A.M. Best Affirms Ratings of The Shipowners’ Mutual Protection and Indemnity Association (Luxembourg)

A.M. Best Europe - Rating Services Limited has affirmed the financial strength rating of A- (Excellent) and issuer credit rating of "a-" of The Shipowners' Mutual Protection and Indemnity Association (Luxembourg) (the Club).

The outlook for both ratings remains stable.

The ratings reflect the expectation that the Club will maintain excellent risk-adjusted capitalisation throughout 2013 and 2014. Although the Club is a mutual, A.M. Best believes that the members are supportive of its business approach, which is to focus on underwriting profitability and to retain operating surpluses. Accordingly, good operating performances over the last four years have increased free reserves from USD 95.6 million at February 2009 to USD 275.3 million at February 2013. Whilst recognising that large claims or substantial investment losses could have a significant impact on the Club's future operating performance, A.M. Best expects this level of free reserves to be maintained in the near term at least.

The Club has a good niche business profile providing protection and indemnity (P&I) insurance for over 32,000 small and specialised vessels operated by 6,200 members worldwide. It is the only one of the International Group of P&I Clubs to focus on smaller vessels. The Club's business is greatly diversified in terms of tonnage, with eight categories of vessels entered from 13 distinct geographic areas. In addition to the P&I cover written within the International Group pool, the Club offers members with smaller vessels, who do not require the high limits available through the pool, cover on a fixed premium basis, which enables the Club to compete with local insurers.

Continued strong operating performance and increased free reserves could lead to positive rating actions in the next year or two, but unexpectedly poor operating results or a material decrease in the Club's free reserves could put negative pressure on the ratings.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at ambest.com/ratings/methodology.

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.

A.M. Best Company is an insurance rating and information source.

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