At yesterday's Annual General Meeting, a unanimous Board of Directors approved the UFDS Annual Report for 2022, which will therefore soon be published. The report talks about a year where activity levels are back to pre-corona highs, and about a fundamentally good result despite challenges.
Yesterday, Thursday 27 April 2023, the Danish Shipowners’ Accident Insurance Association held the Annual General Meeting at Danish Shipping's HQ on Amaliegade with the participation of a full Board of Directors, CEO Jacob Munch and also several members online on Teams.
Chairman Lars Henneberg started by presenting the result for the year, which amounts to a profit of DKK 8.9 million. This is a slight decline compared to last year's plus of just over DKK 10.5 million, but nonetheless satisfactory seen over the last five years.
Among other things, the accounts contain a return on investment of DKK -106.9 million, which Lars Henneberg pointed out, however, is telling for the investment landscape in general and therefore not something that has only affected the UFDS.
The negative return was also well offset by a profit of just under DKK 92 million on remuneration and price adjustment of technical provisions, and the technical result amounted to DKK 24 million, which is a clear improvement on last year's minus of DKK 10.7 million.
As of 31 December 2022, UFDS has a recognized capital base of DKK 215 million, consisting of DKK 160 million in equity, DKK 7 million in profit margin and DKK 48 million in additional capital. The UFDS solvency capital requirement amounts to DKK 123.9 million as of 31 December 2022 compared with DKK 125.9 million at the end of 2021.
The solvency coverage at the end of 2022 is thus 174 percent, which – as Lars Henneberg put it at the AGM – 'is just shy of the goal’, as the company has a target of a solvency coverage ratio of 180 percent.
Putting particular pressure on the solvency coverage ratio is the Labour Market Insurance (AES) not settling cases fast enough for the UFDS to pay damages at the same rate as new business comes in. This leads to increased provisions and thus increased capital requirements.
For 2023, UFDS expects a positive profit after tax of just under DKK 3 million, which, however, depends heavily on the development of claims and the financial markets. The Board of Directors continues to aim to further increase equity within three to five years in order to follow the expected growth in the capital requirement.
Shipping has picked up again
2022 was the year where we as a society put the corona pandemic behind us, which is reflected in the increase in the number of recruitment days the UFDS has experienced within both Cargo, Tank and Passenger, while Offshore/Service has declined slightly.
On the other hand, the number of reported injuries has also increased, from 470 in 2021 to 590 last year, an increase of 26 percent, which is significant, but should be seen in the context of the fact that 2020 and 2021 had a very low number of reported injuries in a historical perspective.
The number of claims is now in line with 2019 and earlier, as is the frequency, i.e., the number of reported claims per insured person, which has also increased in 2022, but again is in line with before 2020. It is reasonable to conclude that the two previous years' low number of incidents is related to changes in activities due to Covid-19, as well as the development of employees between hazard classes.
Based on this development, as well as the fact that the shipping companies' continuous work to improve safety at sea reduces the number of accidents, we can conclude that it has become safer to work aboard Danish shipping companies' vessels for the benefit of all parties, both the employed seafarers as well as the shipping companies and the UFDS.
Speaking of corona, the UFDS has only received very few notifications of Covid-19 outbreaks, none of which have been recognized as work accidents. Although AES continues to process a few notifications concerning Covid-19, we can now conclude that the pandemic has not had a significant economic impact on the UFDS.
»2022 was an eventful year for the UFDS, but we come out with a good result. We also completed the outsourcing of claims handling, policy administration and the finance function to Sedgwick Denmark, so on that basis we look forward to further developing our efforts, not least for the benefit of the injured party, who will experience a broader and better effort to move on after the work injury,« Lars Henneberg comments.
»We can also feel that shipping has picked up again, especially on Cargo and Passenger, and even though there have also been more injuries, we are really just back to pre-corona levels; the frequency is actually lower than in 2019 and 2018, and the number of cases transferred to AES has also decreased significantly,« he adds.
The Board of Directors concluded the Annual General Meeting by approving the Annual Report for 2022, which will therefore be published shortly.