Skuld sees first negative technical result in 16 years due to large claims

Marine insurance provider Skuld posted its first negative technical result in 16 years due to several mid-sized and large claims. Chief executive Ståle Hansen said that he is "pleased" with the company's "positive" performance in the 2019-20 financial year, which saw strong investment returns towards the end of the year.

Skuld reported a bottom line result of $25 million for its financial year ending February 20, 2020, compared with $11 million in 2018-19. The total combined ratio for the year was 109 percent.

Additionally, the result was impacted by one-off costs associated with previous year closure of Skuld’s Lloyd’s syndicate 1897.

In the mutual book of business, the company’s technical result continued to show the clear need to bring premium levels into line with risk. There were a number of mid-sized claims and some large claims leading to Skuld’s first negative technical result in 16 years.

However, the global investment market volatility favoured Skuld’s investments, with a return of 5.5 percent.

Skuld’s commercial marine liability, as well as Skuld Hull underwriting, contributed positively to the overall result. The company's contingency reserves stand at $466 million.

Hansen, Skuld president and CEO, said: "At the end of a challenging 2019/20 financial year, I am very pleased with the positive result. We remain in a robust financial position as reflected by our contingency reserves. The 2020/21 P&I renewal was firmer than in previous years and having witnessed a decade of rate depreciation driven by market competition and a well-capitalised P&I industry, we will continue to do our best to support members by offering competitive rates. However, our technical result shows the clear need to bring premium levels into line with risk. Our long-term investment strategy remains conservative, which is proven to handle extreme volatility although our results will be affected in the short term.

He added: “I have to mention the global Covid-19 pandemic. Our focus has remained on keeping service levels high and assisting members and clients in the best ways possible as well as keeping our staff and their families safe and well. Obviously, the circumstances call for a great deal more flexibility than the industry has perhaps ever needed before, and the global Skuld team is ready to accommodate our membership to ease their challenges.”