PROTECTION AND INDEMNITY

Transcripción

PROTECTION AND INDEMNITY
MARKET REVIEW
2012/2013
FOREWORD 03
Market Financial Commentary 05
Reinsurance and Pooling 17
General Increases 25
Release Calls 29
Club Financial Pages 33
– Introduction to Club Pages – American Club – Britannia – Gard – Japan P&I Club – London P&I Club – North of England Club – Shipowners – Skuld – Standard – Steamship – UK P&I Club – West of England – Liverpool & London – The Swedish Club 33
37
39
41
43
45
47
49
51
53
55
57
59
61
62
DEFERRED Call History 63
Average Expense Ratio (AER) 69
the NON-INTERNATIONAL GROUP P&I Market 73
Contacts 87
Protection and Indemnity | Market Review 2012/2013
2
A PERFECT STORM - A CONFLUENCE OF EVENTS DRASTICALLY AGGRAVATING THE SITUATION
“All collapsed, and the great shroud of the sea rolled on as it had five thousand years ago”.
Herman Melville, Moby Dick
The 2013 Protection and Indemnity (P&I) renewal is poised to be the most challenging in a decade. It is self-evident that ship
operators are facing one of the most challenging economic periods in a generation. It is similarly obvious that the P&I market
is not balancing its underwriting results. Added to this, the reinsurance market has been presented with the largest and third
largest claims in the history of the International Group (IG). The final contributing factor to this ‘confluence of events’ is a
fragile and lacklustre investment market that is likely to allow only meagre returns.
The market results in the 2011/12 financial year showed a 13% increase in incurred claims, a 5.9% underwriting loss and only
a 2.7% investment return. Total market free reserves increased marginally (4%) but tonnage increased by 9% over the same
period. The market is therefore larger, but proportionately slightly weaker than the previous reporting period.
Against this background, the average general increase for 2013 is double the level seen in 2012. There is also a considerably
larger range in results between individual clubs. The average is 8.5%, but the range between the smallest and the largest
general increase is 11.5%. With pressure on all sides, the renewal will likely present some of the hardest fought negotiations
since the turn of the century.
3
Ben Abraham, December 2012
Willis 2012/13 P&i REviEW
This review analyses the financial results of each individual club and of the market in general. We comment on the underlying
issues, including the ‘price of growth’ for clubs and anticipate future trends.
The IG reinsurance arrangements are summarised and the expectations for 2013, outlined. The trends in very large claims
(pool claims) are similarly reviewed.
We highlight the disparity between release calls and the deferred call accuracy of the market. Whatever the motive, these
continue to be a key barrier to the ease of movement between clubs.
The difference between individual clubs’ performance is significant and this report only touches on the comparisons.
Willis P&I clients have access to more expansive information on request.
In such a challenging renewal environment, the choice of specialist broker is critical to ensure that best value is achieved from
this unique market.
4
Financial HigHligHts 2011/12
The positive financial results for the International Group (IG) in 2010/11 now seem a distant memory. The record
underwriting results have been completely reversed by double digit increases in claims levels. Investment return for 2011/12
was better than feared but still less than half the level recorded in the previous year. The modest investment result was just
sufficient to offset the underwriting loss but the consequent increase in free reserves was less than half the growth in tonnage
insured by the market.
The only record set in the 2011/12 financial year results was a new high for combined market net incurred claims (this result
was reached without including the (majority) reinsured parts of the two very high profile claims in that year).
This section provides a broad analysis of the combined financial results for the whole IG market. As in previous years, the
analysis concentrates on the consolidated financial year results for the clubs. We discuss the reported results, comment on
the trends, highlight the implications and set out expectations for the 2013 renewal and policy year.
N.B. Please refer to the notes in the introduction to the Club Financial Pages section regarding the basis of the
financial analysis.
5
P&i MaRkEt Financial HigHligHts (2011/12 Financial yEaR)
—
—
—
—
—
—
—
Market premiums increased by 1.5%
Total net incurred claims increased by 13%
Market underwriting loss of 5.9% (deteriorated from a 3% surplus in 2010/11)
Investment return approximately 2.7% (less than half the 6.8% return in 2010/11)
Overall surplus USD 137 million (reduced from USD 634 million in 2010/11)
Market free reserves increased by 4%
Owned tonnage increased by almost 9%
As discussed in previous Willis market reviews, large variances in performance continue to persist between individual clubs
and the gap between the strongest and weakest appears to be increasing rather than decreasing.
“
investment return for 2011/12 was better than feared, but
still less than half the level recorded in the previous year.
6
MARKET FINANCIAL COMMENTARY
2011/12 FINANCIAL YEAR RESULTS
The following comments relate to the combined financial year results of the individual clubs in the
International Group.
The only club excluded from this analysis is the Swedish Club, which does not report on a like for like basis with the
rest of the market. As the Swedish Club represents less than 2.5% of the P&I market, their omission does not affect
the overall analysis materially.
Continuing Claims Volatility
Following a decade of marginal inflationary increases, there has been a material increase in claims volatility over the
last six years. (See graph below which displays the progression of gross paid claims, net paid claims and net incurred
claims compared to total premium paid into the market, over the last 13 years.)
This volatility was first dramatically evidenced by the 20% jump in net incurred claims in 2006/07. This increase was
driven principally by the increase in number and cost of very large (‘pool’) claims. 2007/08 repeated this trend with
even worse results. The following year the pattern reversed with overall claims levels down by 11%. This then bounced
back up by 12.5% in 2009/10 (the highest level attained by market claims at that point). In 2010/11 paid claims reduced
by over 11%.
This ‘pattern’ of claims swinging up and down was again repeated in the most recently reported year, with net paid
claims, gross paid claims and net incurred claims increasing by 14.6%, 11.2% and 13% respectively.
2011/12 has the dubious honour of registering the highest level of net paid and net incurred claims ever reported by
the P&I market (2% and 8% higher than the previous record level in 2009/10).
Paid Premiums Compared to Gross Paid Claims, Net Paid Claims and Net Incurred Claims
3,500
3,000
Calls and Premiums
Contribution of Unbudgeted Calls in 2008/09
Gross Paid Claims
Net Incurred Claims
Net Paid Claims
USD (millions)
2,500
2,000
1,500
1,000
500
0
99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10
7
10/11
11/12
Total consolidated financial year premiums increased by only 1.5% between 2010/11 and 2011/12. Over the same
period club expenses increased by 7.9%. Even though this was offset somewhat by slightly reduced (-1.4%) reinsurance
costs, net retained income (operating income) only increased marginally (1%).
The jump in claims levels mentioned earlier was clearly the dominant factor and led to an overall underwriting loss in
excess of USD 160 million (which equates to a 5.9% underwriting loss when compared to overall market premium).
Reversal of Record Underwriting Surplus
By historic market standards the scale of this underwriting loss is not dramatic, though the speed of the deterioration
from the very positive previous year is more concerning. A couple of the trends underlying this result will be discussed
later in this chapter.
Investment Income Modest – But Not a Disaster
By September 2011 the world equity markets had slumped amid fears of an impending crisis of European sovereign
debt, returns on fixed income investments were low and the investment prognosis for the rest of the year was dire.
At that point even the most optimistic of commentators were talking about a ‘best case scenario’ of a breakeven or
nominal investment return in the P&I system.
While the investment markets remained volatile, there was a bounce back at the beginning of 2012 and the average
P&I club investment return in the end was a modest, but in the circumstances credible, 2.7%. This investment result
was enough to offset the underwriting loss and allow a small overall surplus for the market (USD 137 million overall
surplus, after investment income).
Overall Result – Including Investment Income/Loss
750
650
550
450
350
250
USD (millions)
150
50
-50
-150
-250
-350
-450
-550
-650
-750
-850
Investment Income
Underwriting Surplus/Deficit
Overall Surplus/Deficit for Year
‘as if’ no unbudgeted calls in 2008/09 (underlying trend)
98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10
10/11
11/12
The above graph shows the progression of underwriting, investment and overall result for the market over the
last 14 years.
N.B. In order to show the underlying underwriting result, the solid lines show the results as reported, the dashed
lines display how the underlying trend would have looked without the unbudgeted calls from 2008/09.
8
Marginal Increase in Reserves – But World Fleet Growing Faster
The USD 137 million overall surplus for the market pushed the combined free reserves to a new high point.
The percentage increase was marginal however, compared to the average increases of 26% for each of the previous
two reporting periods.
This probably represents something of a normalisation of the increase in free reserves following the extraordinary
increases in the previous two years.
The obvious, potentially worrying, counterbalance to this new high level for free reserves is that the 4% growth in
reserves is less than half the rate of increase in combined owned P&I tonnage insured by the IG (almost 9%) over the
same period.
The graph below displays the progression of net assets, outstanding claims and free reserves for the entire market over
the last 14 years.
Development of Assets and Free Reserves
10,000
9,000
Net Assets
Free Reserves
Net Outstanding Claims
8,000
7,000
USD (millions)
6,000
5,000
4,000
3,000
2,000
1,000
0
98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11
“
9
11/12
The USD 137 million overall surplus for the market
pushed the combined free reserves to a new high point.
10
INDIVIDUAL CLUB UNDERWRITING RESULTS
There has been a huge movement in a number of individual club underwriting results between the last two
reporting periods.
The bars in the graph below outline the combined ratios for each of the clubs for 2011/12 and 2010/11. These are
compared to:
—The 100% line (the break-even position)
—The market average line (106%)
This clearly demonstrates:
—That 10 of the 13 clubs reported underwriting losses
—A material deterioration in underwriting performance for eight out of the 13 clubs
—Continuing wide variation in underwriting performance between clubs
On a financial year basis in 2011/12, the largest individual club combined ratio was 120%, the lowest was 85%. Neither
of these extremes of underwriting deficit or surplus (respectively) should be sustainable in a mutual environment.
N.B. C
omparative Analysis of Individual Clubs.
In this section a number of references are made to variances in financial performance between individual clubs.
Willis’ P&I clients have access on request to more comprehensive comparative analysis of individual clubs.
Combined ratios
Combined Ratio (2011/12)
130
120
Combined Ratio (2010/11)
115%
110
100%
120%
119%
118%
Market Average
116%
111%
109%
Percentage
107%
100
102%
101%
98%
96%
90
85%
80
70
West of England
UK Club
Swedish
Steamship
Standard
Skuld
Shipowners
North of England
London
Japan
Gard
Britannia
American
60
Definition of Combined Ratio: (incurred claims + expenses) / (premium - reinsurance)
11
THE P&I CLUB QUANDARY - TO GROW OR NOT
TO GROW?
The 2011/12 P&I Review suggested that the results of a minority of clubs could be reflective of claims levels catching
up with tonnage growth.
The 2011/12 market premium and tonnage figures point towards potential claims time bombs for quickly
expanding clubs.
Overall across the market, headline premium increased by 1.5% between 2010/11 and 2011/12. Over the same period
tonnage increased by 9%. Even adjusting for under calling and/or over calling of three clubs, the underlying premium
increase was still only 3%. Part of this differential can be explained by the exact timing of the additional tonnage
attaching. However, as renewals have not been soft, this looks very much like the result of new tonnage being added to
the clubs at very competitive rating at one end, whilst very heavily rated older tonnage being scrapped is leaving the
clubs at the other end.
It is interesting to note that a number of the clubs which have increased in size by the greatest margin between
2010/11 and 2011/12 have also reported the largest deterioration in their underwriting results. Ironically, the three
clubs that reported a material improvement in their underwriting results (London, UK and West) were the three that
grew at the slowest rate in the market. The Japan club also followed a similar underlying pattern, if the unbudgeted
calls registered in the 2010/11 financial year are taken out of the figures.
This is not to say growth is bad; without it clubs would slowly die. The figures however, and day to day experience,
clearly seem to imply that there is reduced underwriting discipline across the market when it comes to new business.
2008/09 adjusted to exclude the contribution of unbudgeted calls
4.0
1,000
Premium Per Entered Ton
Total Owned Tonnage (GT)
3.8
900
3.6
800
3.4
3.2
700
3.0
600
2.8
2.6
Owned tonnage (million GT)
The question is simply
that, in a mutual
environment, are those
ship owners with stable
fleets subsidising the
growth ambitions of
their clubs? Similarly,
if clubs obtained the
‘right’ premium on
new business, would
annual general
increases be inevitable?
Paid Premiums - Compared to Total Owned Tonnage
Premium, per owned GT
This is unfortunately
a corollary of the
pressures that the
mechanism of the
International Group
Agreement (IGA)
imposes on clubs. It is
not necessarily right or
wrong, it is just the way
the market works.
500
2.4
400
2.2
2.0
300
00/01
01/02
02/03
03/04
04/05
05/06
06/07
07/08
08/09
09/10
10/11
11/12
12
3
6
19
90
9
28
4
9
10
17
11
11
14
Equities
Fixed Income
Cash
Other
17
70
60
15
87
69
72
64
71
86
68
57
23
15
17
3
13
10
15
West of England
16
69
UK Club
22
72
Swedish
80
Steamship
65
Standard
69
Gard
50
40
30
20
Shipowners
North of England
London
21
Japan
0
Skuld
10
Percentage Increase/Decrease in Free Reserves
24.8%
Increase in Free Reserves
Reduction in Free Reserves
Market Average
20
—The first shows the varying allocation
of assets held by each of the clubs in
the International Group as at
20 February 2012
13
11
9
4
80
In reference to the opposite charts:
9.4%
10
6.5%
5.8%
5
4%
1.5%
1.7%
0.8%
0.5%
0
-0.3%
-1.8%
-2.5%
-5
-5.3%
-6.0%
West of England
UK Club
Swedish
Steamship
Standard
Skuld
Shipowners
North of England
London
Japan
-10
Gard
Percentage
15
American
With this more conservative approach
to investing funds, there is no immediate
expectation for massively improved
investment returns in the current year.
1
2
1
7
2
25
—The second outlines the percentage
increase or decrease in each club’s free
reserves as at 20 February 2012 (this
shows that eight out of the 13 clubs
reported some form of overall
surplus after the contribution of
investment income)
2
4
Britannia
Since 2008 there has been a general trend
across the market for clubs to de-risk
their investment portfolios. Some did this
dramatically, others progressively but,
as at the end of 2011/12, only three clubs
maintained 20% or more of their total
assets in equities. In 2007/08 the equivalent
number would have been nine out of 13. The
North of England and Steamship Mutual
have effectively withdrawn from equities as
an investment class and the Japan Club has
never held them.
100
Britannia
With the continued volatility of equity
markets and only relatively modest returns
currently available from fixed income
securities, securing sizeable investment
returns continues to be challenging
for clubs.
Investment Allocation as at 20 February 2012
American
As emphasised by the underwriting
results, investment income continues to
be a fundamental component of the overall
financial results of most clubs.
Percentage
INVESTMENT INCOME DEPENDENCY
Over the last five years, Willis reviews have consistently anticipated greater volatility in overall claims levels against a
higher average.
WHERE NEXT FOR CLAIMS LEVELS – TREND
OR ANTI-TREND?
The ‘trend’ (or ‘anti-trend’) continued in 2011/12. Total market claims levels have oscillated with alternating double
digit increases then reductions over the most recent five years (this following more or less an inflationary progression
in claims levels over the previous decade).
The background to this has been discussed at length in previous Willis P&I reviews. In summary, however, the
principal driver for this volatility is the increased individual size and less predictable frequency of larger claims.
The macro factors influencing the increase in size of claims continue to include increased and increasing liability
limitation on ship owners; increasingly unexpected awards and ingenious ways authorities are exploring the
circumvention of ratified conventions; and technological advancements which make what was previously impossible
now possible (e.g. wreck removal/cargo removal from deeper water etc).
The ‘elephant in the room’ is that all of this volatility is occurring in the midst of a particular and challenging
environment for shipping.
In a subdued freight environment, it would be reasonable to expect that factors such as reduced utilisation of ships,
less pressure on turnaround and lower cargo volumes would reduce the number of P&I claims. Similarly, lower
commodity prices could lead to smaller cargo claims and diminished competition for qualified/experienced crew may
reduce the human error element and crew wage inflation. Countering this, concerns regarding potential deferred
maintenance have been voiced across the industry.
In the ongoing challenging economic period for ship operators this seems to be the continuing pattern. The
concerning factor (the hypothetical ‘elephant’) is what happens when the economy recovers and pressures on ships
are increased? An increase in frequency combined with the pre-exisiting severity issues could lead to a dramatic
expansion in claims levels.
This, however, is not anticipated imminently. In the current policy year, the anecdotal feedback regarding claims
levels is of overall claims costs continuing to increase at above inflationary levels but there is no indication of a
massive change in overall cost.
Our expectation for the short to medium term is more of the same. A continuing ‘anti-trend’ of volatility in overall
claims set against higher average levels.
“
The ‘elephant in the room’ is that all of this volatility
is occurring in the midst of a particular and challenging
environment for shipping.
14
EXPECTATIONS FOR THE
2013 RENEWAL SEASON
In light of the mixed underwriting results in 2011/12 and a greater uniformity of anecdotal claims feedback, it is
certain that the renewal at 20 February 2013 will be materially firmer than in 2012.
To put the 2011/12 underwriting deficit (-5.9%) in historical context, it is neither an unusual nor even a particularly
large loss. For each of the 10 years prior to 2008/09, the IG market reported overall average underwriting deficits of
-12% per year, year on year.
The key differences at the moment are the fragility of the investment markets and the lack of confidence in
particularly positive investment results.
From club feedback, 2012/13 claims levels are also anticipated to continue to increase, which further exacerbates the
quandary for club managers and boards.
Inevitably, bearing in mind the current wider economic environment, the ship owning board members of clubs will be
arguing strongly for moderation in the level of any general increases. From a ship operator’s point of view, there would
be a natural preference to have their club take the risk of continuing to run underwriting deficits in order to assist
members through the current challenging freight markets.
The club general increases will also only be one part of the equation for the renewal at 20 February 2013. The IG
reinsurance renewal is likely to be extremely challenging and the inevitable increases in reinsurance cost would as
usual be passed on in addition to the individual general increases and individually negotiated renewal terms. This is
to be expanded on in the reinsurance section of the P&I review, but increases are expected to be material.
Based on the 2011/12 results, there should be quite a wide range of increases announced. As ever, in a market situation
logical theory is frequently not translated into practice.
We anticipated that most clubs would announce general increases on/about +7.5%, with one or two clubs as low as 5%
and a couple of clubs pushing into double figures. The final announced general increases are outlined on pages 25-28.
The range is as wide as expected around an average of 8.5% (double the level of 2012).
With the expected double challenge of material general increases and IG reinsurance increases, regardless of any
technical considerations, the commercial pressure from ship operators will be enormous. It is difficult to avoid the
conclusion that the 2013 renewal will be even more contentious and confrontational than 2012.
15
16
REINSURANCE
ANDPOOLING
REinsuRancE REsults at 20 FEbRuaRy 2012
The 2012/13 announced International Group (IG) reinsurance results were reported in our bulletin dated 13 January 2012
and expanded upon in the Willis Marine Market Review in April. In summary, the changes were as follows:
annOuncED cOst cHangEs 2012
— No increase in cost of combined reinsurance programme
— 6% increase in world tonnage
— The combined effect of no increase in total cost of the IG reinsurance programme and a 6% increase in world tonnage
allowed average reductions of 6.3% in rates per GT
— All classes of ship benefited, though the largest reductions were allocated to tankers
— US voyage additional premiums reduced by 30%
These cost changes are outlined in the graphs on page 19. Detailed rate splits are provided opposite.
17
intERnatiOnal gROuP REinsuRancE RatEs 2012/13
Vessel Type
2011/12
(uSD, per GT,
per annum)
2012/13
(uSD, per GT,
per annum)
Reduction
(uSD, per GT,
per annum)
Percentage
Reduction
Dirty tanker
0.7038
0.6515
-0.0523
-7.43%
Clean tanker
0.3055
0.2798
-0.0257
-8.41%
Dry/other
0.3709
0.3561
-0.0148
-3.99%
Passenger
1.4780
1.3992
-0.0788
-5.33%
2011/12
2012/13
Reduction
Percentage
Reduction
Vessels with SBT
0.0566
0.0396
-0.0170
-30.0%
Vessels without SBT
0.0680
0.0476
-0.0204
-30.0%
uS Voyage Surcharges:
Additional Fixed Premium, USD per GT, per voyage
18
As a result of the combined
impact of the tragic COSTA
CONCORDIA loss and
the increase in estimate
for RENA, both of which
occurred just after the 2012
reinsurance results had
been announced, the IG
accepted a USD 40 million
additional premium to
complete the renewal.
Because the 2012
reinsurance rates had
already been announced,
the IG felt that they
could not withdraw the
announcement and
subsequently amend
the rates. Consequently
each club had to ‘absorb’
their proportion of this
additional premium
without being able to pass
it on to their members in
the 2012/13 policy year.
IG REINSURANCE, COST CHANGES BY VESSEL TYPE
1.8
1.6
Dirty Tanker
Clean Tanker
Passenger
Other
1.4
1.2
USD (per GT)
REINSURANCE AND POOLING
Additional Premium
Applied after
Reinsurance
Results Announced
1.0
0.8
0.6
0.4
0.2
0.0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
US VOYAGE ADDITIONAL PREMIUM RATES
0.30
Vessels with SBT
Vessels without SBT
0.25
USD (per GT)
0.20
0.15
0.10
0.05
0.00
19
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
The reinsurance structure remained unchanged from 2011/12 but the pool layers were amended slightly.
The revised structure of the programme is shown below. In essence the pool layer reinsured by Hydra was split into
two layers, one from USD 30 million to USD 45 million, the second from USD 45 million to USD 60 million. This was
engineered in order to amend the loss allocation formulas for contributions from individual clubs and also to introduce
a new ‘individual club retention’ component. This new individual club retention means that the particular club
bringing a claim to the new upper pool layer will have a further 10% retention of the loss in excess of USD 45 million
up to USD 60 million. Both changes are intended to increase direct accountability of the individual club contributing
claims to the pool.
Catastrophe/Overspill Call Liability of Shipowners
Approximately USD 6.9B
Collective Overspill Protection
(One Reinstatement)
USD 3.06B
Aggregate of Passenger and Crew Risk
USD 3.00B
Third Excess Layer
(Unlimited Reinstatements)
USD 2.06B
Sub-limit in Respect of Passenger Risks
USD 2.00B Limit
Second Excess Layer
USD 1.06B
75% First Excess Layer
Pool - Reinsured by Hydra
minimal Structure Change in 2012
Oil pollution
USD 1.00B Limit
25% Co-Insurance (Hydra)
USD 560M
USD 60M
10%
USD 45M
Pool
USD 30M
Individual Club Retention
10%
“
USD 8M
Individual Club Retention: The club bringing the claim to this layer of the
pool to retain 10% of the loss in excess of USD 45M up to USD 60M.
The Reinsurance structure remained unchanged from
2011/12 but the pool layers were amended slightly.
20
POOL RESULTS
The graph below shows the number and cost of pool claims for the period from 1995 to 2012 (as at August 2012).
Between 1995 and 2003, there was a relatively modest variation in pool results and over this period the average total cost
of the pool was less than USD 135 million per year. The significant change in exposure to the pool occurred in 2004 with
the introduction of the ‘upper pooling layer’.
This increased the top limit of the pool from USD 30 million to USD 50 million. Inevitably this increased exposure led to
increased volatility of overall results.
Since 2004 the combined results of very large claims have been considerably more erratic. The results peaked in 2006
and 2007, with the overall cost of the pool currently estimated at USD 507 million and USD 540 million respectively.
The aggregate cost of large claims dropped spectacularly in 2008, with a modest rebound in 2009 and 2010.
2011 recorded what appears to be the largest and third largest individual P&I claims in history (COSTA CONCORDIA and
RENA respectively). The majority of the cost of these claims will fall under the reinsurance programme but the pool layer
was naturally also adversely affected. 2011 did not experience anywhere near the frequency of large losses as experienced
in 2006 or 2007 but the severity of these two incidents looks likely to play a large part in producing the third worst pool
year in the market’s history.
In the current year (2012/13) there have been eight pool claims reported as at 20 August, which is more than average at
the mid-year point. In the context of such very large claims however it is much too early to make any sensible predictions
about the eventual cost of 2012/13.
Pool results chart
550
Totals (including Hydra and Co-insurance)
Number of Pool Claims
50
500
450
40
USD (millions)
350
30
300
250
20
200
150
10
100
50
0
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
21
Number of Pool Claims
400
There have been progressive increases in both individual clubs’ retentions and the limits collectively insured by the pool.
The graph below shows this development, outlining increases in individual club retention and pool layers from 1991 to
2012. The trend has been for periods of pool and retention stability followed by clear steps up in exposure.
Pool and retention development
65
CLUB RETENTION
Club retention
Pool
Pool - reinsured by Hydra
60
Pool and Retention Development
9
8
55
50
7
45
6
USD (millions)
USD (millions)
40
35
30
25
5
4
3
20
15
2
10
2013
2011
2012
2010
2009
2007
2008
2005
2006
2003
0
2004
2013
2011
2012
2010
2009
2007
2008
2005
2006
2003
2004
2001
2002
1999
2000
1997
1998
1996
1994
1995
1991
1992
1993
0
2002
1
5
Increased retentions in the P&I industry have exacerbated the impact of large claims volatility.
—Over the last twenty years the maximum pool exposure has increased from USD 10.4 million each claim (in excess of
a USD 1.6 million individual club retention) to the current exposure of USD 52 million each claim (in excess of a
USD 8 million individual club retention)
—In addition to this, a 25% share of the USD 500 million layer above the upper pool was introduced in 2004. This share
of the USD 500 million excess layer represents a further potential exposure of USD 125 million on catastrophic claims
—The current combined catastrophe exposure under the pool and Hydra is therefore USD 177 million each event
(increased by USD 10 million compared to 2010/11)
—This increase in the maximum pool exposure inevitably increases the potential for erratic results. Although this is
moderated somewhat by the reinsurance of Hydra arranged by the IG, the exposure is still considerable
N.B. In this review, references to ‘pooling’ include all areas where the IG collectively shares the risk, either directly
through the lower pool or via Hydra in the upper pool and the 25% co-insurance layer.
“
Any predictions about very large cases should be
tempered with a considerable amount of caution.
22
Pool Results - Prospects for the future
The pattern and causes of individual claims within the pooling layer have been analysed in previous Willis P&I Reviews.
In summary, there were two key factors involved in the surge in very large claims in 2006 and 2007. The first was a significant
increase in the average cost of individual major claims. The second factor was causational. The proximate cause of the
majority of pool claims in these two years was predominantly human error rather than, for example, mechanical failure or
involvement of sub-standard shipping.
Reviewing the cost factor, it is unlikely that the average cost of major claims will reduce. With the pressures of inflation,
technological innovation and ever increasing limitation and liability awards, the opposite appears more realistic.
Reviewing the causation factor, the economic slowdown had the effect of decreasing world trade. In an environment with
fewer ships operating, the competition to secure better qualified and more experienced crew eased somewhat. Similarly with
lessened commercial time pressure on ships, it seemed logical to expect that fewer decision making errors would be made.
Whether coincidental, or as a result of the economic situation, the number of very large cases decreased materially in 2008.
This trend was continued, albeit to a lesser extent in, 2009 and 2010.
When trade eventually increases it would seem similarly reasonable to expect that numbers of claims may again start to
increase. The obvious corollary being that this may be the catalyst for an increase in the overall cost of very large claims.
The longer the shipping recession lasts however, a further issue may raise its head. In challenging economic times there
is a natural temptation for ship operators to defer maintenance until their revenue position improves. With the current
protracted adverse trading environment, it is conceivable that claims arising from issues connected with a lack of
maintenance may start to creep back into the picture.
Any predictions about very large cases should be tempered with a considerable amount of caution. In statistical terms, the
IG experiences a very small total number of pool claims. Even in 2007, there were only 43 cases per year above USD 7 million
across the entire industry. As a consequence, statistical anomalies easily occur. The general trend could follow a pattern in
line with the expected market forces but the potential for volatility is enormous.
As discussed previously, the P&I clubs are more vulnerable to the impact of statistical aberration than ever due to the greater
retentions in the current structure of the pool/IG reinsurance.
“
23
A material increase in reinsurance costs at 20 February 2013
will be unavoidable.
COST EXPECTATIONS
The IG excess of loss reinsurance renewal at 20 February 2013 is likely to be the most contentious since the early 1990s. The
negotiations will inevitably be dominated by the two major incidents in 2011/12. As mentioned above, COSTA CONCORDIA
and RENA are the largest and third largest individual P&I claims in IG history (at current estimates of USD 652 million and
USD 300 million respectively). Neither case was properly taken into account in the main reinsurance renewal discussions
this year; their impact will mean that a material increase in reinsurance costs at 20 February 2013 will be unavoidable.
EXPECTATIONS FOR THE REINSURANCE
RENEWAL AT 20 FEBRUARY 2013
Two thirds of the IG excess of loss reinsurance total premium is allocated to the first layer (USD 500 million in excess of
USD 60 million). The proportion of these two claims impacting the first layer would equate to roughly three years’ worth of
premium for this layer. COSTA CONCORDIA is currently also estimated to encroach (by roughly USD 70 million) into the
second layer of the programme (USD 500 million in excess of USD 560 million). This would similarly wipe out approximately
one and a half years’ of premium for the second layer.
The most recent year with anywhere near the quantum of losses to 2011/12 was 2007/08. That year experienced three major
claims: HEBEI SPIRIT, COSCO BUSAN and NEW FLAME (respectively the fourth, fifth and seventh most expensive insured
P&I claims in history).
Naturally the IG will have strong arguments in terms of continuity and will argue that the IG has made money for the
reinsurance market over the last ten years. Similarly the IG may choose to try to increase the excess point of the reinsurance
programme to try to reduce premium costs. Whichever way this is negotiated, it is very likely that reinsurers’ principal focus
will be to see more premium on the programme after 20 February 2013.
The IG will also have the very thorny issue of how to most equitably allocate any increase in costs between the different types
of vessel. Passenger ship operators will argue, with some justification, that the reinsurance rates allocated to such vessels have
already been increased five-fold over the last ten years to reflect the enhanced risk they potentially represent. Consequently
it would seem perverse to now penalise them when the anticipated big claim actually happens. Tanker operators will argue,
with similar justification, that tankers (particularly clean trading tankers) have not been the driver for excess of loss level
claims in recent years. ‘Other’ ship type operators will try to differentiate between container and non-container ships when
arguing about relative ‘large claims’ loss records. The reality is likely to be that the overall increase will be sufficiently large
that all ship types will need to contribute in some way, though inevitably none will be completely happy with the outcome
regardless of the final allocation.
STRUCTURE EXPECTATIONS
In terms of structure of the retention/pool and excess of loss reinsurance programme, it is likely that we will also see changes
at 20 February 2013. Following three consecutive years of individual club retentions standing at USD 8 million per event, as a
result of pressure from a number of clubs, agreement was reached to increase individual club retentions to USD 9 million at
20 February 2013.
Dependent on the route of the negotiations with reinsurers, it is possible that the pool layer reinsured by Hydra may again
be increased. To date, it is difficult to argue that Hydra has served its original purpose and the longer term benefits are yet
to be seen. It would be in line with the IG’s original intent for Hydra to progressively increase this pooling layer towards a
USD 100 million limit. It is possible that some negotiating ‘value’ could be obtained for an incremental increase in the pooling
layer. It is therefore quite conceivable that this could increase from the current USD 60 million to possibly USD 70 million or
USD 80 million at 20 February 2013.
24
P&i
The average P&I general increase announced for the renewal at 20 February 2013 is 8.5% (double the average in 2012).
The range of increases is more surprising, with an 11.5% disparity between the smallest and largest.
The announced figures for 2013 are included in the graph on page 27 and the trend in market average general increases over the
last 22 years is displayed in the graph on page 28.
As has been the pattern in recent years, a number of clubs will again try to introduce minimum deductibles and/or increase
deductible levels in conjunction with any premium increases.
It is again a notable feature of the general increases that they do not necessarily reflect the underwriting performance of
individual clubs. While the range of figures announced is unusually large it does not correlate directly with each individual
club’s underwriting results. The clubs with the largest underwriting deficits in 2011/12 are not necessarily those with the highest
announced general increases.
It is evident that the perception of future claims trends differs from club to club. The philosophy of club boards and to what extent
to assist through the current challenging shipping environment has also been a significant factor over the last two renewals.
25
Undoubtedly there is an element of competitive market pressure influencing the general increase decisions rather than there
being the outcome of a pure technical assessment of underwriting requirements.
In September 2010, the Skuld declared that it would no longer be announcing general increases in the traditional manner.
Willis welcomed this approach so long as it could be translated into practice in a manner that would not result in effectively
the same methodology (i.e. setting an overall ‘internal’ target which is then applied in the same way as an announced general
increase). For 2013 the Skuld renewal announcement appears very much like a conventional general increase, although
setting out a range between +7% and +10%. This is a disappointing development signalling the limitations of their short lived,
though potentially positive idea.
FD&D (FREigHt DEMuRRagE anD DEFEncE)
The general increases on the FD&D side are similarly disparate, with the variance from the smallest to the largest being 15%
and with an average level of 8%. Individual clubs’ experience of commercial disputes continues to vary considerably. Unlike
the P&I increases, there seems to be a much closer correlation between recent underwriting performance on FD&D and the
announced increases. The graph outlining the FD&D announcements is shown overleaf.
26
GENERAL INCREASES
P&I GENERAL INCREASES - FEBRUARY 20, 2013
Club Percentage
18
Britannia announced a 12.5%
general increase on the advance
call. They also increased their
deferred call from 40% to 45%.
The combined effect of these
two factors is a 16.5% increase in
estimated total call.
Market Average
16.5
16
15
14
12.5
12.5
12
10
10
10
7.5
7.5
7.5
7.5
7.5
Standard
Steamship
Swedish
UK
West of England
8.5
8
Skuld are continuing the
methodology of not announcing
a general increase but have given
an ‘inflationary increase’ range of
between 7% and 10%.
5
5
Gard
Japan
7
6
5
4
Skuld
Shipowners
North of England
London
Britannia
0
American
2
fd&d GENERAL INCREASES - FEBRUARY 20, 2013
Club Percentage
16
Market Average
15
14
12.5
12
10
10
10
10
9
8
7.5
6
5
5
8
7.5
5
4
2
27
West of England
UK
Swedish
Steamship
Standard
*Skuld
Shipowners
North of England
N/A
London
Japan
Gard
Britannia
0
American
0
* Skuld are continuing the
methodology of not announcing
a general increase but assessing
their targets internally.
GENERAL INCREASES
P&I MARKET CYCLE - AVERAGE P&I GENERAL INCREASE
40%
Average General Increase
35%
30%
25%
20%
15%
10%
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
0%
1992
5%
2002 - 2013 market P&I GENERAL INCREASES
%
2002
2003
2004
American
26
25
17.5
Britannia
28.8
15
8.5
25
15
7.5
5
Gard
Japan
2005
2006
2007
10
10
10
7.5
-2.5
5
7.5
5
2008
2009
2010
2011
2012
2013
20
29
4.2
2
5
10
23.8
12.5
5
5
5
12.5
10
15
0
0
5
5
0
10
0
0
0
10
20
21.2
12.5
10
3
5
27.5
25
15
12.5
12.5
7.5
17.5
15
5
5
5
12.5
North of England
25
25
17.5
12.5
7.5
7.5
17.5
17.5
5
3
5
15
Shipowners
20
15
0
0
0
5
*
10
5
0
0
5
Skuld
30
25
15
7.5
5
2.5
7.5
15
5
**
**
7-10
Standard
25
25
20
12.5
5
5
15
15
3
3.5
5
7.5
Steamship
25
25
20
12.5
5
9
15
17.5
5
0
5
7.5
Swedish
25
25
15
10
10
7.5
15
15
2.5
2.5
5
7.5
United Kingdom
20
25
17.5
12.5
12.5
7.5
17.5
12.5
5
5
3
7.5
West of England
25
25
15
12.5
12.5
5
15
19.2
5
5
5
7.5
23.3
21.5
13.0
8.8
6.5
6.7
16.2
16.5
4.8
3.4
4.3
8.5
London
Average
* The Shipowners Club did not announce a general increase in 2008, however they selectively applied increases between 15 and 20%.
** The Skuld has not announced general increases since 2010. Members’ increase is assessed on their individual merits and ‘global risk factors’.
Britannia announced a 12.5% general increase on the advance call. They also increased their deferred call from 40% to 45%. The combined effect
of these two factors is a 16.5% increase in estimated total call.
The Gard did not announce figurative general increases in 2007, 2008 and 2009, but the approximate overall increases they are seeking are noted.
The figures noted for Britannia in 2008, West of England, Japan Club and American Club in 2009 and 2010 represent the cumulative effect of the
announced increase in the advance call plus the increase in deferred call estimate.
28
Following an increase in the average levels of club release calls in the early 2000’s, release calls are an issue that Willis has
consistently highlighted in numerous previous reviews.
As P&I clubs are mutual, release calls are a fair and necessary mechanism. Unfortunately however there appears to have been
a tendency, decreasing marginally of late, to use them as much as a commercial penalty for leaving as a reasonable estimate of
future exposure for the club. This section outlines each club’s release calls, discussing them in the context of current market
averages and historic exposures.
backgROunD
The intent of release calls is to remove any potential future liability for further calls to the club following termination of
membership in the particular club. By paying the release call, the member is ‘released’ from their obligation to pay future
supplementary calls to the club. Thus the release call is intended to represent the member’s proportion of the club’s incurred
but not reported (IBNR) claims for the open years outstanding.
This is an entirely equitable mechanism in a mutual environment but the level of release calls established by a number of
clubs suggest that theory is not necessarily mirrored in practice.
29
RElEasE call lEvEls vs. ExPOsuRE
We have included a table overleaf setting out the release call percentages announced by each of the International Group (IG)
clubs as at the end of November 2012. Due to the different calling structures of individual clubs, the announced figures are
difficult to compare directly across the market. Britannia, Gard, Japan and West of England announce their release calls as a
percentage of their advance call, whereas the remainder of the market publish release calls as a percentage of their estimated
total call (however described; mutual premium, estimated total premium etc). To enable direct comparison, we have included
a graph which adjusts all the announced release calls to percentages of estimated total calls.
N.B. The West of England is unique in separating the International Group reinsurance costs from their mutual premium.
The release calls of this club would therefore only apply to the retained mutual premium of the club resulting in the release
calls being slightly higher than the equivalent levels of any other club in the IG.
The range is significant. Clubs like the Shipowners’ or Japan represent the lower, acceptable end of the market with release
calls set at nil and 3.6% respectively. At the higher end of the market, there are still six clubs which have at least one open
policy year with release calls set at, or over, 20% (of estimated total call).
The graph shows the clubs arranged in order of their average release call for the three open years. Only three out of the eight
clubs with the lowest average release calls, have made unbudgeted calls in the last 15 years. All of the five clubs with the
highest average release calls have been forced to make unbudgeted calls at some point in the last 15 years.
30
RELEASE CALLS
PUBLISHED RELEASE CALLS
2010/11
2011/12
2012/13
American
Club
5
15
20
Britannia
0
7.5
15
Gard
0
10
25
Japan
5
5
5
15
15
15
North of England
0
5
20
Shipowners
0
0
0
Skuld
5
7.5
15
Standard
5
10
15
Steamship
5
15
20
Swedish
5
20
25
United Kingdom
5
5
12.5
West of England
15
30
30
London
Figures as announced by each club: percentages of Advance Calls or Estimated Total Calls in accordance with each club’s normal
calling structure. As at 30 November 2012
Release Calls, as a Percentage of Estimated Total Calls
15
15
15
20
20
15
20
15
11.5
10
10.7
10.1
5
5
5
West of England
Swedish
London
American
Steamship
Standard
Gard
Skuld
0
5
8
5
5
North of England
UK
Britannia
0
0
3.57
3.57
3.57
Japan
0
Shipowners 0
0
0
5
5
7.5
10
5
31
15
15
12.5
15
5.36
Percentage Release Calls
20
20
20
23
23
25
2010/11
2011/12
2012/13
Average (all years)
25
30
RELEASE CALLS
When comparing the published release calls to average levels of unbudgeted calls across the market, the figures continue
to surprise. The average level of unbudgeted calls across the IG market over the last 15 years is only 1.5% (above original
budget) per year. Over the most recent 10 years this average accuracy is slightly worse, at 2.8% above budget per year.
If the average is just taken across the ‘large ship’ clubs these averages deteriorate further, to 3.1% (15 year average) and
4.4% (10 year average).
By contrast, the current average level of release calls across the market is 10.1%. Whichever measure of average deviation
from budgeted levels is used, the release call levels clearly exceed this by some considerable margin.
In the interests of balance, it could conceivably be argued that the average comparison is misleading and that release
calls should be set at a level to address the worst case scenario rather than the average. In this context, over the last 15
years the worst two individual years were 2006 and 2007 at 11.9% and 10.6% (above original budget) respectively.
There has been some improvement in the average release call levels over the recent year. Notable reductions in release
call levels were seen from American Club, Skuld and UK Club compared to this point in 2011. The only clubs to increase
their average release call since last year were Britannia and North of England.
The Shipowners’ Club continues to be unique with release calls set at zero. It specialises in smaller tonnage and arguably
has a relatively predictable claims pattern. It is also subject to greater competitive pressure than any other member club
in the IG.
The average release call level over the three open years has reduced by just under 1% since November 2011.
BANK GUARANTEE VS. PAYING RELEASE CALLS
Clubs will reasonably argue that any member has the option of providing a bank guarantee as security for potential
future calls instead of actually paying release calls. This is entirely true, however it is not without cost. In addition to
bank costs, there is frequently a requirement to tie up funds to secure the guarantee. In challenging economic times,
where liquidity is all important, the bank guarantee route is far from straightforward and in many cases presents as
large a barrier to movement as actually paying the release calls outright.
CONCLUSION
Release call levels have very marginally improved over the last twelve months. There still appears to be considerable
room for improvement for certain clubs to bring their release call levels closer to the actual probability of their making
unbudgeted calls. The average levels of release calls for the policy years 2010/11, 2011/12 and 2012/13 are currently 5.5%,
10.9% and 15.6% respectively. At the same time there hasn’t been a variance in average unbudgeted calls in excess of 15%
across the market since 1991.
Clubs have a wide variety of sophisticated modelling methods at their disposal. It is therefore curious that some clubs
believe that their claims may exceed expectations by up to 20%.
Given the ongoing discrepancy between average release call levels and average levels of unbudgeted calls, it is
understandable why the release calls of some clubs are perceived to be more a commercial ‘penalty’ for moving than
a realistic assessment of the potential for the club to over call.
The question that is inevitably raised in respect of the clubs with consistently high release calls is this: is the level of
confidence in their own modelling so low that they seek the security of release calls pitched at levels approaching the
twenty year worst case scenario? If this is not the case, the alternative conclusion is that release calls for those clubs are
in reality a convenient method of increasing the barrier to movement from them.
32
intRODuctiOn
The following section includes the consolidated financial year summaries for each club.
Basis oF FinanCial analysis
The main aim in the Willis analysis of club report and accounts has been consistency. There are still variations between the
way clubs report, however we try as far as possible to compare ‘like with like’ and apply the same approach year after year.
We simplify and summarise certain aspects where information is available and have tried to adopt the same approach for
all clubs.
A glossary of terms is provided opposite. Consolidated financials are provided in this format for each club.
“
33
Large variances in financial performance continue
to persist between individual clubs.
Calls and premiums
Reinsurance Premiums
Operating Expenses
Operating income
Gross Paid Claims
Net Paid Claims
Paid Technical Surplus/Deficit
Net Change in Provision for Claims
incurred Technical Surplus/Deficit
Investment Income
Overall Surplus/Deficit for Year
net Assets
Forecast Additional Calls
free Reserves (including forecast
additional calls)
All calls (gross basis, including brokerage).
All reinsurance premiums.
All general management, administrative and audit expenses
(not including claims management costs).
Calls, less reinsurance costs, less expenses.
Paid gross claims, including Pool contributions (including claims
management costs).
Gross paid claims less reinsurance and Pool recoveries.
Operating income, less net paid claims.
Change in net estimated outstanding claims.
Paid technical surplus (deficit), plus/minus net change in
provision for claims.
All investment income, including exchange gains/losses, tax etc.
incurred technical surplus (deficit), plus investment income.
Total assets, less creditors, less miscellaneous provisions for
taxation etc., less additional calls advised but not yet debited.
Total net estimated outstanding claims.
Premium/calls advised but not yet debited.
net assets, plus forecast additional calls, less outstanding claims.
34
CLUB FINANCIAL PAGES
35
GARD
All figures are on a consolidated financial year basis, in USD.
BRITANNIA
With effect from the 1997/98 policy year, Britannia entered into a
reinsurance contract with Boudicca Insurance Company Limited,
located and regulated in Bermuda. Boudicca Insurance holds assets
in a way that cannot be dissipated to the detriment of the reinsurance
contract with Britannia. This is intended to be a tax efficient vehicle for
a proportion of Britannia’s reserves.
Boudicca is owned and controlled by the Iceni Trust, a charitable
trust for which reports and accounts are unavailable. For the sake of
effective comparison, we have always included Boudicca’s assets in
the figures set out in our summary page for Britannia. The assets of
Boudicca as disclosed by the club are as follows:
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
USD 105.4 million
USD 106.7 million
USD 124.9 million
USD 152 million
USD 142.8 million
USD 132.3 million
2006/07 2007/08
2008/09
2009/10
2010/11
2011/12
USD 108.4 million
USD 80.3 million
USD 85 million
USD 153.8 million
USD 179.2 million
USD 170.3 million
The relationship between Britannia and Boudicca presents an
unusual challenge in terms of trying to show the ‘combined’ picture
as accurately as possible.
The adjustments we make to Britannia’s reported figures to show the
overall picture including Boudicca are as follows:
– Britannia reinsurance premiums reduced by amounts paid
to Boudicca
– Britannia paid claims increased by amounts recovered from Boudicca
– The change in provision of claims for Boudicca added to the change
for Britannia
– Inclusion of a non-technical adjustment under Britannia’s
‘investment income’ heading to reflect the difference between
Boudicca’s investment income and operating costs
Standard Club
The figures shown for the 2010/11 and 2011/12 years on the Standard
Club page reflect the combined results of the consolidated club
following its reorganisation at the end of December 2011. The
principal difference from the 2010/11 (restated) year is the inclusion
of the previously separate Standard Steamship Owners’ Protection
and Indemnity Association (London) Limited (‘Standard London’)
and The Standard Steamship Owners’ Mutual War Risks Association
Limited (‘Standard War Risks’) with the results of the Standard
Steamship Owners’ Protection and Indemnity Association (Bermuda)
Limited (‘Standard Bermuda’).
In Gard’s 2010/11 Management Report, the club
changed their basis of reporting the P&I class
of cover. The Gard P&I underwriting results
continue to be provided in full but the club has
only published the combined Gard Group results
for investment return, assets and free reserves
(i.e. the combined results for P&I, Marine and
Energy). To provide a meaningful comparison, the
figures used in our financial graphs representing
Gard’s investment income, assets and free reserves
are Willis analysts’ estimates of solely the P&I
proportion of each of these amounts (although the
published ‘Group’ figures for these amounts are
stated in the table on the Gard’s page).
CLUB FINANCIAL PAGES
NOTES
SWEDISH CLUB
The Swedish Club’s published report and
accounts have never included an allocation of
funds between their P&I and Hull and Machinery
(H&M) classes. This makes the P&I class
impossible to compare directly with other clubs
and consequently we have only included a partial
(underwriting) financial summary for this club.
STANDARD AND POOR’S
Standard and Poor’s (S&P) ratings mentioned
in the following pages fall into two categories,
interactive ratings and public information ratings.
S&P establish interactive ratings following in-depth
meetings with the club managers. Interactively
rated clubs are identified by ‘*’ after the rating.
Public information ratings are signified by a ‘pi’
subscript and are established purely on the basis
of the information provided in the clubs’ published
financial statements.
It is the clubs themselves that choose whether
or not to pursue an interactive rating and there
is a cost to the club from S&P for the consequent
additional work involved. When an interactive
rating is undertaken, the rating of the particular
club usually shows some form of improvement.
This phenomenon was seen most recently with
the West of England. In January 2012, S&P
downgraded West of England on public information
from BBBpi to BBpi. In October 2012, following an
interactive rating this was increased to BBB-*.
All ratings are shown as at 1 November in the
years noted.
36
www.american-club.com
Highlights
Gross Underwriting Development
200
180
140
120
80
Net Assets
Members’ Receivables
and Unbilled Assessments
Free Reserves
-18,725
-5,475
5,470
-7,887
1,342
-10,359
20,551
12,664
13,939
15,281
6,966
-3,393
196,322
188,018
40,027
233,238
197,851
28,225
232,413
200,838
28,644
48,331
63,612
60,219
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
50
50
40
40
30
30
20
20
10
10
0
0
-10
-10
-20
-20
-30
-30
-40
-40
-50
-50
-60
-60
-70
-80
37
0
00/01
NET Underwriting Development
USD (millions)
Calls and Premiums
Operating Expenses
Operating Income
Gross Paid Claims
Net Paid Claims
Paid Technical
Surplus/Deficit
Net Change in Provision
for Claims
Incurred Technical
Surplus/Deficit
Investment Income
Overall Surplus/Deficit
for Year
2011/12
111,955
-16,283
-33,045
62,627
76,588
67,516
-4,889
5
20
Consolidated Financial Year Summary
(USD 000s)
2010/11
114,631
-9,362
-34,691
70,578
100,628
74,711
-4,133
10
40
2012
BB+*
2009/10
115,691
-12,282
-35,378
68,031
182,740
94,643
-26,612
15
100
0
2011
BB-*
20
60
2010
2011
2012
Owned/Mutual 15,283,342 15,400,000 16,800,000
Chartered/Fixed 1,506,488 1,000,000 1,000,000
Total
16,789,830 16,400,000 17,800,000
2010
BB-*
25
160
Entered tonnage (GT)
s&p rating
30
Calls and Premiums
Gross Paid Claims
Total Tonnage (GT)
Entered Tonnage (GT millions)
—— 9% increase in owned tonnage
—— Premiums slightly reduced (by 2.3%)
—— Gross and net paid claims reduced by 23.9%
and 9.6% respectively
—— USD 5.5 million increase in outstanding
claims estimates
—— Total incurred claims increased by 5.4%
—— Investment return of just over 3%
—— Reduced investment income insufficient to
offset the USD 10.4 million underwriting
loss, leading to a modest overall deficit of
USD 3.4 million
—— Assets and free reserves reduced by 0.35%
USD (millions)
CLUB FINANCIAL PAGES - AMERICAN CLUB
American Club
Paid Technical Surplus (Deficit)
Change in Estimated Outstanding Claims
Incurred Technical Surplus (Deficit)
00/01
01/02
02/03
03/04 04/05
05/06
-70
-80
06/07
07/08
08/09 09/10
10/11
11/12
Tonnage Split
by Nationality of Management
Overall Financial Result
30
Investment Income
Overall Surplus for Year (Deficit)
Rest of World 3%
Europe 46%
20
CLUB FINANCIAL PAGES - AMERICAN CLUB
American Club
USD (millions)
10
0
-10
-20
Asia 40%
Americas 11%
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
-30
Tonnage Split
by Vessel Type
assets and free reserves
USD (millions)
250
Net Assets (Market)
Free Reserves
250
200
200
150
150
100
100
50
50
General Cargo/
Container/
Ferry/
Passenger 10%
Tug/Barge 4%
Bulk 61%
Tanker 25%
0
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
0
38
www.britanniapandi.com
Highlights
300
270
2010
2011
2012
Owned/Mutual
98,000,000 103,000,000 111,100,000
Chartered / Fixed 40,000,000 32,800,000 28,900,000
Total
138,000,000 135,800,000 140,000,000
s&p rating
2010
Api
2011
Api
Net Assets (including
Boudicca assets)
Free Reserves
(including Boudicca)
39
180
240
160
210
140
180
120
150
100
120
80
90
60
60
40
30
20
0
0
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
2012
Api
(USD 000s)
80
80
60
60
40
40
20
20
0
0
2009/10
289,605
-52,068
-25,530
212,007
183,618
185,271
26,736
2010/11
298,482
-52,718
-27,877
217,887
156,570
150,542
67,345
2011/12
281,772
-45,681
-29,389
206,702
188,988
176,941
29,761
21,422
63,584
72,001
5,314
3,761
-42,240
-20
-20
94,090
99,404
74,454
78,215
49,109
6,869
-40
-40
-60
-60
976,482
1,117,173
1,183,501
688,796
88,207
375,893
755,480
92,415
454,108
815,113
92,589
460,977
USD (millions)
Calls and Premiums
Operating Expenses
Operating Income
Gross Paid Claims
Net Paid Claims
Paid Technical
Surplus/Deficit
for Claims
Incurred Technical
Surplus/Deficit
Investment Income
for Year
200
Calls and Premiums
Gross Paid Claims
Total Tonnage (GT)
—— Nearly 8% increase in owned tonnage
—— 5.6% reduction in premiums (the underlying
reduction would have only been 1.3% if
Britannia hadn’t waived 7.5% of the 2009/10
policy year deferred call)
—— Gross and net paid claims increased by 20.7%
—— Total incurred claims increased by 16%
(from USD 214 million to USD 249 million)
—— USD 42 million underwriting deficit
(deteriorated from a modest surplus in 2010/11)
—— 6% return on investments (approximately
USD 49 million)
—— Very positive investment result allows a modest
overall surplus for the year (USD 6.9 million)
—— Assets and free reserves increased by 5.9% and
1.5% respectively
USD (millions)
CLUB FINANCIAL PAGES - BRITANNIA
Britannia
-80
-100
-80
00/01
01/02
02/03
03/04 04/05
05/06
-100
06/07
07/08
08/09 09/10
10/11
11/12
Tonnage Split
120
Middle East 1%
100
Europe 20%
CLUB FINANCIAL PAGES - BRITANNIA
Britannia
80
60
USD (millions)
40
20
0
-20
-40
-60
Investment Income
00/01
01/02
02/03
03/04 04/05
USD (millions)
Scandinavia 19%
-80
05/06
06/07
07/08
08/09 09/10
10/11
11/12
Americas 7%
-100
Tonnage Split
by Vessel Type
1,200
Asia 53%
Net Assets (including Boudicca assets)
Free Reserves (including Boudicca)
1,200
Other 1%
1,000
1,000
800
800
600
600
400
400
200
200
Bulk Carrier 32%
Container 25%
0
General Cargo 4%
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
0
Tanker 38%
40
www.gard.no
Highlights
500
N.B. The figures in the table below from 2010/11
represent the underwriting results of Gard P&I
class but the figures for investment, assets and
free reserves represent those for the combined
Gard Group. To ensure some form of meaningful
comparison, the figures used in the graphs are
the Willis analysts’ estimates of the purely P&I
proportion of each of these areas.
250
Calls and Premiums
Gross Paid Claims
Total Tonnage (GT)
400
200
300
150
200
100
100
50
0
—— Owned tonnage increased by 12.9%
—— Reported premium increased by 9%, however
this is complicated by the Gard not charging
their full deferred calls in the most recent
three years
—— The underlying premium increase would
have been 5.7%, had the full deferred calls
been charged
—— Gross paid claims reduced by 7.7%, contrasting
with the 17.7% increase in net paid claims
—— The USD 29.4 million underwriting loss would
have been improved to a USD 14.9 million loss
had the full deferred call been made in 2011/12
USD (millions)
CLUB FINANCIAL PAGES - GARD
GARD
0
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
2010
2011
2012
Owned/Mutual
119,100,000 130,000,000 146,800,000
Chartered/Fixed 65,800,000 65,600,000 73,300,000
Total
184,900,000 195,600,000 220,100,000
s&p rating
2010
A*
2011
A*
2012
A*
100
Calls and Premiums
Operating Expenses
Operating Income
Gross Paid Claims
Net Paid Claims
Paid Technical
Surplus/Deficit
for Claims
Incurred Technical
Surplus/Deficit
Investment Income
for Year
2009/10
447,601
-69,902
-54,519
323,180
335,442
303,586
19,594
2010/11
463,098
-86,344
-43,030
333,724
420,914
292,945
40,779
2011/12
504,812
-90,641
-41,330
372,841
388,575
344,889
27,952
31,041
67,205
57,365
-11,447
-26,426
-29,413
174,889
163,442
n/a
n/a
n/a
n/a
USD (millions)
(USD 000s)
75
75
50
50
25
25
0
0
-25
-25
-50
-50
-75
-75
-100
Net Assets
Free Reserves
41
1,259,720
729,816
27,638
557,542
2,171,988 2,295,549
1,116,114
1,163,964
42,220
58,529
789,695 825,618
100
-100
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
Tonnage Split
250
Investment Income
Willis Estimates (P&I only)
200
Americas 10%
Norway 17%
CLUB FINANCIAL PAGES - GARD
Gard
150
100
USD (millions)
50
0
-50
-100
-150
-200
-250
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
Asia 22%
Greece 12%
Germany 16%
Tonnage Split
by Vessel Type
1,750
Other Europe 23%
Net Assets
Free Reserves
1,750
Other 4%
1,500
1,500
Gas Carrier 6%
Bulk Carrier 21%
USD (millions)
Passenger 2%
1,250
1,250
1,000
1,000
750
750
500
500
250
250
0
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
0
Tanker 32%
Other Dry Cargo 8%
Mobile Offshore Unit 10%
Container 17%
42
www.piclub.or.jp
Highlights
2010
2011
Owned/Mutual
88,250,000 89,030,000
Owned/Fixed
3,300,000 2,890,000
Chartered/Fixed
12,310,000 13,510,000
Total
103,860,000 105,430,000
2012
87,250,000
2,610,000
13,650,000
103,510,000
300
120
Calls and Premiums
Gross Paid Claims
Total Tonnage (GT)
100
250
80
200
60
150
40
100
20
50
s&p rating
2010
BBBpi
2011
BBBpi
2012
BBBpi
0
(USD 000s)
Net Assets
Forecast Deferred Calls
Free Reserves
2010/11
280,927
-49,652
-25,819
205,456
211,233
154,787
50,669
2011/12
251,773
-46,228
-26,498
179,047
207,000
164,031
15,016
20,956
28,392
16,359
6,020
22,277
-1,343
953
6,973
-14,995
7,282
-2,883
-4,226
354,833
220,464
0
134,369
432,905
275,078
0
157,827
461,600
294,650
0
166,950
60
50
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
60
50
40
40
30
30
20
20
10
10
0
0
-10
-10
-20
-20
-30
43
0
00/01
USD (millions)
Calls and Premiums
Operating Expenses
Operating Income
Gross Paid Claims
Net Paid Claims
Paid Technical
Surplus/Deficit
for Claims
Incurred Technical
Surplus/Deficit
Investment Income
for Year
2009/10
230,981
-43,368
-24,034
163,579
203,383
136,603
26,976
—— Total entered tonnage reduced by nearly 2%
—— Premium reduced by 10.4%
—— Gross paid claims reduced by 2%, net paid
claims increased by 6%
—— Total incurred claims reduced by 1.5% (from
USD 183 million to USD 180 million)
—— Modest underwriting loss (USD 1.3 million)
—— Investment loss of USD 2.9 million, leading to
overall loss to USD 4.2 million
—— Assets and free reserves increased by 6.6%
USD (millions)
CLUB FINANCIAL PAGES - JAPAN P&I CLUB
Japan P&I Club
-30
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
Tonnage Split
by Nationality of FLAG
40
Investment Income
Marshal Islands 3%
30
Bahamas 3%
Singapore 3%
Korea 1%
Others 7%
Panama 65%
20
CLUB FINANCIAL PAGES - JAPAN P&I CLUB
japan P&I Club
USD (millions)
10
0
-10
-20
-30
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
400
Hong Kong 3%
Liberia 3%
11/12
Tonnage Split
by Vessel Type
450
Japan 12%
450
Net Assets (Market)
Outstanding Claims (P&I Only)
Free Reserves
400
LPG, LNG Tanker 5%
Other 1%
Container Ship 10%
350
350
300
USD (millions)
300
250
250
200
200
150
150
100
100
50
50
Tanker 15%
Car Carrier 11%
0
0
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
General Cargo Ship 3%
Bulk Carrier 55%
44
www.londonpandi.com
Highlights
250
50
Calls and Premiums
Gross Paid Claims
Total Tonnage (GT)
200
40
150
30
100
20
50
10
—— 5% increase in owned tonnage
—— 3.6% reduction in premium
—— Estimates for outstanding claims reduced by
USD 12.7 million
—— Overall 7.7% reduction in total incurred claims
—— Underwriting loss of USD 16.7 million (though
improved by USD 4.7 million on 2010/11)
—— Investment income of USD 16.3 million - not
quite enough to prevent a USD 0.4 million
overall loss for 2011/12
—— Assets and free reserves reduced by 3.2% and
0.3% respectively
USD (millions)
CLUB FINANCIAL PAGES - London P&I Club
London P&I Club
Owned/Mutual
Chartered/Fixed
Total
2010
37,223,388
3,391,719
40,615,107
s&p rating
2011
38,713,248
5,117,048
43,830,296
2012
40,777,050
3,428,024
44,205,074
0
2010
BBBpi
2011
BBBpi
Net Assets
Free Reserves
2010/11
113,224
-22,549
-11,021
79,654
107,178
90,687
-11,033
2011/12
109,190
-21,216
-11,367
76,607
133,503
106,051
-29,444
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
12,055
10,431
-12,713
-16,460
-21,464
-16,731
42,367
25,907
25,108
3,644
16,330
-401
362,468
253,616
32,574
141,426
409,116
264,046
0
145,070
396,002
251,333
0
144,669
100
USD (millions)
2009/10
121,011
-20,292
-11,103
89,616
137,074
94,021
-4,405
100
75
75
50
50
25
25
0
0
-25
-25
-50
45
01/02
2012
BBBpi
(USD 000s)
Calls and Premiums
Operating Expenses
Operating Income
Gross Paid Claims
Net Paid Claims
Paid Technical
Surplus/Deficit
for Claims
Incurred Technical
Surplus/Deficit
Investment Income
for Year
0
00/01
-50
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
Tonnage Split
100
Investment Income
Americas 4%
75
Asia 29%
CLUB FINANCIAL PAGES - London P&I Club
london P&I Club
USD (millions)
50
25
0
-25
Northern Europe 18%
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
Tonnage Split
by Vessel Type
Net Assets
Free Reserves
400
Southern Europe 49%
-50
400
350
350
Gas Carrier 2%
USD (millions)
Tanker 26%
300
300
250
250
200
200
150
150
100
100
50
50
0
0
Container 16%
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
Bulk Carrier 56%
46
www.nepia.com
Highlights
350
180
Calls and Premiums
Gross Paid Claims
Total Tonnage (GT)
160
300
140
250
120
200
100
80
150
60
Owned/Mutual
Chartered/Fixed
Total
100
40
2010
2011
2012
86,400,000 105,000,000 123,000,000
28,000,000 45,000,000 40,000,000
114,400,000 150,000,000 163,000,000
s&p rating
50
0
2010
A*
2011
A*
Net Assets
Free Reserves
2010/11
314,243
-59,738
-43,721
210,784
142,485
124,424
86,360
2011/12
346,348
-55,432
-51,616
239,300
194,217
176,571
62,729
0
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
14,066
31,532
69,501
11,152
54,828
-6,772
17,998
29,150
16,782
71,610
8,352
1,580
706,697
466,435
0
240,262
810,400
497,966
0
312,434
896,237
582,224
0
314,013
100
80
USD (millions)
2009/10
285,051
-47,619
-35,811
201,621
188,551
176,403
25,218
100
80
60
60
40
40
20
20
0
0
-20
-20
-40
-40
-60
-60
-80
47
20
2012
A*
(USD 000s)
Calls and Premiums
Operating Expenses
Operating Income
Gross Paid Claims
Net Paid Claims
Paid Technical
Surplus/Deficit
for Claims
Incurred Technical
Surplus/Deficit
Investment Income
for Year
—— Owned tonnage increased by 17%
—— Premium increased by 10%
—— Gross and net paid claims increased by 36%
and 42% respectively
—— USD 69.5 million increase in provisions for
outstanding claims
—— Material increase (57%) in total incurred claims
—— USD 6.8 million underwriting loss
—— The underwriting loss was small enough
that despite low investment income
(USD 8.4 million) a USD 1.6 million overall
surplus was achieved
0.5% respectively
USD (millions)
CLUB FINANCIAL PAGES - North of England
North of England
-80
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
Tonnage Split
80
Investment Income
70
60
50
Scandinavia 6%
South America 5%
Others 1%
Northern Europe 21%
40
CLUB FINANCIAL PAGES - North of England
north of england
USD (millions)
30
20
10
0
-10
-20
-30
Asia Pacific 26%
-40
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
-50
USD (millions)
900
Net Assets (Market)
Free Reserves
1,000
900
800
800
700
700
600
600
500
500
400
400
300
300
200
200
100
100
0
00/01
01/02
02/03
03/04 04/05
Southern Europe 22%
Tonnage Split
by Vessel Type
1,000
Middle East 11%
North America 8%
05/06
06/07
07/08
08/09 09/10
10/11
11/12
0
Other 5%
Bulk Carrier 34%
Car Carrier 6%
LNG 2%
Container 23%
Tanker 30%
48
www.shipownersclub.com
Highlights
225
200
150
15
2011
17,772,477
350,000
18,122,477
2012
19,792,065
350,000
20,142,065
2010
BBBpi
2011
BBBpi
2012
A-*
Net Assets
Free Reserves
100
10
75
0
2010/11
196,815
-22,998
-40,510
133,307
106,348
96,929
36,378
2011/12
209,689
-19,927
-43,030
146,732
115,431
93,454
53,278
16,092
10,221
24,718
-2,195
26,157
28,560
41,668
39,473
26,717
52,874
17,986
46,546
367,632
232,592
0
135,040
430,727
242,813
0
187,914
501,991
267,531
0
234,460
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
60
60
40
40
20
20
0
0
-20
-20
-40
-40
-60
49
0
00/01
USD (millions)
2009/10
174,190
-24,186
-34,409
115,595
127,692
101,698
13,897
5
25
(USD 000s)
Calls and Premiums
Operating Expenses
Operating Income
Gross Paid Claims
Net Paid Claims
Paid Technical
Surplus/Deficit
for Claims
Incurred Technical
Surplus/Deficit
Investment Income
for Year
125
50
2010
16,583,572
350,000
16,933,572
s&p rating
20
175
Owned/Mutual
Chartered/Fixed
Total
25
Calls and Premiums
Gross Paid Claims
Total Tonnage (GT)
—— Owned tonnage increased by 11%
—— Premium increased by 6.5%
—— Gross paid claims increased by 8.5%, net paid
claims reduced by 3.6%
—— USD 24.7 million increase in reserves for
outstanding claims
—— 10.3% increase in total incurred claims
—— Material (USD 28.6 million)
underwriting surplus
—— Above market average investment return
of 4.8%
—— Positive underwriting and investment result
lead to significant overall surplus for 2011/12
(USD 46.5 million)
24.8% respectively
USD (millions)
CLUB FINANCIAL PAGES - Shipowners
Shipowners
00/01
01/02
02/03
03/04 04/05
05/06
-60
06/07
07/08
08/09 09/10
10/11
11/12
Tonnage Split
60
Investment Income
40
Worldwide 8%
Africa 1%
South East Asia &
Far East 46%
CLUB FINANCIAL PAGES - Shipowners
shipowners
20
USD (millions)
0
-20
-40
-60
Australasia 5%
Europe 19%
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
-80
USD (millions)
500
North America 4%
Middle East & India 9%
Tonnage Split
by Vessel Type
550
Latin America 8%
Net Assets (Market)
Outstanding Claims
Free Reserves
550
500
450
450
400
400
350
350
300
300
250
250
200
200
150
150
100
100
50
50
Yacht 2%
Tanker 12%
Barge 34%
Dry Cargo
Vessel 11%
Fishing Vessel 5%
Harbour Craft 9%
0
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
0
Offshore Craft 23%
Passenger Vessel 4%
50
www.skuld.com
Highlights
—— 11.7% increase in owned entered tonnage
—— Outstanding claims provisions increased by
USD 24.5 million
—— Underwriting surplus of USD 11.7 million
—— Combined investment income result of
USD 12.7 million
—— Very positive overall surplus for the year
(USD 24.4 million)
—— Both assets and free reserves increased
by 9.4%
300
270
2012
69,900,000
not advised
69,900,000
Net Assets
Free Reserves
51
40
150
120
30
2011
A-*
10
30
0
75
2011/12
299,971
-38,482
-56,109
205,380
233,115
169,191
36,189
51,459
15,343
24,531
10,627
30,608
11,658
46,381
57,008
34,013
64,621
12,696
24,354
534,707
333,202
0
201,505
633,939
367,504
0
266,435
693,673
402,244
0
291,429
USD (millions)
2010/11
272,429
-32,312
-44,436
195,681
204,348
149,730
45,951
0
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
2012
A*
2009/10
255,386
-26,507
-39,217
189,662
194,414
127,576
62,086
20
60
(USD 000s)
Calls and Premiums
Operating Expenses
Operating Income
Gross Paid Claims
Net Paid Claims
Paid Technical
Surplus/Deficit
for Claims
Incurred Technical
Surplus/Deficit
Investment Income
for Year
180
50
N.B. The Skuld, probably correctly, do not feel
GT is a consistent measurement of charterers’
business. As a measure of size however, Skuld’s
premium volume of chartered business is
USD 52 million.
2010
A-*
60
90
2010
2011
55,011,661 62,600,000
not advised not advised
55,011,661 62,600,000
s&p rating
70
210
Owned/Mutual
Chartered/Fixed
Total
80
Calls and Premiums
Gross Paid Claims
Owned P&I Tonnage (GT)
240
USD (millions)
CLUB FINANCIAL PAGES - Skuld
Skuld
75
50
50
25
25
0
0
-25
-25
-50
-50
-75
-75
-100
-100
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
Tonnage Split
80
Investment Income
60
40
Americas 5%
Middle East/
Africa/India 2%
CLUB FINANCIAL PAGES - Skuld
Skuld
China 24%
USD (millions)
20
0
-20
-40
-60
Europe 37%
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
Other Asia 9%
Tonnage Split
by Vessel Type
700
Scandinavia 23%
-80
700
Net Assets (Market)
Free Reserves
Other 3%
600
600
Bulk Dry 29%
Tanker 44%
500
USD (millions)
500
400
400
300
300
200
200
100
100
Passenger & RoRo 5%
Offshore 3%
0
0
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
General Cargo 8%
Container 8%
52
www.standard-club.com
Highlights
300
100
200
2010
A*
Net Assets
Free Reserves
53
150
60
40
50
2011
A*
0
20
0
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
2012
A*
2009/10
250,291
-48,114
-16,615
185,562
208,464
148,204
37,358
2010/11
278,100
-68,200
-21,100
188,800
181,100
144,200
44,600
2011/12
286,200
-65,500
-23,900
196,800
285,600
177,700
19,100
36,017
26,600
63,200
1,341
18,000
-44,100
65,794
67,135
58,900
76,900
47,000
2,900
670,449
427,642
0
242,807
809,700
460,000
0
349,700
875,600
523,000
0
352,600
USD (millions)
(USD 000s)
Calls and Premiums
Operating Expenses
Operating Income
Gross Paid Claims
Net Paid Claims
Paid Technical
Surplus/Deficit
for Claims
Incurred Technical
Surplus/Deficit
Investment Income
for Year
80
100
2010
2011
2012
80,000,000 85,000,000 94,000,000
30,000,000 38,000,000 30,000,000
110,000,000 123,000,000 124,000,000
s&p rating
120
250
Owned/Mutual
Chartered/Fixed
Total
140
Calls and Premiums
Gross Paid Claims
Total Tonnage (GT)
—— Premiums increased by 2.9%
—— Estimates for outstanding claims increased
by USD 63.2 million
—— Total incurred claims increased by 41% (from
—— USD 44.1 million underwriting loss (a material
deterioration from the 2010/11 surplus)
—— 6.7% investment return, well above the
market average
—— Due to a market leading investment return the
adverse underwriting result was offset, allowing
a USD 2.9 million overall surplus
0.8% respectively
USD (millions)
CLUB FINANCIAL PAGES - Standard
Standard
50
50
25
25
0
0
-25
-25
-50
-50
-75
00/01
01/02
02/03
03/04 04/05
05/06
-75
06/07
07/08
08/09 09/10
10/11
11/12
Tonnage Split
80
60
40
Other 10%
Europe 52%
CLUB FINANCIAL PAGES - Standard
standard
USD (millions)
20
0
-20
-40
-60
-80
Investment Income
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
-100
Asia 22%
Tonnage Split
by Vessel Type
USD (millions)
1,000
Net Assets
Free Reserves
1,000
Other 2%
800
800
600
600
400
400
200
200
0
USA 9%
Canada 7%
Passenger &
Ferry 6%
Bulk 24%
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
0
Offshore 13%
Tanker 28%
Container &
General Cargo 27%
54
www.simsl.com
Highlights
400
360
Owned/Mutual
Chartered/Fixed
Total
2010
2011
52,800,000 57,900,000
30,200,000 34,000,000
83,000,000 91,900,000
s&p rating
2010
BBB+*
2011
A-*
2012
62,600,000
30,000,000
92,600,000
Net Assets
Free Reserves
55
90
320
80
280
70
240
60
200
50
160
40
120
30
80
20
40
10
0
0
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
2012
A-*
(USD 000s)
120
120
2009/10
305,431
-43,935
-37,543
223,953
276,237
181,227
42,726
2010/11
316,054
-48,543
-40,417
227,094
211,988
174,197
52,897
2011/12
329,646
-51,470
-44,922
233,254
289,251
192,607
40,647
21,628
31,786
81,587
21,098
21,111
-40,940
42,802
63,900
30,634
51,745
33,471
-7,469
-40
-40
723,024
502,772
31,310
251,562
837,865
534,558
0
303,307
911,983
616,145
0
295,838
-80
-80
USD (millions)
Calls and Premiums
Operating Expenses
Operating Income
Gross Paid Claims
Net Paid Claims
Paid Technical
Surplus/Deficit
for Claims
Incurred Technical
Surplus/Deficit
Investment Income
for Year
100
Calls and Premiums
Gross Paid Claims
Total Tonnage (GT)
—— 8.1% increase in owned tonnage
—— 4.3% growth in premium
—— USD 81.6 million increase in estimates for
outstanding claims
—— Significant increase (33%) in total
incurred claims (from USD 206 million
to USD 274 million)
(deteriorated from a USD 21 million
underwriting surplus in 2010/11)
—— Steady investment income (USD 33.5 million)
insufficient to prevent a modest overall deficit
for the year (USD 7.5 million)
—— Assets increased by 8.8%, free reserves reduced
by 2.5%
USD (millions)
CLUB FINANCIAL PAGES - Steamship
Steamship
80
80
40
40
0
0
-120
-120
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
Tonnage Split
120
Investment Income
Middle East/
Indian Sub-Continent 7%
80
Latin America 9%
Europe 31%
CLUB FINANCIAL PAGES - Steamship
steamship
USD (millions)
40
0
-40
-80
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
North America 15%
Tonnage Split
by Vessel Type
1,000
USD (millions)
900
Net Assets (Market)
Free Reserves
1,000
800
700
700
600
600
500
500
400
400
300
300
200
200
100
100
00/01
01/02
02/03
03/04 04/05
Other 4%
900
800
0
Far East 38%
-120
05/06
06/07
07/08
08/09 09/10
10/11
11/12
0
Passenger 13%
Bulk Carrier 39%
General Cargo 6% Container 16%
Tanker 22%
56
www.ukpandi.com
Highlights
600
540
NB: The UK Club’s reported assets and free
reserves include USD 99.3 million of perpetual
subordinated capital securities ( hybrid capital).
2010
2011
2012
Owned/Mutual 106,500,000 105,000,000 112,000,000
Chartered/Fixed 70,000,000 70,000,000 80,000,000
Total
176,500,000 175,000,000 192,000,000
s&p rating
2010
A-*
2011
A-*
200
Calls and Premiums
Gross Paid Claims
Total Tonnage (GT)
180
480
160
420
140
360
120
300
100
240
80
180
60
120
40
60
20
0
—— 6.7% increase in owned tonnage
—— Premium reduced by 1.2%
—— Estimates for outstanding claims reduced by
USD 24.3 million
—— Consistent underwriting surplus
(USD 4.6 million)
—— Relatively modest 1.5% investment return
—— USD 10.9 million overall surplus for the year
—— Assets reduced by 1.7%, while free reserves
increased by 1.7%
USD (millions)
CLUB FINANCIAL PAGES - UK P&I Club
UK P&I Club
0
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
2012
A-*
(USD 000s)
Net Assets
Free Reserves
(including perpetual
subordinated capital
securities)
57
2009/10
447,183
-75,935
-44,113
327,135
366,263
329,720
-2,585
2010/11
364,791
-70,218
-40,621
253,952
312,683
239,394
14,558
2011/12
360,540
-70,685
-42,109
247,746
321,070
267,629
-19,883
-9,756
11,034
-24,342
7,171
3,524
4,459
68,002
75,173
59,093
62,617
6,480
10,939
1,207,055 1,286,599 1,264,646
797,710
808,744
778,869
0
0
0
409,345 477,855 485,777
USD (millions)
Calls and Premiums
Operating Expenses
Operating Income
Gross Paid Claims
Net Paid Claims
Paid Technical
Surplus/Deficit
for Claims
Incurred Technical
Surplus/Deficit
Investment Income
for Year
120
120
80
80
40
40
0
0
-40
-40
-80
-80
-120
-120
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
Tonnage Split
Investment Income
150
100
Asia-Pacific 38%
Europe/Middle East/
Africa 50%
CLUB FINANCIAL PAGES - UK P&I Club
uk P&I Club
USD (millions)
50
0
-50
-100
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08 08/09
09/10
10/11
11/12
-150
Tonnage Split
by Vessel Type
1,400
1,200
Americas 12%
1,400
Net Assets (Market)
Net Assets including Hybrid Capital
Free Reserves
Free Reserves excluding Hybrid Capital
Other 2%
1,200
USD (millions)
Gas Carrier 12%
1,000
1,000
800
800
600
600
400
400
200
200
Passenger 4%
0
0
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
Tanker 30%
Bulk/General
Cargo 34%
Container 15%
Car Carrier/RoRo 3%
58
www.westpandi.com
Highlights
450
400
60
250
50
200
40
2012
50,900,000
15,000,000
65,900,000
2011
BBBpi
Net Assets
Free Reserves
50
2011/12
211,551
-33,008
-36,492
142,051
208,573
176,127
-34,076
17,944
54,475
-18,532
-55,680
-36,669
-15,544
63,929
8,249
50,176
13,507
12,236
-3,308
639,579
492,244
32,021
179,356
120
0
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
120
80
80
40
40
0
0
-40
-40
-80
-80
-120
59
10
USD (millions)
2010/11
243,167
-39,831
-35,532
167,804
219,943
149,998
17,806
659,469
510,776
33,971
182,664
20
2012
BBB- *
2009/10
239,589
-45,641
-35,157
158,791
256,205
196,527
-37,736
553,997
456,301
71,413
169,109
30
100
(USD 000s)
Calls and Premiums
Operating Expenses
Operating Income
Gross Paid Claims
Net Paid Claims
Paid Technical
Surplus/Deficit
for Claims
Incurred Technical
Surplus/Deficit
Investment Income
for Year
70
300
0
2010
BBBpi
80
150
2010
2011
52,300,000 49,000,000
16,500,000 20,000,000
68,800,000 69,000,000
s&p rating
90
350
Owned/Mutual
Chartered/Fixed
Total
100
Calls and Premiums
Gross Paid Claims
Total Tonnage (GT)
—— Premium reduced by 13%
—— Gross paid claims reduced by 5.2% while net
paid claims increased by 17.4%
—— Estimates for outstanding claims improved
by USD 18.5 million
—— Improved, but still material, USD 15.5 million
underwriting loss
—— 1.8% return on investment not sufficient to
offset the underwriting deficit, leading to a
small overall deficit (USD 3.3 million)
—— Assets and free reserves reduced by 3% and
1.8% respectively
USD (millions)
CLUB FINANCIAL PAGES - West of England
West of England
-120
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
Tonnage Split
100
80
Middle East and
Africa 8%
60
Europe
(including Russia) 46%
40
CLUB FINANCIAL PAGES - West of England
west of england
USD (millions)
20
0
-20
-40
-60
Investment Income
00/01
01/02
02/03
03/04 04/05
-80
Asia 39%
05/06
06/07
07/08
08/09 09/10
10/11
11/12
Tonnage Split
by Vessel Type
700
700
Net Assets (Market)
Free Reserves
Other 2%
600
600
Ferry/Passenger 3%
Bulk Carrier 38%
500
500
USD (millions)
Americas 7%
-100
400
400
300
300
200
200
100
100
General Cargo 15%
0
0
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
Tanker 25%
Container/RoRo 17%
60
Highlights
—— Club in Run-Off
—— Continued positive developments in the claims
run off
—— Gross and net paid claims increased by 21% and
42% respectively
—— The estimates for outstanding claims reduced
by USD 1.4 million
—— Investment loss of USD 0.23 million
—— Overall deficit of USD 0.77 million
—— Assets reduced by 2.7%
—— Free reserves reduced by 4.03%, to
USD 18.3 million
—— The final three policy years (1997, 1998 and
1999) remain open
USD (millions)
CLUB FINANCIAL PAGES - LIVERPOOL AND LONDON
Liverpool and London
50
50
40
40
30
30
20
20
10
10
0
0
-10
-10
-20
-30
(USD 000s)
Net Assets
Free Reserves
2009/10
5
-741
-736
1,385
1,322
-2,058
2010/11
3
-1,151
-1,148
916
768
-1,916
2011/12
1
-842
-841
1,110
1,088
-1,929
-1,852
2,649
-1,392
-206
-4,565
-537
3,551
3,345
2,566
-1,999
-233
-770
45,693
24,607
0
21,086
46,343
27,256
0
19,087
00/01
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
-30
40
30
20
10
0
-10
-20
Investment Income
45,071
26,754
0
18,317
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
-30
USD (millions)
Net Assets
Outstanding Claims
Free Reserves
140
120
120
100
100
80
80
60
60
40
40
20
20
0
02/03
Overall Financial results
140
61
01/02
USD (millions)
Calls and Premiums
Operating Expenses
Operating Income
Gross Paid Claims
Net Paid Claims
Paid Technical
Surplus/Deficit
for Claims
Incurred Technical
Surplus/Deficit
Investment Income
for Year
-20
Calls and Premiums
Gross Paid Claims
00/01
01/02
02/03
03/04 04/05
05/06
06/07
07/08
08/09 09/10
10/11
11/12
0
www.swedishclub.com
The Swedish Club writes P&I, FD&D and Hull and Machinery (H&M) classes of business. The club provides separate summary
financial statements for the P&I class but it does not allocate total reserves of the club across all the different classes written.
Meaningful financial comparisons with other P&I clubs are therefore limited.
In terms of premium income, the Swedish Club continues to be the smallest club in the IG by some margin (roughly 25%
less premium than the next smallest club). The club has developed a much more international P&I Membership over the last
decade. Swedish tonnage now represents only 6% of their portfolio, compared with around 50% 12 years ago.
Consolidated Financial Year Summary Tonnage Split
(USD 000s)
Calls and Premiums
Operating Expenses
Operating Income
Gross Paid Claims
Net Paid Claims
Paid Technical
Surplus/Deficit
for Claims
Incurred Technical
Surplus/Deficit
Investment Income
for Year
2009/10
78,742
-17,321
-9,824
51,597
97,241
40,382
11,215
2010/11
85,280
-16,920
-11,644
56,716
35,540
25,772
30,944
2011/12
91,062
-19,086
-12,358
59,618
65,811
53,549
6,069
9,004
26,316
17,465
2,211
4,628
-11,396
10,948
13,159
9,333
13,961
800
-10,596
Middle East 2%
Other 1%
Southern Europe 30%
Asia 34%
Northern Europe 28%
Highlights
Passenger 4%
Tanker 21%
Bulk Carrier 26%
General Cargo 9%
Sweden 6%
—— USD 17.5 million increase in outstanding
claims estimates
—— Total incurred claims increased by 36%,
from USD 52 million to USD 71 million
—— Nominal investment return unable to
offset underwriting loss
—— Overall P&I result for 2011/12 was a
USD 10.6 million deficit
Tonnage Split
by Vessel Type
CLUB FINANCIAL PAGES - the swedish club
The Swedish Club
Container/RoRo 39%
Owned/Mutual
Chartered/Fixed
Total
s&p rating
2010
2011
25,900,000 30,900,000
16,000,000 17,000,000
41,900,000 47,900,000
2010
BBB*
2011
BBB*
2012
33,900,000
16,500,000
50,400,000
2012
BBB+*
62
HistORic DEFERRED (suPPlEMEntaRy)
call accuRacy
OvERall MaRkEt tREnD
The most recent phase of widespread unbudgeted calls was in 2008. These however were nowhere near as severe, nor as
extensive as the ‘spike’ in such calls in the late 1980’s/early 1990’s. The cause was also different. In the late 1980’s clubs’
unbudgeted calls were largely a response to a surge in claims levels, whereas the principal driver in 2008, if not the sole
underlying cause, was enormous investment losses.
The trend and scale of the market’s call performance is outlined in the ‘Market Average’ graph overleaf. This graph shows
the average deferred call accuracy of the combined market from 1991 to 2011.
Since the market wide problems between 1987 and 1991, and before the recent problems in 2008, there have been a couple
of more minor phases of clubs making unbudgeted calls. The main clubs over-calling in the mid 1990’s were the Liverpool
and London, Newcastle and Ocean Marine. These clubs were all subsequently forced to cease underwriting, either by
merging or entering run-off. Since then there was a small peak of unbudgeted calls in 2000/01 when comparatively minor
63
investment losses forced the Skuld and Steamship to over-call. Additionally the West of England made ‘solvency’ calls
in 2006 and the American Club has been more routinely above their originally budgeted calls than any other club in the
last 15 years.
There is a natural tendency to focus on the negative with deferred calls. To provide some balance, it is worth commenting
that over the last 10 years three clubs have, on average, been able to charge less than their full originally budgeted deferred
calls (Britannia, Gard and Shipowners’). In recent years Gard notably reduced their deferred call from 25% to 10%, 15%
and 20% for the years 2009/10, 2010/11 and 2011/12 respectively. Britannia also reduced their deferred call from 40% to
32.5% in the 2009/10 year and UK agreed a 2.5% return in 2011/12.
PERcEntagE vaRiatiOn FROM ORiginal EstiMatED tOtal call
This is a measure whereby the clubs’ deferred call performance can be directly compared. It provides a clear
comparison, as individual clubs use a wide range of original estimated deferred calls.
• A zero percentage variance from estimated total calls signifies that the club has charged exactly what it
estimated for that year.
• A negative percentage variance shows that the club charged less than it originally estimated for the year
in question.
• A positive variance highlights that the club actually charged more than was originally estimated for the year.
64
Deferred call history
Market average variance in estimated total call
30
Average Variance in Estimated Total Call
25
20
Percentage
15
10
5
0
-5
-10
91
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
11
INDIVIDUAL CLUB COMPARISONS
The following three graphs display a direct comparison of each club’s deferred call performance, using the percentage
variation measure, on average over three periods: 5 years, 10 years and 15 years.
Percentage Variation from Estimated Total Call - Average from 1997 to 2011
20
American
15
West of
Steamship
England
Percentage
10
Swedish
5
UK
0
Japan
Britannia
-5
North of
England
Standard
Gard
-10
65
Skuld
London
20
American
Club
15
West of
England
London
10
UK
Percentage
Swedish
Steamship
5
Japan
0
-5
Gard
Britannia
North of
England
Standard
Skuld
-10
20
15
American London
Club
West of
England
UK
10
Percentage
Steamship Swedish
5
Japan
0
Britannia
-5
North of
England
Skuld
Standard
Gard
-10
The pattern is broadly similar across the three periods. A minority of clubs charged less than they originally estimated
on average for each year (those less than zero percent); seven clubs have charged more than originally estimated on
average over the period (those greater than zero percent); and the remaining clubs were exactly on budget (on zero
percent – no variation from estimated levels).
As with many other measures of performance for IG clubs, the range is significant. The range between the best and
worst performing clubs is almost 25%.
N.B. The Shipowners’ Club has the best historic supplementary call record in the IG, however in 2011 they amended
their calling structure to move all members to the equivalent of an ‘estimated total call’ basis. Consequently their
exceptional historic performance is unlikely to be repeated (though we expect them to continue entirely on budget).
We have therefore omitted the Shipowners’ Club from the three comparison graphs. The graphs compare the
performance of the clubs able to write ‘large ships’ only.
66
FUTURE TRENDS
There was an understandable period of uncertainty immediately after almost half the market was forced to make
unbudgeted calls in 2008. Following the announcements of the six over-calling clubs, a significant number of
commentators continued to question which club would be next. At the time Willis consistently highlighted that we
did not expect this particular problem to spread imminently to the stronger half of the market.
This is not to say unbudgeted calls are a thing of the past and there could well be further isolated announcements in
the next couple of years. However, as previously mentioned in our reviews, we do not expect unbudgeted calls to recur
frequently for the majority of the market.
REFERENCE DATA
The reference table below shows the original and current estimates for the deferred calls of all the clubs from
1996 to 2012.
Policy Year:
Supplementary /
Deferred Call
Estimate:
67
1996/1997
1997/1998
1998/1999
1999/2000
2000/2001
2001/2002
2002/2003
2003/2004
Original Final Original Final Original Final Original Final Original Final Original Final Original Final Original Final
American Club
25
34
25
25
25
25
25
45
25
115
25
60
40
70
20
56
Britannia
25
-7.5
25
0
25
10
25
15
25
25
25
25
40
40
40
40
Gard
30
0
30
0
30
0
25
15
25
25
25
25
25
25
25
25
Japan Club
20
10
20
10
20
0
20
15
20
20
20
10
20
20
30
10
Liverpool & London
25
116
25
172
25
25
25
25
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
London
40
40
40
30
40
20
40
40
40
40
40
40
40
40
40
40
North of England
40
40
40
40
40
40
40
40
25
25
25
25
25
25
25
25
Shipowners
25
0
25
0
25
0
25
0
25
0
25
0
25
0
25
0
Skuld
20
20
20
20
20
30
20
45
20
65
20
20
0
0
0
0
Standard
25
0
25
0
25
0
25
15
25
25
25
25
39
39
39
39
Steamship
40
40
40
40
40
40
40
60
43
86
43
100
43
43
43
43
Swedish
0
0
0
0
0
-10
0
0
0
0
0
0
0
0
0
0
UK
40
25
40
25
40
30
40
30
33
33
33
33
33
33
33
33
West of England
50
50
50
50
50
50
50
50
50
50
20
20
20
20
20
20
The inherent issues with the American and West of England clubs continue to make them vulnerable to fluctuations in
the investment and/or claims climate. The Japan Club similarly faces a challenging outlook. Questions are also inevitably
raised in respect of any club growing significantly quicker than the market average.
The clubs in the stronger half of the market are likely to continue with stable deferred call performance. Thus, the broad
market picture is expected to continue, with one or two isolated problem clubs at the bottom, contrasted with one or two
clubs at the top granting rebates.
Where clubs charge on an Estimated Mutual Basis, the supplementary/deferred call figures
provided refer to the percentage charged after expiry of the policy period (relative to the
premium charged during the policy year). These are shown in red in the table below.
2004/2005
2005/2006
2006/2007
2007/2008
2008/2009
2009/2010
2010/2011
Key:
Open
2011/2012
2012/2013
Closed
Policy Year:
Supplementary /
Original Final Original Final Original Final Original Final Original Final Original Final Original Current Original Current Original Current Deferred Call
Estimate:
0
0
0
20
0
35
0
30
0
25
20
20
25
25
25
25
25
25
American Club
40
30
40
30
30
30
30
30
40
40
40
32.5
40
40
40
40
40
40
Britannia
25
25
25
20
25
20
25
25
25
25
25
10
25
15
25
20
25
25
Gard
30
30
30
30
30
60
30
30
30
30
40
40
40
50
40
40
40
40
Japan Club
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Liverpool & London
40
40
40
40
40
89
40
89
40
75
40
40
0
0
0
0
0
0
London
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
North of England
25
0
25
0
25
0
25
0
25
0
10
0
10
0
0
0
0
0
Shipowners
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Skuld
39
39
39
39
39
39
39
39
39
39
39
39
39
39
39
39
39
39
Standard
43
43
43
43
0
12.5
0
14
0
20
0
0
0
0
0
0
0
0
Steamship
0
0
0
0
0
35
0
35
0
0
0
0
0
0
0
0
0
0
Swedish
33
33
33
33
33
60
33
67
33
60
33
33
33
33
33
30.5
33
33
UK
20
35
20
35
20
55
20
55
20
65
30
30
30
30
30
30
30
30
West of England
68
avERagE ExPEnsE RatiO (aER)
Average Expense Ratios (AERs) were introduced in 1999 following pressure from the European Commission in an attempt
to enable direct comparisons of operating costs between clubs within the International Group.
The formula that all clubs are required to adhere to when calculating their AER figure is as follows:
The AER formula is the five-year average of:
oPerating Costs
(Premium inCome + inVestment inCome)
x 100
The AER is a reasonable idea in principle, but in reality it is only ever a very approximate guide to the relative operating costs
of clubs. Direct comparisons between clubs are by no means straightforward therefore while the ratio is a useful guide to
relative efficiency it is too simplistic to assume that the club with the lowest AER is the most efficient and the club with the
highest the most inefficient.
69
limitations to direCt ComParison
There are a number of factors that affect the AER figure, examples of which include:
— Disproportionately high levels of premium or investment income will produce a lower AER.
— Different membership profiles also have an impact. For example because the Shipowners’ Club has a membership which
consists of a large number of small ships paying relatively low premiums per vessel, hence it is to be expected that they
have a significantly higher AER than the other clubs.
— The exact basis of calculation adopted is also material. For example, the increase in the Standard Club’s AER in 2004/05
was caused principally by the club revising the basis upon which they calculated their AER. They moved to the methodology
adopted by most other clubs of including commissions within the calculation.
— Loss prevention programmes increase operating costs and therefore push up the AER. Naturally most clubs would argue
that such costs are more than offset by claims avoided.
— If a club owns its offices, the club’s operating costs will be less, therefore reducing the AER. The capital cost of the building
will however not be available for investment, therefore potentially reducing investment income.
70
Average expense ratio (aer)
TREND ANALYSIS
The graph below summarises the trend for all clubs’ full fourteen year history of published AERs.
Even when analysing the trends of the ratio the results are not straightforward. Arguably, the changes in AERs show
greater correlation with the combined effects of investment and premium income of the individual clubs, rather than
with the level of reported expenses themselves.
What is unmistakable is the upward trend in the expenses ratios. The market average expense ratio has increased by 60%
over the 14 year period. Nine clubs are currently on or above the market average with only Japan, Britannia, London and
the UK club materially below it.
14 Year progression, ordered by the levels in 2011/12
Shipowners
21
18
American
West of England
Average Expense Ratio
15
Standard
Gard
Skuld
Market Average
ngland
orth of E
Swedish
Steamship
N
12
UK Club
London
Britannia
9
Japan
6
08/09
09/10
10/11
11/12
3
98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11
71
11/12
Shipowners
American
West of England
Standard
Gard
Swedish
Market Average
Skuld
Steamship
UK Club
London
Britannia
North of England
Japan
Average expense ratio (aer)
72
Since the demise of the South of England P&I Association in November 2011, the ‘non-International Group’ P&I market
has seen some positive developments. There has been modest overall growth across the sector over the last 12 months and
significantly two new underwriting facilities have been launched.
caRina
In early 2012 Tindall Riley, the managers of Britannia, started the process of hiring individuals who would form the team
to set up and run a new fixed premium P&I facility aimed at small vessels.
This new facility, named Carina, is an underwriting agency writing on behalf of Lloyd’s security. While the underwriting
and claims team is employed by Tindall Riley, the facility will be entirely separate from Britannia.
Carina will be able to write ships up to 5,000 gross tonnage (GT), for a maximum limit of USD 500 million.
“
73
there has been modest overall growth across the sector over
the last 12 months and significantly two new underwriting
facilities have been launched.
lODEstaR
www.lodestar-marine.com
Following a period of enforced dormancy, Lodestar finally wrote its first risk in November 2012.
The protracted and well publicised gestation period of this facility started with a team of 11 leaving British Marine in
Spring/Summer 2011. As a result of successful legal proceedings brought by QBE, the parent company of British Marine,
Lodestar was prevented from progressing their facility until April 2012.
Lodestar is an underwriting agency writing fixed premium P&I on behalf of RSA and supporting markets. They are aiming
to attract owners and charterers of small to medium-sized ships (on occasions vessels slightly in excess of 10,000 GT) and
can offer limits up to USD 500 million.
The first USD 100 million of their underwriting capacity is provided by RSA (S&P A+), with excess USD 400 million
capacity supplied by Lloyd’s of London and other insurance markets with minimum ‘A’ rated S&P security.
74
non-international group market
FIXED PREMIUM MARKET TREND
The concept of ‘general increases’ is very much specific to the mutual system. The fixed premium P&I market
consider renewals like any other commercial insurer. In the 2013 renewal season, there will be inflationary
pressures on claims and increased reinsurance costs to contend with. The insurers will naturally endeavour to pass
on their increased overheads to the ship operators. Competition in this sector will again be intense and increases are
likely to be minor, if any.
NON-INTERNATIONAL GROUP P&I MARKET SUMMARY
Fixed Premium Facility
Maximum P&I
Limit (USD)
Standard and Poor’s Rating
Number of Vessels
(Owned P&I)
500 million *
500 million
50 million
500 million
A+ (QBE)
A+ (Lloyd’s)
BB+
Participating underwriters A-
10,000
n/a
204
850
Hydor
500 million
A+ (Lloyd’s)
n/a
Ingosstrakh
Lodestar
Navigators
Osprey
RaetsMarine
500 million
500 million
500 million
100 million
500 million
BBBA+ (RSA)
A
A+ (Lloyd’s)
A- (Amlin Insurance N.V.)
1,000
n/a
1,700
2,900
5,600
British Marine
Carina
Eagle Ocean Marine
Hanseatic Underwriters
* USD 1 billion in exceptional circumstances.
Facilities for Charterers Liability Only
Charterama
Charterers P&I Club
Norwegian Hull Club
“
75
100 million
500 million
200 million
A+ (RSA)
AA- (Great Lakes/Munich Re Group)
A-
Competition in this sector will again be intense and
increases are likely to be minor, if any.
www.britishmarine.com
British Marine completed a successful demutualisation in
February 2000 and in late 2005 the facility was bought by
QBE Insurance Group (QBE). The final stage of the
consolidation was completed on 1 January 2009 with British
Marine’s security transferring from British Marine SA to QBE
Insurance (Europe) Limited.
by nationality of management
Australasia 3%
Scandinavia 4%
Africa 3%
Western Europe 40%
British Marine
India 5%
Americas 9%
Following a year of changes in underwriting and claims
staff, the reinvigorated British Marine team reported very
satisfactory results in 2012/13. Their portfolio expanded with
the addition of 26 new assureds, achieved a 94% retention rate
and the renewing premium increased by 3%.
British Marine’s strategy continues to be concentrated on
their traditional core business of smaller vessels, generally up
to maximum 10,000 GT. Western Europe remains the largest
source of business (40% of the total book) followed by the Far
East and Eastern Europe (17% and 10% respectively). The
spread of vessel type remains consistent with previous years,
with general cargo vessels continuing to represent the largest
class of vessel (28% of the total book).
British Marine aims, with some success, to combine a
mutual-style service with a fixed premium product. In
addition to P&I, British Marine also has the ability to offer
Charterers Liability, Hull and Machinery (H&M) insurance
and Freight Demurrage and Defence (FD&D).
British Marine’s favoured maximum limit on owned P&I is
USD 500 million, but on select accounts it can offer limits up
to USD 1 billion each incident.
Far East 17%
Eastern Europe 10%
Middle East 9%
by vessel type
Dredger 1%
Yacht 2.5%
Other 9.5%
General Cargo 28%
Tanker 5%
The maximum limit available on the chartered side is
USD 100 million for Charterers P&I and USD 50 million for
Charterers Damage to Hull. FD&D limits tend to be fixed on
a case by case basis, but would normally be in the region of
USD 1-2 million.
QBE Europe is A+ rated by Standard and Poor’s.
Tugs/Utility/Barge/Offshore 20%
Bulker 17%
Container 10%
Fishing 7%
76
Eagle Ocean Marine
www.eagleoceanmarine.com
Eagle Ocean Marine was developed by the managers of the
American Club, the Shipowners Claims Bureau.
Rest of World 25%
Asia 60%
The facility was first introduced in 2010 supported by
Lloyd’s security. From 1 July 2011 however, it was decided to
restructure the product, with American Steamship Owners
Mutual Protection and Indemnity Association Inc. providing
the primary security. The change to club security represents
a more direct backing of the venture by the American Club.
Consequently, the Eagle Ocean Marine’s assureds will benefit
of the American Club blue cards with worldwide acceptance
and IG club letters of guarantee to secure claims and prevent
the arrest of vessels. This latter point is likely to provide a
material advantage over certain other competitors in the fixed
premium P&I market.
The majority of underwriters who originally supported the
project continue to be involved, although now by way of
quote-share reinsurance.
Whilst the security is provided by the club, those owners
buying cover from Eagle Ocean Marine are policy holders
and do not become mutual members of the Association.
Their insurance contract is defined in the policy terms
and conditions and not in the By-Laws and Rules of
the Association.
The facility is aimed at operators of smaller ships (up to
12,500 GT) in regional trades, excluding US operators and
those trading exclusively in US waters. Eagle Ocean Marine
have no restriction on vessel age and class, provided the
condition and status are approved by their surveyors. P&I
cover with limits up to USD 50 million and FD&D cover with
limits up to USD 2 million are available.
America 5%
Europe 10%
by vessel type
Other 15%
Bulk 5%
General Cargo 20%
The American Club is BB+ rated by Standard and Poor’s.
Tanker 35%
Tug/Barge 25%
77
www.hanseatic-underwriters.com
Hanseatic Underwriters is an insurance consortium backed
by: Allianz, Gothaer, Kravag, Ergo, Torus and UNIQA. The
consortium has seen a number of changes in the last two years.
In December 2011 the group was rebranded as ‘Hanseatic
Underwriters’, offering P&I and FD&D products, which were
previously available under the Hanseatic P&I and Hanseatic
Defence brands. Founding insurer Sovag left the group in 2011
and was replaced by Torus and UNIQA, increasing the number
of participating insurers to six.
Other 10%
Europe 85%
Hanseatic Underwriters
Asia Pacific 5%
Since its establishment, the consortium has been fully
managed by Zeller Associates Management Services
in Hamburg.
Hanseatic’s focus for owned P&I is on small to medium-sized
general cargo and container vessels, as well as liquid cargo
and dry bulkers. At present Hanseatic Underwriters write
business in all parts of Europe, including Russia and Turkey
and is expanding to selected regions in the Middle East, North
Africa and Asia. They can write bulk carriers up to 40,000
GT and tankers up to 10,000 GT. Generally the maximum age
considered would be 30 years. Smaller ferries and passenger
vessels can be considered.
Hanseatic are also able to provide Ship Owner’s Liability,
Charterers Liability and Inland Craft P&I cover. In addition
FD&D can be provided as either an add-on cover to the P&I or
a standalone Legal Expenses cover. P&I limits can be provided
up to USD 500 million. The primary USD 50 million is covered
directly by the Hanseatic P&I Consortium. The excess of
USD 450 million is placed through the manager’s reporting
facility lead by Hiscox at Lloyd’s.
by vessel type
Tanker 1%
Passenger 1%
Misc 3%
General Cargo 42%
Bulk Carrier 6%
Other Cargo 14%
The Hanseatic consortium is not individually rated by
Standard & Poor’s. The consortium is currently comprised of
the following securities: Allianz Global Corporate & Specialty
AG (S&P AA), ERGO Versicherung AG (S&P AA-), Gothaer
Allgemeine Versicherung AG (S&P A-), KRAVAG-LOGISTIC
Versicherungs-AG (S&P A+), Torus Insurance (Europe) AG
(S&P A-) and UNIQA Sachversicherung AG (S&P A-).
Hanseatic Underwriters is not individually rated by S&P
but all the current participating underwriters are Arated or better.
Container 33%
78
Hydor
www.hydor.no
Hydor is an underwriting agency established by Johan Gjernes
(previously at Skuld) in 2010 and backed by the Brit Syndicate
at Lloyd’s.
For Owners P&I, Hydor targets vessels less that 10,000 GT.
They have the ability to offer worldwide trading and limits up
to USD 500 million.
Turkey 5%
Singapore 2%
Russia 6%
Africa 3%
America 6%
Cyprus 2%
Far East 2%
France 3%
Denmark
6%
Charterers Liability cover is also available for any type or size
of vessel, with the same offering of worldwide trading and
limits up to USD 500 million.
Hydor’s claims and legal services are outsourced to
C Solutions Limited.
Hydor’s cover is backed by Lloyd’s security which is
A+ rated by Standard and Poor’s.
Germany 14%
Greece 10%
Middle East 6%
Norway 35%
by vessel type
Tug 4%
Tank 12%
RoRo 7%
Bulk 7%
Container 2%
Ferry 8%
Fishing 6%
General Cargo 27%
Multipurpose 11%
Offshore 15%
Reefer 1%
79
www.ingos.ru
Ingosstrakh have been offering P&I insurance for more
than 35 years. Their current portfolio consists mainly of
owners/operators from Russia and other eastern European
countries. The remaining portfolio, while appearing to be of an
international nature, has in most cases a Russian connection.
Tonnage Distribution By Year
of Build
2006 - 9%
2000 - 2005 7%
1959 - 1969 4%
1970 - 1979 19%
Ingosstrakh Insurance Co
Ingosstrakh P&I cover is similar to that provided by the
International Group clubs. FD&D cover is also available.
Historically, limits of liability were offered up to a maximum
of USD 100 million, although the majority of owners require
limits of no more than USD 10 million. Since 2005 Ingosstrakh
have been able to offer limits up to USD 500 million for P&I
and USD 1 million for FD&D.
Ingosstrakh cover a large range of vessels, from very small
ships operating inland and coastally to larger ocean going
vessels in excess of 20,000 GT. They will not write large
tankers, cruise vessels or US registered or operated craft.
1980 - 1989 38%
1990 - 1994 18%
Ingosstrakh currently insure just over 1000 vessels, the
majority of which are dry cargo ships.
Ingosstrakh are also able to offer Charterers Liability cover,
with a maximum limit available of USD 100 million.
Ingosstrakh are rated BBB- by Standard and Poor’s,
with a National Scale rating of ruAA+.
1995 - 1999 5%
by vessel type
Other 8%
Barge 3%
Yacht 2%
Bulker 5%
Tug 14%
Container 1%
Dry Cargo 32%
Fishing 12%
Specialist 4%
Tanker 9%
RoRo 2%
Passenger 2%
Reefer 6%
80
Navigators Protection and Indemnity
www.navpandi.com
Navigators P&I facility began underwriting on 1 January
2004, following Navigators Insurance Group (Navigators)
appointing the team which originally set up Terra Nova P&I.
Navigators are able to offer a USD 500 million limit any one
accident or occurrence for P&I.
Other 2%
UK/Europe 37%
Africa 5%
Middle East 9%
Navigators focus on vessels engaged in coast-wise, inland
and short sea trades and seek only to insure vessels up to
10,000 GT. Both IACS and Non IACS classed vessels will be
considered, although US flagged vessels are not acceptable.
UK/Europe tonnage constitutes nearly 40% of the total
tonnage, with general cargo vessels representing nearly 60%
of the facility’s portfolio.
In addition to Owned P&I, Navigators are able to provide
cover for contractual liabilities by way of contractual
extensions to the main P&I cover. Navigators also have a
Charterers Liability, including Damage to Hull facility, with a
maximum combined single limit of USD 50 million. Cover is
provided with identical vessel underwriting parameters as the
owned book.
Navigators P&I are A rated by Standard and Poor’s.
Mexico & Central America 10%
South America 13%
Asia 24%
by vessel type
Other 6%
Bulker 10%
Fishing 5%
Offshore/Supply 4%
Barge 6%
General Cargo 57%
Tanker 6%
Tug 6%
81
www.osprey-uwr.co.uk
Osprey was founded in 1991 as an agency underwriting on
behalf of Lloyd’s and dedicated to the US brown water market.
USA 66%
Africa 1%
Asia 5%
Osprey was the first fixed premium insurer concentrating on
smaller vessels, with relatively limited trading. Now, twenty
years later, Osprey offers cover on a worldwide basis, focusing
on owners who do not require the limits offered by the mutual
clubs. Osprey recently expanded its P&I criteria to include
larger dry cargo vessels up to a maximum of 25,000 GT.
Osprey Underwriting Agency Ltd
Caribbean 7%
Europe 14%
Middle
East 1%
Along with other fixed premium insurers and in response
to competition and demands from ship operators, in 2007
Osprey doubled the maximum limit of liability they would
offer to USD 50 million. The following year the limit was
increased again to the current USD 100 million.
Unlike the other fixed premium facilities mentioned in the
P&I Review, Osprey is comfortable insuring US domiciled
operators. In terms of premium income, the US market
represents 66% of their portfolio. Tugs and barges equate to
almost half of Osprey’s P&I book (49%).
Osprey’s P&I wording, along with that of the other fixed
premium providers, offers similar ‘heads of cover’ to the
mutual clubs. In addition to standard P&I, Osprey are able
to provide cover for:
–Maritime Employers’ Liability exposures for entities who
do not operate vessels, but whose employees work within
the maritime industry. Maximum limit USD 1 million.
–Marine General Liability coverage for owners and/or
operators of shipyards, terminals, stevedores, wharfingers,
marinas and other marine contracting companies.
Maximum limit USD 2 million.
–Hull and Machinery and War Risk insurance for vessels up
to 10,000 GT, USD 12.5 million in value and in conjunction
with the P&I.
Rest of
World 2%
South America 4%
by vessel type
Tug & Barge 49%
Dry Cargo 3%
Fishing Vessel 25%
Marine
Contractor 1%
Osprey also has a dedicated yacht underwriting agency,
Osprey Special Risks.
Osprey’s policy forms are backed by Lloyd’s security
which is A+ rated by Standard and Poor’s.
Miscellaneous 5%
Oilfield Service 14%
Passenger 3%
82
RaetsMarine
www.RaetsMarine.com
RaetsMarine’s head office is located in Rotterdam with branch
offices in London, Paris and Singapore. RaetsMarine offer the
following P&I and marine liability products:
–Charterers Liability for all types of charterers,
traders, operators.
–Protection and Indemnity insurance for all types of small
to mid-size vessels.
–Protection and Indemnity insurance for all types of
inland craft.
–Multimodal, Port & Logistics Insurance for marine
related companies.
Russia & CIS 1%
Europe 55%
North America 1%
Africa 2%
Central-South America 5%
Middle East/
India 8%
RaetsMarine can write any type of charterers’ business
irrespective of size. The majority of the portfolio is comprised
of tramp chartering (both voyage and time charters) and
commodity traders who charter vessels to carry their own
cargoes. The gross premium income is anticipated to reach
around USD 33.5 million for the 2012 policy year.
Owned P&I cover on a fixed premium basis was launched in
1999. RaetsMarine currently insure around 5,600 vessels,
equating to just over 13 million GT. Like much of the fixed
premium P&I market, RaetsMarine focus on small to mid-size
cargo vessels, as well as supply vessels, fishing boats, tugs and
other specialist craft. There are no restrictions on age, and
singletons will be considered.
Cover is restricted to those operators who do not regularly
trade Trans-Atlantic, Trans-Pacific or to the USA.
Asia-Pacific 28%
by vessel type
Other 5%
General Cargo 19%
Bulk Carrier 2%
Passenger 4%
Tanker 7%
P&I cover for inland craft provides insurance amongst other
vessel types, for barges, narrow boats and cruisers. Currently
there are around 2,000 vessels in this portfolio.
The maximum limit of liability available for Shipowners P&I,
Charterers Liability & Inland Craft P&I is USD 500 million
any one accident or occurrence. For FD&D the available limit
is USD 2 million any one accident or occurrence.
All risks written by RaetsMarine are currently 100% ceded to
Amlin Corporate Insurance N.V. (ACI) up to USD 50 million.
In excess of this, USD 450 is co-insured in the Lloyd’s market
with Amlin as the leading underwriter.
Amlin Corporate Insurance N.V. are A- rated
by Standard & Poor’s.
83
Specialist Craft 17%
Tug 16%
Fishing 15%
Barge 15%
There are currently three facilities dedicated solely to charterers liability. These stand alone facilities do not write
any owned vessel P&I, but are included below for the sake of completeness.
The most established is the Charterers P&I Club, followed by the Norwegian Hull Club’s charterers liability facility in
2008 and Charterama in 2009.
Charterers Only Facilities
Charterama
www.charterama.nl
Rotterdam based underwriting agency Charterama was established in 2009 and offers charterers liability insurance with
limits up to USD 100 million and FD&D cover exclusively for charterers. With other services like Piracy Loss of Hire,
Bunkers insurance and War insurance, Charterama are able to offer a comprehensive package for Charterers.
Generated by around 350 assureds, the premium income for 2011 reached USD 10 million.
Geographically, the majority of their book is European based, although Asia Pacific and the Americas are also
important markets.
Charterama are backed by Royal Sun Alliance, which is A+ rated by Standard and Poor’s.
Other 9%
Americas 11%
by vessel type
Other 2%
Bulker 45%
Tanker 13%
Asia Pacific 15%
Reefer 6%
Europe 65%
General Cargo 29%
Container 5%
84
The Charterers P&I Club
www.exclusivelyforcharterers.com
The Charterers P&I Club, established in 1986, offers charterers
liability and charterers FD&D cover.
Middle East/India 10%
Africa 5%
Americas 3%
Originally run as a mutual, the club demutualised in 1999
and became a fixed premium provider, working as an agency
backed by Lloyd’s security. In 2009 the Charterers Club
switched their security to Great Lakes Munich Re Group
(S&P AA-).
All claims handling and underwriting support is provided by
Michael Else and Co, the managers of the club.
The Charterers Club can provide a limit of USD 2 million
for FD&D, while on the Liability side their standard
maximum limit is USD 50 million, although they can
provide options up to USD 500 million, subject to certain
underwriting restrictions.
The Charterers Club’s gross premium has remained relatively
stable. In both 2010 and 2011 policy years the combined
Defence and Liability classes generated premiums of
approximately USD 28 million per year.
The Charterers Club currently provides cover for
approximately 250 assureds, from liner operators to
trading houses.
The Charterers’ Club are backed by Great Lakes/Munich
Re Group which is AA- rated by Standard and Poor’s.
85
Asia 35%
Australasia 9%
Europe 38%
by vessel type
Other 2%
Tanker 3%
Liner 15%
Bulker 80%
www.norclub.no
The Norwegian Hull Club (NHC) has long been established in
the hull and machinery and loss of hire markets, and this year
the club celebrates its 175 year anniversary. In 2008 the NHC
made a move into the charterers liability sector employing
a team with many years of experience from the Skuld P&I
club. The NHC Charterers facility is now approaching the
end of its fifth underwriting year, with premium income
having increased from USD 5 million in 2008, to more than
USD 11 million in 2011. The majority of the NHC’s clients are
currently from Europe and Asia.
Other 11%
Asia 46%
Scandinavia 8%
The Norwegian Hull Club
The Club has the ability to offer limits up to USD 200 million.
In addition to the standard charterers P&I, damage to hull
and FD&D covers, they also have access to a range of ancillary
covers for charterers. The NHC has its own dedicated team of
claims handlers and maritime lawyers based in Oslo, Norway.
The Norwegian Hull Club is A- rated by Standard & Poor
and has reinsurance placed in the Lloyd’s market.
Europe 35%
by vessel type (ESTIMATED)
Other 20%
Bulker 40%
General Cargo 40%
86
lOnDOn P&i Placing tEaM
87
Ben Abraham
Executive Director
Email: [email protected]
Direct line: +44 (0)20 3124 7786
Jacqui Coplen
Account Handler
Direct line: +44 (0)20 3124 8202
Richard furness
Executive Director
Direct line: +44 (0)20 3124 7612
Jonathan Burley
Account Handler
Direct Line: +44 (0)20 3124 7200
Ben Dillon
Divisional Director
Direct line: +44 (0)20 3124 7521
ian M. Harris
Executive Director
Direct line: +44 (0)20 3124 8595
Kate Collins
Account Handler
Direct line: +44 (0)20 3124 7755
Eilert Eilertsen
Executive Director
Direct line: +44 (0)20 3124 8009
Anna Harrison
Account Handler
Direct line: +44 (0)20 3124 7704
Paul D. Harrison
Divisional Director
Direct line: +44 (0)20 3124 8291
nick Roblin
Account Handler
Direct Line: +44 (0)203124 7332
Simon Mather
Executive Director
Direct line: +44 (0)20 3124 7707
Cathy nice
Account Handler
Direct Line: +44 (0)20 3124 7639
Rachel Sebborn
Executive Director
Direct line: +44 (0)20 3124 7718
Gabriel Rocha Pimentel
Claims Broker
Direct line: +44 (0)20 3124 7622
Andreea Petro
Account Handler
Direct line: +44 (0)20 3124 7632
lOnDOn claiMs tEaM
Kirk Simpson
Claims Broker
Direct line: +44 (0)20 3124 8517
George H. McMenamin
Executive Director
Direct line: +44 (0)20 3124 7419
This Review is published for the benefit of clients and prospective clients of Willis. It is intended to highlight general issues relating to the subject matter which may be
of interest and does not necessarily deal with every important subject nor cover every aspect of the subjects contained herein. If you intend to take any action or make any
decision on the basis of the content of this bulletin, you should first seek specific professional advice and verify its content. Copyright Willis 2012. All rights reserved.
88
Willis Limited
The Willis Building
51 Lime Street
London, EC3M 7DQ
United Kingdom
Tel: +44 (0)20 3124 6000
www.willis.com
Willis Limited, Registered number: 181116 England and Wales.
Registered address: 51 Lime Street, London, EC3M 7DQ.
A Lloyd’s Broker. Authorised and regulated by the Financial Services Authority.
11068/12/12

PROTECTION AND INDEMNITY

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