“No comprise on quality” was the message at The Swedish Club’s 4 June Annual General Meeting in Gothenburg. Managing Director Lars Rhodin defined quality in a world undergoing unprecedented change. He told members: “We can expect continuing low investment returns and  increasing capital costs. Our response is clear: an even more determined effort to generate underwriting surpluses in all sectors, by means of an even sharper focus on strong underwriting discipline.”

Delivering his report to members, Lars Rhodin offered words of encouragement for 2009. “Things are developing satisfactorily so far this year. The overall trend has been favourable in the first half. So far, so good!”

One encouraging development, now taking hold, is a long-awaited decline in claims inflation – fuelled largely by the prolonged “shipping boom”. The impact will be more visible on the Hull side rather than on the P&I side. The Club’s Managing Director observed that cargo-related claims had jumped from 10% of total P&I claims value in the 2003-07 period to 45% in 2008. He said that the impact of recession, however, “will be felt more on the claims side than in the level of premiums.” He pointed to the fact that shipping “remains an easy target” for regulators and that the industry is firmly associated with issues of great environmental sensitivity. He added: “We continue to see the erosion of traditional maritime defences. The pressure, on the P&I side, is driven by governments determined to ensure that owners shoulder more liability.”

In his overview of 2008, Lars Rhodin reported a combined operating  surplus of USD 7.2 million, as against a USD 2.3 million loss in 2007. Indeed, the Swedish Club generated a combined underwriting surplus of USD 37.7 million  but there was also a negative financial outcome of USD 31.9 million, largely accounted for by unprecedented falls across all classes of investments. Nevertheless, the Club increased free reserves to USD 107 million, the highest level in the past five years. Lars Rhodin said: “This Club has faced the ‘perfect storm’ and, in doing so, has shown that it has  resilience.

“We have taken swift action to derisk our position, moving from a USD 25 million risk value in early 2008 on the investment side to a level of just over USD 5 million today. In early 2008 33% of our investment portfolio consisted of equities. By the end of the year this had fallen to 12%, half of which has resulted from active decisions to sell.

“Our objectives for 2009 are to achieve surpluses across all classes of business, including Hull. Our Hull Action Plan is doing well. We expect to turn 2008’s marginal Hull loss into a surplus for the current year. Our objectives are achievable, as we will continue to adhere to strict underwriting principles. Premium income must match risk exposure.”

As at 1 June, the P&I-entered fleet (including charterers’ liability) totalled 1,229 vessels of 37.5 million GT. In addition, 575 vessels (21.5 million GT) were entered for FD&D and the Hull & Machinery portfolio totalled 1,352 vessels of 50 million GT.

During the AGM two new Board Members were elected: Kim Kyung Soo, Deputy CEO of IMC Corp, and Anders Källström, CEO of Rederi AB Transatlantic.

Contact:
Henric Gard. The Swedish Club, Telephone: +46 31 638 400
TRS Public Relations, Telephone: +44 1304 813 366

The Swedish Club
The Swedish Club was founded in 1872. It is a leading mutual marine insurance company, owned and controlled by its members. The Club writes Protection & Indemnity, Freight Demurrage & Defence, Hull & Machinery, Loss of Hire, War Risks and any additional insurances required by shipowners. The head office is located in Göteborg, Sweden, and branch offices are located in Piraeus, Hong Kong and Tokyo.

As at 1 June the Club covered 1,229 vessels for P&I, 575 vessels for FD&D and 1,352 vessels for Hull & Machinery.