Bermuda mutual OIL returns $250m to shareholders despite tough 2018
Oil Insurance Limited (OIL), a Bermuda-based mutual insurance company, declared a dividend in the aggregate amount of $250 million to all of its shareholders despite having a challenging 2018.
For the full year, OIL posted a net loss of $675.6 million, compared with a net income of $587.7 million year-on-year.
The mutual also wrote less in premiums in 2018, $345,853 compared to $396,285 in 2017.
"The board decided to authorise the $250 million dividend after carefully reviewing the company's multi-year capital management plan," explained Theodore Guidry II, chairman of OIL's board. "Despite the 2018 financial results, the plan clearly indicated that there was capital available to pay a dividend without negatively compromising the capital and financial strength of the company. As in the past, it is our policy to return available capital to the shareholders when prudent to do so."
OIL insures over $3 trillion of global energy assets for more than fifty members with property limits up to $400 million totaling more than $19 billion in total property capacity.
In its annual general meeting, OIL's shareholders also approved two changes to the company's shareholders agreement.
Commencing in 2019, all shareholders must be investment grade if they wish to elect or continue to elect the retrospective premium plan that allows a shareholder to retroactively purchase up to 40 percent of the $400 million limit on a strict dollar of premium for dollar of loss basis over the subsequent five-year period. OIL suggested this decision protects the company from future potential credit losses.
The second decision removes the need for shareholders to declare assets located in the offshore region of the Gulf of Mexico for purposes of determining pool percentages in the offshore designated named windstorm pool. OIL said this was warranted as a matter of equity given that OIL excluded coverage for offshore Gulf of Mexico Windstorm starting in 2018.
Bertil Olsson, president & CEO of OIL, commented: "While 2018 turned out to be financially challenging, OIL is focused on creating long term value and we continue to enjoy a strong commitment and belief in the system by our dedicated shareholder base. Including 2018, OIL has charged its shareholders $2.1 billion in premium over the last five years while returning $1.8 billion of dividends during that same period. While premiums did increase in 2019, the recently announced dividend will offset a significant amount of that increase for our members. OIL continues to operate from a position of strength and will continue to offer long-term value to the world's leading energy companies."
