Fourth consecutive year of growth as TT Club posts strong results
- Date: 28/03/2006
28 March 2006
TT Club has announced a US$23.2 million surplus after tax for its 2005 financial year, marking a further strengthening of its finances and another successful trading period, during which it has increased its leading market share. The result boosted total surplus and reserves by 25.9 per cent to US$112.7 million.
Gross earned premiums rose 9.5 per cent, despite a marginal reduction in premium rates, to US$196.8 million on the back of a high level of business retention and strong organic growth. Although TT Club saw an increase in reported claims in 2005, partly as a result of the exceptional severity and frequency of Atlantic hurricanes, the Club posted sound underwriting results and its reinsurance programme limited the mutual’s exposure to windstorm and other claims.
TT Club Chief Executive Officer, Paul Neagle disclosed that, while the cost to the Club in gross claims of hurricanes Katrina, Rita and Wilma was just under US$60 million, after deducting specific, excess of loss and quota share reinsurances, the net cost was reduced to approximately US$2.5 million.
“While these amounts are significant by Club standards – Katrina being our largest ever gross claim – both the gross and net figures are relatively small when compared to the total insurance market loss, which is currently estimated in excess of US$66 billion,” Mr Neagle said.
He confirmed that the structure of the Club’s reinsurance programme has been maintained for 2006 but warned that the cost of this protection has risen considerably in response to the last Atlantic hurricane season, which saw a record total of twenty-seven named Atlantic storms including the first ever recording south of the equator.
Mr Neagle also highlighted the reversal of the previous two years’ currency trend, which had seen a weakening of the US dollar against other major currencies, especially the euro and sterling. Whilst interest rates and equity markets both rose significantly in 2005 and generated investment gains for the Club, these were eliminated by the fall in value of those two major currencies compared to the dollar.
However, this did not detract from an otherwise successful year, reported Mr Neagle. He pointed to a year of buoyant international trade, which had fuelled the trend towards consolidation, with a number of significant mergers and acquisitions being completed in the ship operator and ports and terminals sectors.
“That process has boosted rather than undermined the Club’s position as the market leader in those sectors,” Mr Neagle said. He added: “We remain conscious, however, of the need to build our financial strength to meet the insurance requirements of these mega-operators, while maintaining our superior claims handling and loss prevention services that all our Members demand and have come to expect from the Club.”
In keeping with its principles as a mutual insurer, TT Club has stepped up its loss prevention activities on several fronts in 2005.
Firstly it has distilled its experience and the lessons learned from the Gulf hurricanes, and other major windstorms such as typhoon Maemi, by producing a booklet designed to help Members to prepare for and mitigate the effects of such events. The publication is being distributed free of charge to all Members.
Secondly, the Club has held further seminars worldwide on hazardous cargoes, aimed at increasing awareness of the importance of the correct declaration, packing, labelling and stowage of such cargoes to avoid accidents both at sea and on land. “The risk to personnel and property from leakage of toxic chemicals or fire and explosion of inflammable goods is enormous and has been demonstrated in a number of high profile marine casualties in recent years,” Mr Neagle observed.
In October 2005 the Club staged a seminar in Hong Kong for Asian ship operators on the subject of North American chassis liabilities and insurance. “This is a complex area of the law,” noted Mr Neagle, “covering an operational sector in which the Club has experienced several large and sometimes horrific bodily injury claims. “
Turning to corporate governance issues, TT Club Chairman Sir David Thomson reported that the major changes to its corporate governance that were implemented in June 2004 have worked successfully during their first full year of operation. The Board has updated the Club’s Risk Log and has finalised its first Individual Capital Assessment (ICA), which obliges the company to assess and maintain the amount of capital required to meet the set of risks that it faces. Sir David said that based on the ICA results, the Club is “sufficiently well capitalised to withstand those risks with an appropriate margin of prudence. “
Sir David concluded: “After four consecutive years of growth, we now have a higher margin of solvency, a lower dependence upon reinsurance, a modern system of governance and a very strong market position. I am confident that the Club remains well equipped to meet its challenges and its financial targets in 2006 and beyond.”
ENDS [Note to Editors: The TT Club is the international transport and logistics industry's leading provider of insurance and related risk management services. Established in 1968, the Club's membership comprises ship operators, ports and terminals, road, rail and airfreight operators, logistics companies and container lessors. As a mutual insurer, the Club exists to provide its policyholders with benefits, which include specialist underwriting expertise, a world-wide office network providing claims management services, and first class risk management and loss prevention advice. The full Annual Report and Financial Highlights can be reviewed or downloaded and printed from the home page of the web-site [www.ttclub.com by accessing the menu item Publications/Annual reports.
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