Protection & Indemnity

North of England | www.nepia.com

North "only" highlights

  • Owned tonnage increased by 6.9%
  • Premiums reduced by 9.6% (although without the 5% premium return in 2016/17, this would have only been a 6% reduction)
  • Gross and net paid claims reduced by 27.6% and 5% respectively
  • 30.7% increase in total net incurred claims (though still 26% less than the 2014/15 year level)
  • USD 19.5 million underwriting surplus

Highlights of the combined results for the merged North Group

  • Overall group investment return 2.8%, however the group had a further USD 30.2 million pension deficit which affected the overall results materially
  • As a result, despite positive underwriting and investment results the overall increase in the North’s free reserves was 0.6%

Combined Ratio

The North ‘only’ combined ratio, as reported, was 93.2%. North ‘only’ combined ratio, excluding the 5% P&I premium rebate (underlying result), would have been 88.8%. The respective overall combined ratios for the North Group were 97.5% (as reported) and 93.5% (excluding the 5% P&I premium rebate).

Consolidated Financial Year Summary (USD 000s)

2013/14 2014/15 2015/16
Income and Expenditure
Calls and Premiums 394,876 385,673 348,561
Reinsurance Premiums -78,381 -75,852 -63,767
Operating Expenses -49,703 -50,463 -50,730
Operating Income 266,792 259,358 234,064
Gross Paid Claims 318,825 337,702 244,463
Net Paid Claims 252,412 240,107 228,172
Net Change in Provision for Claims 38,826 -75,976 -13,601
Net Incurred Claims 291,238 164,131 214,571
Technical Surplus (Deficit) -24,446 95,227 19,493
Investment Income 8,921 -3,201 -6,134
Overall Surplus for Year (Deficit) -15,525 92,026 13,359
       
Balance Sheet
Net Assets 959,050 975,024 977,154
Net Outstanding Claims 662,301 586,249 575,018
Free Reserves 296,749 388,775 402,136
Entered tonnage (GT, millions) 2015 2016 2017
Owned / Mutual 127 131 140
Chartered / Fixed 43 54 50
Total 170 185 190
       
S&P Rating History 2015 2016 2017
  A A A
       
Average Expense Ratio (AER) 2015 2016 2017
Five years ending 20 February 12 12 12

North acquisition of Sunderland Marine

North acquired the Sunderland Marine on 28 February 2014.
For the sake of consistency, the table and graphs show the income, expenditure and balance sheet results for North only.

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.