“We are naturally disappointed S&P has taken this step to revise our rating at this time,” he said.
“The estimated cost of pool claims is the largest in history. This, coupled with premium levels that have failed to keep up with rising claims, has resulted in this change of rating from S&P.”
In a press release, Taylor noted that the UK Club, despite its revised rating, was still in the ‘A’ range, regarded as healthy by the ratings agency.
“The UK Club remains very strong financially, and this has allowed us to take a measured approach to addressing inadequate premium rates,” he said.
“The combined ratio of 115% for the first half of 2021 was in line with the Club’s plan, and the Club remains in a strong competitive position.”
Taylor noted that the whole of the P&I sector had been hit by the same factors and said the resulting increases in combined ratios had put pressure on ratings across the board.
P&I premium rates have led to an average combined ratio across the sector of more than 120% last year.
Moreover, the market now faces increasing pool claims and reinsurance costs, as well as a flow of Covid-19 claims.
As a result, rates across the sector will need to increase, according to the UK P&I Club.
