Report and Accounts 2015 Contents Review 01 Financial highlights 02 Chairman’s statement 07 General information 10 Managers’ review 24 Notice of meeting 26 Report of the Directors 32 Audit report Financial statements 34 Consolidated balance sheet 36 Consolidated income and expenditure account 37 Consolidated statement of cash flows Notes to the financial statements 39 Accounting policies 42 Other notes to the financial statements 59 Class 1 policy year position 62 Class 2 policy year position 63 Average expense ratio 01Report & Accounts 2015West of England Financial highlights $243.7 Free Reserve increased to record 12.7% Free Reserve growth of Combined Ratio improved for 7th year running million 4.3% Investment return of ($27 million) Members’ claims frequency and values remain low 90 million GT Owned and chartered tonnage increased to over 97.4% Combined Ratio Free Reserves At 20 February ($) Combined Ratio Year to 20 February Investment Return Year to 20 February (inc property) Gross Tonnage Mutual pro rata by Policy Year 2015 243.7m 97.4% 4.3% 67.5m 2014 216.2m 100.8% 3.4% 57.2m 2013 197.4m 102.5% 3.8% 53.7m 2012 179.4m 108.7% 1.8% 50.9m 2011 182.7m 118.0% 9.1% 49.2m 0 2 W e s t o f E n g l a n d R e p o r t & A c c o u n t s 2 0 1 5 C h a i r m a n ’ s s t a t e m e n t F r e e r e s e r v e s h a v e i n c r e a s e d a g a i n , t h i s t i m e b y 1 2 . 7 % , t o a r e c o r d $ 2 4 3 . 7 m i l l i o n a n d o u r c o m b i n e d r a t i o w h i c h r e f l e c t s t h e C l u b ’ s o p e r a t i n g p e r f o r m a n c e , h a s i m p r o v e d f o r a s e v e n t h s u c c e s s i v e y e a r f r o m 1 0 0 . 8 % l a s t y e a r t o a v e r y p o s i t i v e 9 7 . 4 % . T h i s l a t e s t f i g u r e f a l l s w e l l w i t h i n t h e k e y o b j e c t i v e s e t i n o u r b u s i n e s s p l a n o f a c h i e v i n g b e t t e r t h a n 1 0 5 % a n d c o m p a r e s f a v o u r a b l y w i t h a p e r f e c t m u t u a l C l u b r e s u l t o f 1 0 0 % . T h e m o s t s a t i s f y i n g e l e m e n t i n a l l o u r n u m b e r s i s t h e c o n s i s t e n t p r o g r e s s t h a t h a s b e e n m a d e b y o u r o w n M e m b e r s . T h e i r c l a i m s f o r 2 0 1 4 , b o t h i n v a l u e a n d f r e q u e n c y , a r e a t a s i m i l a r l o w l e v e l a s f o r a l l t h e p o l i c y y e a r s s i n c e 2 0 1 1 . C l a i m s i n c u r r e d f o r e a r l i e r p o l i c y y e a r s h a v e a l s o c o n t i n u e d t o r e d u c e a s t h e y e a r s h a v e m a t u r e d , c o n f i r m i n g a t r e n d w h i c h h a s b e e n e v i d e n t s i n c e 2 0 0 9 . T h i s m a y , t o s o m e d e g r e e , b e a t t r i b u t a b l e t o l u c k b u t g o o d l u c k r a r e l y s m i l e s o n p o o r s h i p m a n a g e m e n t . W e h a v e a l s o b e n e f i t t e d f r o m o u r o w n s o u n d c l a i m s r e c o r d w i t h t h e I n t e r n a t i o n a l G r o u p ’ s P o o l . T h a t r e c o r d c o n t i n u e s t o k e e p o u r P o o l s h a r e a t a b o u t 6 % , w h i c h f o r 2 0 1 4 , h a s b e e n c o m p l e m e n t e d b y t h e c o s t o f P o o l c l a i m s f o r t h e y e a r a p p e a r i n g a t t h i s e a r l y s t a g e t o b e d e v e l o p i n g w e l l b e l o w t h e l e v e l s o f t h e p r e v i o u s t h r e e y e a r s . T h e e f f e c t o f t h e s e s a t i s f a c t o r y c l a i m s f i g u r e s i s t h a t t h e c o n t i n g e n c y m a r g i n s i n c l u d e d i n