,552) (130,268) (167,654)
INVESTMENT INCOME 48,626 28,716 (23,500)
NET OPERATING EXPENSES (25,666) (25,719) (26,986)
NET INCOME AFTER TAXATION 80,615 32,946 (24,871)
FREE RESERVES* 429,957 379,342 346,396
TOTAL ASSETS 1,595,957 1,574,791 1,687,087
NET LOSS RATIO 61.4% 80.9% 86.1%
AVERAGE EXPENSE RATIO 9.73% 9.42% 9.12%
STANDARD & POOR’S RATING A (stable) A (stable) A (stable)

*The Association also retains the benefit of its reinsurance contract with Boudicca Insurance Company Limited

USD(000) USD(000) USD(000)
ASSETS IN BOUDICCA 211,600 221,700 166,300