Protection & Indemnity

Britannia | www.britanniapandi.com

2016/17 financial year results

  • Owned tonnage reduced by 4.7%
  • Premiums reduced by 13.2%
  • Gross paid claims increased by 17.1% although net paid claims reduced by 17.5%
  • Net incurred claims reduced by -40.3% (this more than reverses the similar percentage increase in incurred claims between 2014/15 and 2015/16)
  • Reduction in incurred claims allowed a substantial underwriting surplus (USD 45.8m underwriting profit)
  • 3% investment return
  • Very positive underwriting result combined with solid investment return led to a huge overall surplus of USD 88.3 million
  • Free reserves increased by 17.2%

Combined Ratio

Britannia’s reported net combined ratio for 2016/17 was a very positive 75%. In the 2016/17 financial year however Britannia reduced their estimated total premiums by USD 14.5m. If the full estimated total premium was charged in this year, Britannia’s combined ratio would have improved even further, to 70%.

Consolidated Financial Year Summary (USD 000s)

2013/14 2014/15 2015/16
Income and Expenditure
Calls and Premiums 269,726 260,272 225,854
Reinsurance Premiums -48,941 -43,413 -39,498
Operating Expenses -24,963 -26,986 -25,719
Operating Income 195,822 189,873 160,637
Gross Paid Claims 221,976 248,054 290,362
Net Paid Claims 196,557 198,512 163,748
Net Change in Provision for Claims -63,566 -6,236 -48,959
Net Incurred Claims 132,991 192,276 114,789
Technical Surplus (Deficit) 62,831 -2,403 45,848
Investment Income 10,838 -30,468 42,498
Overall Surplus for Year (Deficit) 73,669 -32,871 88,346
       
Balance sheet
Net Assets 1,342,505 1,294,314 1,406,583
Net Outstanding Claims 796,938 781,618 805,541
Free Reserves 545,567 512,696 601,042
Entered tonnage (GT, millions) 2015 2016 2017
Owned/Mutual 109 106 101
Chartered/Fixed 27 36 15
Total 136 141 116
       
S&P Rating History 2015 2016 2017
  A A A
       
Average Expense Ratio (AER) 2015 2016 2017
Five years ending 20 February 8 9 9
NB the above figures include the combined figures of Britannia and Boudicca to show the complete group picture
The Assets of Boudicca included in the combined results above, are as follows:
Average Expense Ratio (AER) 2015 2016 2017
174,300 166,300 221,700
Britannia is entered into a reinsurance contract with Boudicca Insurance Company Limited, located and regulated in Bermuda.
Boudicca Insurance holds assets in a way that cannot be dissipated to the detriment of the reinsurance contract with Britannia.
This is intended to be a tax efficient vehicle for a proportion of Britannia’s reserves.
For the sake of effective comparison, we have consistently included Boudicca’s assets in the figures set out in our summary page for Britannia.

Combined Ratio

Combined ratios provide a direct comparison of club underwriting performance. The combined ratio is essentially the net loss ratio for the club and is defined as follows:

Combined ratio =

(Net incurred claims + operating expenses)
(Premium – reinsurance costs)
  • A combined ratio of 100% represents an underwriting break-even position
  • Anything in excess of 100% would be an underwriting loss
  • A combined ratio less than 100% would represent an underwriting surplus.

Average Expense Ratio (AER)

Average Expense Ratios (AERs) were introduced in 1999 following pressure from the European Commission in an attempt to enable direct comparisons of operating costs between clubs within the International Group. The formula that all clubs are required to adhere to when calculating their AER figure is as follows:

The AER formula is the
five-year average of:

(Operating expenses x 100)
(Premium income + Investment income)

In principle the AER is a reasonable idea, but in reality it is only ever a very approximate guide to the relative operating costs of individual clubs. For example different membership profiles, disproportionately high levels of premium or investment, whether the club owns or rents their office space, how much the club spends on loss prevention, global office network, member portals etc all have an impact on the AER.