Protection & Indemnity

West of England | www.westpandi.com

2016/17 financial year results

  • Owned tonnage increased by 11%
  • Premiums reduced by 2.5%
  • Net paid claims increased by 4.8%
  • 4.8% increase in net incurred claims
  • Underwriting surplus of USD 23.2 million
  • 1% return on investments
  • Overall surplus increased from USD 25.6 million in 2015/16 to USD 37 million in 2016/17
  • Assets increased by 3.4% and Free Reserves increased by 10.8%

Combined Ratio

The West of England’s net combined ratio deteriorated from 84% to 87% between 2015/16 and 2016/17. This is still an extremely positive underwriting position and marginally better than the market average.

Consolidated Financial Year Summary (USD 000s)

2014/15 2015/16 2016/17
Income and Expenditure
Calls and Premiums 216,798 227,614 221,849
Reinsurance Premiums -40,619 -43,927 -40,172
Operating Expenses -35,350 -35,466 -34,688
Operating Income 140,829 148,221 146,989
Gross Paid Claims 184,185 150,528 151,540
Net Paid Claims 147,843 124,853 130,788
Net Change in Provision for Claims -11,563 -6,781 -7,016
Net Incurred Claims 136,280 118,072 123,772
Technical Surplus (Deficit) 4,549 30,149 23,217
Investment Income 13,445 -4,527 13,758
Overall Surplus for Year (Deficit) 17,994 25,622 36,975
       
Balance sheet
Net Assets 653,978 680,166 703,001
Net Outstanding Claims 410,286 403,505 396,489
Free Reserves 243,692 276,661 306,512
Entered tonnage (GT, millions) 2015 2016 2017
Owned / Mutual 68 72.1 82.5
Chartered / Fixed 34 34.9 30
Total 102 107 112.5
       
S&P Rating History 2015 2016 2017
  BBB BBB+ A-
       
Average Expense Ratio (AER) 2015 2016 2017
Five years ending 20 February 15 16 15.15

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.