The war in Ukraine is having a profound impact on global shipping and trade. It remains to be seen what the long-term effects of the conflict will be, but already we are witnessing a horrendous humanitarian crisis, as well as trade disruptions and geopolitical changes that will likely have impacts for a long time.
Sanctions regimes are also complicating matters. The rules are complex, and out of fear of transgression, we are seeing caution and self-imposed sanctioning. Reinsurance is becoming more challenging in this situation. Another major unknown is how long-standing rivalry between China and the West will play out against the backdrop of the Ukraine crisis. The political rhetoric on both sides is strong, but only time will tell the course of action.
Moreover, as a financial institution Gard is highly impacted by complex international regulatory developments. Many jurisdictions deem global environmental treaties and conventions to be insufficient and are pressing ahead with more ambitious regulations applied on a regional basis. California´s oil-spill regulations, those covering air quality in Japan, and the EU´s upcoming carbon Emissions Trading System (ETS) for shipping, are just some examples.
Success in adversity
In spite of significant challenges and uncertainties, it delights me to recognise the results that Gard achieved on behalf of its Members during this financial year. We secured a record premium of USD 1.036bn and a healthy combined ratio of 94%. We also maintained a solid capital base and regained our S&P capital rating of A+ with a stable outlook.
Gard is using its experience from traditional markets to grow organically into new markets, and we expect this trend to continue in the years to come. We are also seeing promising expansion of business, particularly in Greece and Asia, and are pursuing these markets with the same dedication and service offering that has served us well in our traditional core Nordic and Northern European markets.
I welcome Rolf Thore Roppestad´s efforts to place Gard at the head of several pivotal ESG initiatives, such as the Poseidon Principles for Marine Insurance, a global framework to quantify and disclose the carbon intensity of insurers’ marine-hull portfolios, and the sustainability work being done in CEFOR and in the International Group of P&I Clubs (IG). P&I is essentially a ‘ticket to trade’ in shipping around the globe and, with that, we both can and should set certain expectations. As the largest P&I club in the International Group, Gard should lead by example. For instance, Gard expects Members and clients to comply with the Hong Kong Convention and EU regulations on wreck removal, even in markets where there is no regulatory obligation to comply with these conventions. This a practical example of our commitment to sustainable business practices.
Equally so, we welcome the global shipping industry’s efforts to combat climate change. As we saw at the COP26 event in Glasgow last October, the private sector is now increasingly driving progress, and is in some respects more proactive than governments and policymakers. As a leading marine insurer, we aim to be part of these conversations in order to create initiatives and incentives supporting the transition to a low carbon economy.
A changing industry
In light of the changes in our markets and the challenges ahead, I welcome the moves towards consolidation that we are now seeing in the marine insurance industry. Increased competition and stronger industry players help to keep us on our toes and motivate us to carry on performing at our best. Consolidation in the industry will also help when it comes to pooling of resources, which will in turn lead to greater efficiency and efficacy in responding to claims.
I look back over this year with admiration for all those who work in Gard, and the great effort they have put in to achieve this years’ results. I also want to thank those who serve on our Board and committees for their contribution. It is thanks to our Members, clients and employees; our forward-thinking approach to digitalisation and intellectual capital; and our financial strength and stability that we continue to do what we do best: mitigate risks and support sustainable maritime development.
Fortunately, not every decade begins with the extremes of pandemic and war involving alliances of multiple nations. In the face of adversity, we see time and again that our model works. We provide stability not only to the maritime industry, but also in the global economy that relies so greatly on the services of our Members and clients. It is with gratitude that I introduce this, our first integrated annual report, and I look forward to yet greater success to come.
Morten W. Høegh