Protection and indemnity mutuals are facing an erosion of their free reserves as investment returns falter, according to figures compiled by Gallagher.

The insurance broker has aggregated the financial results of the International Group of P&I Clubs.

It found that the clubs’ collective free reserves have fallen by about $300m, from $5.5bn in February 2021 to $5.2bn at the same point this year — despite an improvement in underwriting losses from $552m to $244m over the period.

One problem for the P&I mutuals is that healthy investment returns on which they have relied have started reducing rapidly.