Standard & Poor's (S&P) said it expects the protection and indemnity sector to experience a period of relative stability and it is maintaining a stable outlook for the International Group of Protection and Indemnity Clubs (IG).
The general increases in premium rates in recent years and the clubs' increased financial sophistication and discipline underpin this view the ratings agency said.
"At least for the time being, clubs are showing some evidence of having learnt from the experience of recent years' operating deficits by bringing their underwriting results more under control, so reducing their excessive reliance on investment returns," said S&P's credit analyst Rowena Potter.
S&P said the average combined ratio for the year ended 20 February 2004, was an unprofitable 115%, however, it was the best result recorded since year-end 1997.
Free reserves for the IG as a whole increased by 42% during the 2003/2004 policy year, but, S&P's said this was sufficient only to return them to the level at which they had previously stood in February 1999.
