Protection & Indemnity

Japan P&I club | www.piclub.or.jp

2016/17 financial year results

  • Owned tonnage reduced by 0.7%
  • Premiums reduced by 2.3%
  • Operating expenses stable (reduced by 0.6%)
  • Gross and net paid claims reduced by 25.5% and 9.1%
  • 2.2% reduction in net incurred claims
  • USD 25.3 million underwriting surplus
  • Investment return 2%
  • Overall surplus USD 22.2 million (improved by USD 7.9 million since 2015/16)
  • Assets and free reserves increased by 7.8% and 11.4%

Combined Ratio

The Japan P&I Club 2016/17 combined ratio of 85% is better than the market average, and an improvement on its 2015/16 underwriting result of 90%.

Consolidated Financial Year Summary (USD 000s)

2014/15 2015/16 2016/17
Income and Expenditure
Calls and Premiums 233,086 226,280 221,126
Reinsurance Premiums -55,257 -59,229 -49,132
Operating Expenses -20,297 -24,290 -24,134
Operating Income 157,532 142,761 147,860
Gross Paid Claims 187,595 163,741 122,032
Net Paid Claims 133,743 119,902 108,987
Net Change in Provision for Claims 21,892 5,514 13,617
Net Incurred Claims 155,635 125,416 122,604
Technical Surplus (Deficit) 1,897 17,345 25,256
Investment Income 34,981 -13,578 -3,096
Overall Surplus for Year (Deficit) 36,878 3,767 22,160
 
Balance Sheet
Net Assets (market) 428,303 465,589 501,715
Outstanding Claims (P&I Only) 255,933 278,459 293,292
Free Reserves 172,370 187,130 208,423
Entered tonnage (GT, millions) 2015 2016 2017
Owned/Mutual 91 90 89
Owned/Fixed 3 3 3
Chartered/Fixed 12 13 12
Total 105 105 104
       
S&P Rating History 2015 2016 2017
   BBB+   BBB+   BBB+ 
       
Average Expense Ratio (AER) 2015 2016 2017
Five years ending 20 February 9 10 10

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.