Annual report and accounts

2011 Chairman's Statement

Dear Members,

In an ongoing difficult global economy, ITIC has continued to increase its membership and, despite record levels of claims, has increased its level of free reserves at May 2011 by over 17%.

Investment returns have once again been strong following last years returns of 7.1% with a further 10.6% this year. The Club's reserves have grown to a record US$ 79.2m which is, once again, comfortably higher than the current regulatory requirements.

The Board's underwriting strategy has meant that, once again, the Club has not needed to make any general increase in premium, despite significant claims and legal costs inflation.  The Club continues to provide invaluable support to its Members with their claims and currently holds claims reserves of over US$ 48.5m in respect of  1,250 open claims files.  Of course, Members with poor claim records are expected to pay an appropriate premium and/or increase in their deductible at renewal.  

This year, the Club has returned to the Members a continuity credit of US$ 6.2m which is slightly below the previous year's US$ 6.5m. The Board recognised the need to continue to be prudent in a challenging market whilst noting the strength of the Club’s reserves.  There is still some uncertainty about the impact of Solvency II on the future capital requirements of the business so it is desirable to maintain strong reserves at this stage.  However, in the current year, the Board agreed to maintain the level of credit and return between 5.0% and 17.5% of the expiring premium to renewing members.  Looking forward, the Board and the Managers expect to be able to pay continuity credits for many years to come to add to the US$ 67.3m which has been returned to Members since the credit payments began over 14 years ago.

You will be pleased to know that the Board has decided to close the 2009 policy year, meaning that no additional premium can be requested from Members for this or any earlier year.  The only year remaining open is 2010.

ITIC continues to maintain its competitive advantage as a specialised professional indemnity insurer by virtue of its breadth of cover and the service that it offers to its Members. The increase in free reserves will continue to serve ITIC well as it is very likely that a substantial increase in capital  will be required under the new risk management framework encompassed under Solvency II.

Harry Gilbert
Chairman
International Transport Intermediaries Club Ltd