Britannia P&I club downgraded by S&P
Ratings agency assessment ‘disappointing’ for marine mutual, Cutler confirms
International Group affiliate said to ‘lag behind peers’ on underwriting performance
STANDARD & Poor’s has downgraded its financial strength and issuer credit ratings for Britannia P&I Club from A to A-, citing “continued poor operating performance” as grounds for the move.
The International Group affiliate is likely to report technical losses again this year, the ratings agency added, although investment returns are expected to result in modest net income.
S&P also predicted that the marine mutual is unlikely to achieve breakeven technical results over the next two years, compared with its previous forecasts and expectations.
However, it switched the club from negative to stable, indicating its expectation that Britannia will maintain capital adequacy above its 99.99% confidence level.
The move comes after Britannia recently announced a rate hike of 7.5% for the coming renewal round, the highest of any IG insurer, although the increase was offset by a $30m cashback for renewing entries.
Chief executive Andrew Cutler — who is also chair of the IG — argued in a circular to members: “The re-rating by S&P is disappointing. However, the Britannia Group boards stand by their decision on the calls recommendations for the 2025/2026 policy year and a further capital distribution.
“Our competitive position remains strong, evidenced by continued growth in our membership across the fleets we have targeted to renew as well as new members joining the Britannia Group.”
But a research update from S&P argued that despite improved underwriting results in fiscal 2023 and fiscal 2024, Britannia’s performance “lags that of its A-rated peers” in some crucial respects.
Combined ratios for those policy years came in at 106.6% and 102.3%, respectively, during a period of low pool claims activity, as the club continued to report underwriting losses.
As a member of the IG, Britannia’s technical performance is inherently volatile, influenced by fluctuating contributions to the pool and the generally unpredictable nature of the protection and indemnity sector.
Although Britannia operates as a mutual entity, focused on member support, rather than as a profit-driven company, the ability to achieve breakeven or better technical results is a key indicator of an insurer’s competitive strength in its market.
S&P added: “We view positively the significant measures Britannia has taken during the last two renewals to strengthen its underwriting book.
“These include declining renewal terms for underperforming accounts, adjusting deductibles, and implementing material rate increases, most recently announcing a minimum targeted increase of 7.5% for the 2025-2026 renewal.
“However, it will take time for these actions to positively impact the club’s earnings.”
It also noted Britannia’s $30m capital distribution to renewing members, which more than offset its rate hike.
