Aon Marine Insurance Review 2014 Aon Marine Insurance | Review 2014 5 Introduction The troubled...

Aon Risk SolutionsGlobal Broking Centre | Marine

Risk. Reinsurance. Human Resources.

Aon Marine Insurance Review 2014Protection & Indemnity

2 Aon Marine Insurance | Review 2014

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Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Mutual Clubs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

P&I Comparative Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

P&I Club Market Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Specialist Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

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Aon Marine Insurance | Review 2014 5

IntroductionThe troubled shipping world has little to celebrate since our last review. Yes there are some gradual signs of recovery, but these are far from encouraging and at a time when we constantly see new tonnage entering the market place. The political unrest and ever increasing imposition of sanctions do little to ease the burden in many parts of the world.

Last year’s renewal was concluded late with few surprises and a final outcome of low single digit increases. We have little doubt this year will see similar posturing and outcome.


Back to mutualityIn this review we highlight the performance of each Club and their financial results. The historical divide between the better and poorer performing Clubs is a continuing trend. What is clear, at least for those carrying an A rating, is that underwriting results are showing more of a consistent pattern with technical results hovering around 100%. With a greater emphasis in this area it negates to a certain extent the reliance on investment income.

Whilst recent high profile claims have demonstrated how costs escalate following major casualties, the Group’s solid reinsurance programme(s) has weathered this storm. Those Clubs affected will have the burden of future pool contributions (more of this later in our Review), but free reserves have stood firm.

Whilst Solvency II and the all important Standard & Poor’s rating have been constant companions for all Clubs, the financial strength of the Group has never been in better shape. There is little doubt Clubs have rather been a slave to free reserves and we wonder if it is not a time to look to utilise the mutual system. In recent years Britannia and Gard have performed well by not calling their full deferred calls. It begs the question, if Clubs feel a general increase is necessary to protect their financial position going forward, why not introduce a deferred call.

When the claims picture is clearer, those Clubs performing well can opt to forgo that deferred call either in full or in part. At a time when shipowners are counting every penny it would make sense to lessen the burden of cost each year. It would also be a fairer method, as each member would be contributing the same percentage should the deferred call be made, rather than the all too often unequal application of the general increase. We are not suggesting the general increase disappears, but we believe there is not always a need to impose one every year.

Due to the usual factors of ‘churn’, when new vessels entering the Club pay much less than those departing, increased convention limits and claims inflation, Aon expects general increases ranging from 0% to 7.5%. We suspect Clubs such as the Shipowners’ Club, performing very well but in a highly competitive environment, will opt for no general increase at all. We also expect Gard and Britannia to again not call their full deferred call this year and hope that others will follow suit in the future.

Spirit of the RulesThe recent Club newcomers to the ‘fixed’ scene have certainly made some waves. Should there be a clear message from the Group on what is to be considered ‘IGA bound’ and what is free business when quoting business from a holding to another’s fixed P&I facility? There are mixed signals with some upholding the ‘spirt of the rules’ and others taking a wholly different approach. Is this business ‘free’ business after one year?

At renewal a number of mutual Members are tempted by often favourable terms by one of the many well established fixed P&I providers. All too often the stumbling block to a move is release calls. We ask what happens when a member of an International Group Club seeks quotes from that same Club’s fixed P&I facility. Are those release calls, still imposed?

What message does this send to those Members unable to take advantage of another vehicle to offer renewal? It is also worth bearing in mind that those in a position to take advantage of their Club’s fixed facility, avoiding release calls and being free business after one year, are sitting very comfortably indeed.

“Due to the usual factors of ‘churn’, when new vessels entering the Club pay much less than those departing, increased convention limits and claims inflation, Aon expects general increases ranging from 0% to 7.5%.”

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“Against the background of the good loss record since Costa Concordia and the reasonably significant additional retentions taken by the Pool and Hydra we would be disappointed to see any further premium increases at this renewal.”

ConsolidationWe are frequently asked if there will be some consolidation within the group. It is well known approaches have been made by a few over the years. At Aon we welcome choice, giving opportunities to our clients. However, this has to be tempered with cost and sustainability. Presently the costs and expenses of running the 13 International Group Clubs is eye catching. Our thoughts are there will be little change, at least for the present, but this subject remains in clear view, if on the horizon.

The 2015 Group reinsurance renewalThe last two years have seen extremely difficult renewals for International Group excess of loss reinsurance contracts that have ultimately ended up causing a lot of financial pain for Club members at a time when they can ill afford it. As everyone in shipping knows the reasons for the increases from reinsuring underwriters were for both years an unprecedented deterioration in the wreck removal costs for both Costa Concordia and Rena.

Approaching the 20 February 2015 renewal we are still commenting on the same issues. Costa Concordia has now reached her final resting place but since writing the Aon P&I Review this time last year the loss has deteriorated from USD 1.2 billion to USD 1.4 billion. The Rena claim has also deteriorated further with the estimate at the time of writing approximately USD 425 million having moved from USD 350 million at the start of the year. The Rena wreck removal is ongoing and could deteriorate further if there is more government intervention.

On the positive side since the Costa Concordia in early 2012 there has not been a major disaster to hit the reinsurance contract. The one claim large enough to exceed the Pool has been the Smart wreck removal off the coast of South Africa and this is currently estimated at USD 110 million and not expected to move much from this figure. Barring any major claims before the reinsurance renewal is concluded we therefore expect a much easier negotiation this year. There is no doubt reinsuring underwriters will ask for increases in view of the deterioration on those two large claims however it should be argued that significant

rises have been paid over the last few years and reinsurers cannot continue to push for increases on the back of the same two claims year after year. Particularly against the background of the good loss record since Costa Concordia and the reasonably significant additional retentions taken by the Pool and Hydra we would be disappointed to see any further premium increases at this renewal.

In previous years we have mentioned the potential of splitting the four vessel categories currently used, with particular attention on whether container ships should form part of the dry cargo category and ferries along with cruise ships. On the dry cargo side much of this has died down despite the increase in the Rena estimates. This is partly due to there being no container ship losses since then being big enough to reach the reinsurance market and also thanks to the Smart claim being the wreck removal of a bulk carrier and although nowhere as expensive as Rena, still a significant loss. Ferry operators still argue they represent a very different risk to cruise ships and they certainly have a point. However they have also had their losses with the total loss of Amadeo I this year likely to cost tens of millions of dollars to remove. We do not expect to see any changes to the vessel categories this year.

In recent years we have seen the individual Club retention and the retention of the Pool and Hydra as a whole creep upwards. This has partly been through necessity to ameliorate the increases demanded by market underwriters, but also part of a long term strategy to increase the International Group’s involvement in reinsurance with the aim of relying less on the commercial market. We expect this to continue in the short to medium term and would not be surprised to see increased individual Club retentions and/or Hydra involvement at this renewal.


Mutual Clubs

Mut

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American Club . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Britannia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Gard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Japan Club . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

London Club . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

North of England . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Shipowners’ Club . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Skuld . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Standard Club . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Steamship Mutual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Swedish Club . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

UK P&I Club . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

West of England . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Commentary on individual Clubs has been supplied by the Clubs themselves.

Balance sheet data includes combined P&I and FD&D figures if applicable.


Entered GT by vessel type

Entered GT by region

Breakdown of investment by type

Tankers 44.6%

Europe 40.5%Asia

46%

North America

9%

Bulk carriers 45.3%

Unitised/ pax/roro

7.7%

American ClubAmerican Steamship Owners Mutual Protection and Indemnity Association, Inc. Shipowners Claims Bureau, Inc., 1 Battery Park Plaza, 31st Floor, New York, NY 10004, USA american-Club.com t +1.212.847.4500

Manager’s comment The American Club strengthened its service capabilities by establishing a liaison office in Hong Kong during 2013. This supports the diversity of the Club’s membership, which is 46% Asia, 41% Europe, 9% North America with 4% for the rest of the world by GT.

Positive investment returns buoy a modest underwriting deficit for the 2013 financial year. At twelve months development, 2013 policy year figures show increased cost of crew and passenger claims as a proportion of total claims compared to recent years, whereas cargo claims have been cumulatively lower than experienced for any of the past six years.

The Club, and quota share reinsurers in Lloyd’s, continue to support the fixed premium P&I facility Eagle Ocean Marine. The facility is now offering a limit of cover up to USD 100 million. Entering its third year, results continue to be positive and steady premium and tonnage growth is expected.

Number of ships (owned entries only)

Total owned entered GT

Total chartered GT


Tugs/barges/small craft

2.4%


Rest of world 4.5%

2014 2013 2012 1,260 1,341 1,319

2014 2013 2012 16,700,000 15,100,000 16,100,000

2014 2013 2012 1,000,000 500,000 1,000,000

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“Whilst the Club’s underwriting results have improved and free reserves are marginally up, it is noticeable last year’s premium was lower despite an increase in tonnage. We anticipate the Club will take a reasonably hard approach at renewal to maintain their steady improvement.”Aon Comment

Income Statement (year ending December) USD 000s Breakdown of investment by type

2013 2012

Income

Calls and premiums 107,959 112,126

Excess Calls 0 0

Reinsurance Premiums -18,581 -18,585

Total Income 89,378 93,541

Expenditure

Net claims incurred -65,064 -83,265

Net operating expenses -35,250 -31,995

Total expenditure -100,314 -115,260

Underwriting result pre investment /other financial income and tax -10,936 -21,719

Investment/other financial income 14,290 16,089

Tax/interest charged -239 -360

Overall result 3,115 -5,990

Free reserves 57,344 54,229

S&P Rating Aug 2014 Aug 2013

Rating BBB- BB+

Outlook Stable Stable

Policy year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

General Increase % 12.5 30.0 17.5 10.0 10.0 10.0 20.0 20.0 0.0 2.0 5.0 10.0 10.0

Supplementary Call Record % 40/70 20/56 0/0 0/20 0/35 0/30 0/25 20/20 25/25 25/25 0/0 0/0 0/0

Cash/cash equivalents

0.8%

Fixed income securities

67.1%

Equities 32.1%


BritanniaThe Britannia Steam Ship Insurance Association Limited 45 King William Street, London, EC4R 9AN, UK britanniapandi.com t +44 (0)20 7407 3588



Total chartered GT

2014 2013 2012 2,924 2,925 2,951

2014 2013 2012 108,000,000 110,500,000 111,100,000

2014 2013 2012 23,000,000 25,000,000 28,900,000

Manager’s comment While claims incurred in the year to 20 February 2014 were once again at a disappointingly high level, there are some encouraging signs that in the current year the claims position may have returned to more normal levels. Despite the heavy claims experienced in 2013/14, the Association achieved a positive underwriting result for the year, although the 7.5% premium discount given to Members at the 2013/14 renewal, which was funded from reserves, created a small deficit on the technical account. The investment return achieved was just under 5%, with particularly strong performances from equities and corporate bonds. Overall, the Association’s reserves grew by USD 26.2 million and the surplus assets in Boudicca, which are available to meet future claims, also grew, by USD 7.7 million. The Association’s overall financial strength therefore continues to provide a high degree of security and certainty for its Members.



Others1%

Americas6%

Others3%




Bulk carriers/General cargo39%

Containers29%

Tankers31%

Asia Pacific53%

Europe38%

Mut

ual C

lubs


Income Statement (year ending February) USD 000s Breakdown of investment by type

2014 2013

Income

Calls and premiums 284,167* 294,057

Excess Calls 0 0


Total Income 235,551 245,147

Expenditure




Underwriting result pre investment /other financial income and tax -21,963 -69.986


Tax/interest charged -928 -1,174


Free reserves including Boudicca 471,898 438,017

S&P Rating Current rating Oct 2013

Rating A A

Outlook n/a n/a

Type of rating Interactive Pi

Policy year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

General Increase % 28.8** 15.0 8.5 7.5 2.5 5.0 23.8** 23.8 5.0 5.0 5.0 16.5*** 2.5

Supplementary Call Record % 25/25 40/40 40/30 40/30 30/30 30/30 40/40 40/32.5 40/40 40/40 40/40 45/45 45/45

* Calls and premiums for year ending 20 February 2014 include the 7.5% P&I discount offered to renewing tonnage for the 2013/14 policy year and the waiver of half of the deferred call for the 2012/13 FD&D policy year.

** Includes the effect of an increase in budgeted supplementary call.

*** Includes the effect of an increase in budgeted supplementary call however increase applied to members’ accounts was 10.5% due to 7.5% rebate on advance call.




Government bonds (short)

23%

Government bonds

(medium)14%

Inflation linked bonds14%

Corporate bonds18%

Equities21%

Cash10%

The past two renewals have been difficult for the Club. However, that steely approach, despite losing a few well-known names, has enabled the Club to maintain an impressive level of free reserves, despite a negative underwriting result. The Club enjoys a lofty position and we anticipate a softer stance at renewal.Aon Comment


GardAssuranceforeningen Gard Gard AS, Kittelsbuktveien 31, NO-4836 Arendal, Servicebox 600, NO-4809 Arendal, Norway gard.no t +47 37 01 91 00



Total chartered GT

2014 2013 2012 6,050 5,900 5,700

2014 2013 2012 169,800,000 158,700,000 146,800,000

2014 2013 2012 57,500,000 57,500,000 51,000,000

Manager’s comment Gard reported strong results to 20 February 2014, with a surplus after tax of USD 89 million on an ETC basis, a CRN of 97% across the group and a return on investments of 4.3%. Gard has a contingency reserve of USD 944 million, after the reduction in deferred call for the 2013 policy year, amounting to USD 35 million.

This cut – 15% compared to an original estimate of 25%, was the fifth consecutive year in which we reduced the deferred call – demonstrating the value we deliver, year on year.

For P&I, GWP was USD 621 million, following a competitive – but satisfactory – renewal season in which we made tonnage gains and attracted new Members. Over the last 12 months, the gross tonnage increased by seven per cent to 187 million GT. Gross claims to 20 February 2014 totalled USD 445 million, with no new P&I claim above USD 10 million – compared to six in the previous year.

Entered GT by vessel typeEntered GT by vessel type



Containers18%

Americas 6%

Europe68%

Other 1%

Asia Pacific24%

Tankers30%

Bulk carriers/General cargo

24%

Others26%

Passengers2%


Total MOU Entered GT

2014 2013 2012 16,900,000 15,700,000 15,800,000

Mut

ual C

lubs




Breakdown of investment by typeIncome Statement (year ending February) USD 000s

Cash1%

Real Estate3%


2014 2013

Income


Excess Calls -34,808 -30,708


Total Income 444,298 404,979

Expenditure





Investment/other financial income ** **

Tax/interest charged ** **

Overall result 49,332 69,174

Free reserves 944,123* 894,792


Rating A+ A+


Type of rating Interactive Interactive

Policy year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014



* After reduction in deferred call of USD 35 million.

** No longer allocated across individual lines of business.

“Improved underwriting results coupled with a significant increase in free reserves bears testament to Gard’s philosophy of diversification. The likelihood is owners can look forward to the deferred call being reduced and a rather benign renewal.”Aon Comment

Bonds80%

Equities16%


Japan ClubJapan Shipowners’ Mutual P&I Association 2-15-14 Nihonbashi-Ningyocho, Chuoh-ku, Tokyo 103-0013, Japan piclub.or.jp t +81 33 662 7401



Total chartered GT

2014 2013 2012 2,356 2,399 2,449

2014 2013 2012 89,311,735 89,370,000 87,250,000

2014 2013 2012 11,362,017 12,724,767 12,610,000

Manager’s comment In 2013, the frequency of large claims occurring reduced and the loss record remained at a good level throughout this year by strengthening our loss prevention activities. In terms of the investment income earned, we gained higher returns than expected by purchasing additional fund assets and investment bonds. In addition, there was a 7.5% General Increase for ocean-going vessels, Charterers’ Liability and FD&D entries by focusing on strengthening our financial soundness. Ultimately, overall reserves under the Association’s new financial strategy climbed up to ¥16,057 million in total, ¥1,240 million up from last year. These attributed to our steady progress of the new financial strategy this year.

Another highlight was opening of our Singapore Branch. We will use the base of the branch in order to promote our business in the Asia-Pacific region to increase our entries.




Bulk carriers/General cargo

59%

Americas72%

Asia Pacific21%

Europe2%

Others5%

Containers9%

Others16%

Passengers0.12%


Mut

ual C

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Money trusts2.54%

Other securities

7.88%

Japanese government

bonds1.38%

Stocks0.02%

Japanese local

government bonds6.29%

Cash and deposits at banks30.81%

Corporate bonds

17.06% Foreign securities34.02%


2014 2013

Income


Excess Calls 0 0


Total Income 181,474 179,010

Expenditure






Tax/interest charged -4,147 -1,088




Rating BBB+ BBB+



Policy year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014



“Whilst the combined ratio has improved free reserves have not shown the growth of others. There is no doubt the Club’s attempt to widen their appeal outside of home soil will offer the Club greater opportunities. We feel the Club will take a reasonably hard line at this renewal.”Aon Comment


London ClubThe London Steamship Owners’ Mutual Insurance Association Limited A Bilbrough & Co Ltd, 50 Leman Street, London E1 8HQ, UK londonpandi.com t +44 (0)20 7772 8000



Total chartered GT

2014 2013 2012 1,014 1,174 1,081

2014 2013 2012 43,100,000 41,390,000 40,777,050

2014 2013 2012 5,000,000 5,060,000 3,428,024

Manager’s comment During 2013/14 there was growth in the Club’s reserves, income and membership. The reserve grew to USD 160.6 million; there was an 8% year on year increase in income, net of reinsurance costs; and there was growth in the mutual membership of 2 million GT – which stood at 43.1 million GT moving into the new policy year.

There were also signs of mounting claims costs, especially from the high severity end of the retained layers - serving as a reminder of the importance of the Club’s financial strength and it’s attention to strengthening operating performance going forward.

A high quality service to Members is central to the Club’s strategy; and there were further recruits to the teams in London, Hong Kong and Piraeus during the year drawn from legal, seafaring, insurance and other relevant backgrounds. The aim is to ensure that there are strong resources across the Club, to provide Members with first class, dedicated P&I support.



Americas 4%




Tankers 22%

Southern Europe 46%

Asia Pacific 34%

Northern Europe

16%

Bulk Carrier 57%

Gas Carriers 3%

General Cargo 2%

Containers 16%

Mut

ual C

lubs





Alternatives 0.2%

Fixed income 62.4%

Equities25.2%

Cash and cash equivalents

12.2%


2014 2013

Income


Excess Calls 0 0



Expenditure










Rating BBB BBB

Outlook BBB BBB

Type of rating Pi Pi

Policy year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014



“Once again investment income has nullified a sombre underwriting performance. The Club enjoys a loyal following no doubt as a result of the service they provide. Still we feel the Club must address their underwriting and that is likely to result in a tough stance at renewal.”Aon Comment


North of EnglandNorth of England P&I Association Limited The Quayside, Newcastle Upon Tyne, NE1 3DU, UK nepia.com t +44 (0)191 232 5221



Total chartered GT

2014 2013 2012 3,500 3,500 4,000

2014 2013 2012 130,801,946 133,510,307 123,000,000

2014 2013 2012 49,000,000 43,000,000 40,000,000

Manager’s comment Overall this has been a positive year for North with a strong technical underwriting result and further progress in achieving the Club’s strategic objectives; in particular our merger with Sunderland Marine is key to our strategy of diversification to develop further financial stability for Members. The key themes contributing to the result were:

• High gross claims value for 2013 policy year, including two large pool claims.

• Low retained claims value (net of reinsurance and pool recoveries) for 2013 policy year.

• Steady improvement in claims values on prior policy years.

• Small positive investment result.

• Exceptional item for the 2013/14 financial year (a mandatory change in accounting policy requiring the full adoption of the pension scheme deficit onto the Club’s balance sheet).

Overall an underwriting surplus of USD 20 million and a combined ratio of 90.1% indicate that the 2013/14 financial year was a positive underwriting year for North.




bulk carrier/general cargo 38.10%

Northern Europe 20%

Asia Pacific 28%

Middle East 11%

North America 7%

Scandinavia 3%

South America 1%

Southern Europe 29%

Containers 19.78%

Tanker 31.67%

Others10.03%

Passengers0.42%


Mut

ual C

lubs


Income Statement (year ending February) USD 000s




Government bonds 37.98%

Short dated US treasuries and cash

40.20%

non-government

bonds 14.96%


2014 2013

Income


Excess Calls 0 0


Total Income 305,649 294,559

Expenditure




Underwriting result pre investment /other financial income and tax 20,362 -10,315



Recognition of defined benefit pension scheme liability -33,451 0

Overall result 38 -1,777



Rating A A



Policy year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014



Equities 6.86%

“An excellent underwriting performance, easing the way for the Club to address their pension deficit. We wait to see how the integration of Sunderland Marine performs over the next year. A common theme is the Club’s rather rigid approach to renewal and we expect little difference this year.”Aon Comment


Shipowners’ ClubThe Shipowners’ Mutual Protection and Indemnity Association St Clare House, 30-33 Minories, London EC3N 1BP, UK shipownersclub.com t +44 (0)20 7488 0911



Total chartered GT

2014 2013 2012 33,899 32,781 31,341

2014 2013 2012 26,613,022 21,920,725 19,792,062

2014 2013 2012 N/A N/A N/A

Manager’s comment With over 6,600 Club members totalling just fewer than 34,000 vessels we continue to weather the storm of increased market competition in our sector. The Club remains focused towards the smaller, specialist and regionally trading vessels hence the Club’s average tonnage of 700 GT. An Owner and their brokers support in this competitive environment remains essential and that can only be achieved through the Club’s commitment to offering the widest cover, a dedicated and understanding approach to claims, insurance solutions at cost, plus certainty of premium through a stated policy of zero supplementary and release calls matched by the Club’s consistent combined ratio over the last six years of 90.6%.

As the Club seeks to enter into a partnership of trust with its members and their brokers we know that there remains an ever increasing choice when it comes to marine liability insurance. At a time when we are witnessing the cost of claims increase with a greater number of claims in the USD 1 million to USD 5 million range our members and their brokers also need to be reminded as to the importance of the stability of the mutual system especially as the Club seeks to maintain its recognised traditional virtues of a mutual club offering continuity, stability and security.






Harbour 28.46%

Africa 2%

Worldwide 6%

Middle East and India

6%

Barges 18.19%

Offshore 14.28%

Fishing 9.73%

Passengers 12.80%

Yachts 4.94%

Tankers 4.94%

Dry cargo 6.65%

Central and South America

11%

Canada and USA

9%South East Asia

and Far East 25%

Australia, New Zealand and South Pacific

10%

Europe 31%

Mut

ual C

lubs





Fixed interest investments

70.24%

Equities 27%

Deposits with credit institutions

2.76%


2014 2013

Income


Excess Calls 0 0


Total Income 213,051 200,130

Expenditure




Underwriting result pre investment /other financial income and tax 2,334 8,938






Rating A- A-



Policy year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014



“The Club are no strangers to competition making their underwriting performance even more impressive. With no release calls to aid the Club they continue to set the standard. Ever mindful of those around them we expect a soft renewal.”Aon Comment


SkuldAssuranceforeningen SKULD (Gjensidig), Ruseløkkvn. 26, 0251 Oslo, Norway skuld.com t +47 22 00 22 00



Total chartered GT

2014 2013 2012 4,354 3,856 3,792

2014 2013 2012 81,700,00 75,600,000 69,900,000

2014 2013 2012 n/a n/a n/a

Manager’s comment Skuld continues to follow a growth strategy, where diversification and innovation are key words. Over the last years we have developed our marine portfolio to meet our customers’ requirements for a full insurance package. The diversified product range is provided by Skuld P&I and our Syndicate at Lloyd’s, Skuld 1897. By using the synergies between the two we can tailor make new products for our members and clients.

In addition to our traditional P&I offerings, the offshore market and the commercial operations have delivered significant growth in line with Skuld’s plans. With a long-term strategy of controlled growth and financial strength, we continue to deliver positive results and to maintain a combined ratio below 100%. No release calls or general increases are part of this picture.

We will continue to support our members’ and clients’ needs and throughout Skuld our ambition is to deliver service and competence they can rely on.




General cargo 7.71%

Container 10.40%

Bulk carrier 31.95%

Far East37%Europe

30%

Nordic 23%

Americas 7%

Others2%

Tanker40.15%

Others8.32%

Passengers1.47%



2014 2013 2012 5,100,000 3,600,000 1,500,000

Mut

ual C

lubs






Commodities 1%

Hedge fund 1%

Private equity

3%

Fixed income 66%

Equities 23%

Cash 6%


2014 2013

Income


Excess Calls 0 0


Total Income 322,833 277,692

Expenditure




Underwriting result pre investment /other financial income and tax 3,959 969






Rating A A



Policy year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

General Increase % 30.0 25.0 15.0 7.5 5.0 2.5 7.5 7.5 5.0 n/a n/a n/a n/a


“Another excellent underwriting result, with free reserves mirroring those results. Whilst the mutual Club opts for renewal based heavily on individual member’s performance, we expect some form of ‘across the board’ increase but one likely to be better than many of its peers.”Aon Comment


Standard ClubThe Standard Steamship Owners’ P&I Association (Bermuda) Limited 12/13 Essex Street, London WC2R 3AA, UK standard-Club.com t +44 (0)20 3320 8888



Total chartered GT


2014 2013 2012 8,743 8,007 7,511

2014 2013 2012 108,500,000 107,000,000 96,000,000

2014 2013 2012 22,500,000 30,000,000 29,000,000

2014 2013 2012 7,500,000 6,400,000 7,500,000

Manager’s comment The Standard Club’s strategy is to provide members with sustainable cover for P&I and related risks at a reasonable cost, with first class service and financial security. The Club has always prioritised the operating quality of its fleet over its scale, with ratings that reflect exposure. This approach has driven steady growth over time and has led to one of the strongest financial positions in the International Group.

In recent years, the Club held back from increasing rates at the same pace as many competitors, to support members during difficult times. As a result, a general increase slightly above market was necessary in 2014 to keep pace with the cost of cover. As at every renewal, the Club declined to renew some members that did not meet its quality standards or would not pay rates commensurate with exposure. Owned tonnage increased overall year-on-year, consistent with the focus on quality and modest growth appetite.




Container and general cargo

25.35% Dry bulk25.81%

Tankers27.19%

Americas 20%

Other 7%

Europe 47%

Asia Pacific 25%

Passenger and ferry

5.99%

Offshore 15.21%

Others0.46%


Mut

ual C

lubs



Gold 1.10%

Cash 2%

Alternative assets

6%


2014 2013

Income


Excess Calls 0 0


Total Income 253,200 231,200

Expenditure










Rating A A

Outlook Negative Stable


Policy year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014






Bonds 75.70%

Equities 15.20%

“A significantly improved combined ratio is a welcome return following two years of below par results but was slightly undermined by a less than successful investment return. However, the Club are still amongst the strongest and we expect a gentler approach at this renewal.”Aon Comment


Steamship MutualThe Steamship Mutual Underwriting Association (Bermuda) Limited Aquatical House, 39 Bell Lane, London E1 7LU, UK simsl.com t +44 (0)20 7247 5490



Total chartered GT

2014 2013 2012 8,831 8,782 9,327

2014 2013 2012 68,727,878 65,294,099 62,600,000

2014 2013 2012 45,000,000 37,000,000 30,000,000

Manager’s comment The Club has been able to report a good financial performance for the year. The free reserves increased by USD 14.9 million to USD 301.2 million. Importantly the result was mainly due to a good underwriting performance, the financial year combined ratio was 96.7%. With investment returns likely to continue to be modest, it is important that premium levels are sufficient to cover the anticipated level of claims and costs. The Club continues to enjoy good support from existing members and is succeeding in attracting high quality new members, the entered owned tonnage increased by over 5% during the year and total tonnage now stands at 113.7 million tons as of February 2014.




Tankers23.60%

Asia Pacific39%

Americas15%

Europe30%

Others16%

Bulker / general cargo 45.20%

Container15.20%

Passenger12.80%

Others3.20%


Mut

ual C

lubs


Ente

red

GT b

y ve

ssel

type

Ente

red

GT b

y re

gion

Brea

kdow

n of

inve

stm

ent b

y ty

pe


Property 1.13%

Equities 3.64%

Equities 3.64%

Cash and deposits60.37%

Alternative investments

7.88%

Bonds 26.98%


2014 2013

Income


Excess Calls 0 0


Total Income 284,562 270,942

Expenditure




Underwriting result pre investment /other financial income and tax 9,289 -33,775






Rating A- A-



Policy year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014


Supplementary Call Record % 0/0 0/0 0/0 0/0 0/12.5 0/14 0/20 0/0 0/0 0/0 0/0 0/0 0/0

“It is good to see the Club enjoy a positive underwriting result with free reserves increasing; not particularly aided by their conservative investment policy. The Club’s careful underwriting philosophy is beginning to show returns and we feel a steady if somewhat firm approach will be adopted at renewal.”Aon Comment





Swedish ClubSwedish Club Gullbergs Strandgata 6SE-411 04 Göteborg, Sweden swedishclub.com t +46 31 638 400



Total chartered GT

2014 2013 2012 1,040 1,013 1,035

2014 2013 2012 37,100,000 34,800,000 34,400,000

2014 2013 2012 14,000,000 15,900,000 16,000,000

Manager’s comment The Swedish Club’s financial strength increased in 2013, with investment earnings and a positive underwriting outcome, producing an overall result of USD 17 million. The net combined ratio of 94% is satisfactory and the free reserves increased to USD 168 million.

The P&I tonnage grew by 8% and continues to increase. The progress in recent years is a measure of market confidence in our operational performance, financial strength and service capabilities. The Swedish Club had no pool claims during the policy year. The entries in the Marine business sector increased from 1,500 to more than 2,000 vessels.

Two major strategic decisions were taken: to reinforce our commitment to the Norwegian market, and to accelerate the uptake of Maritime Resource Management (MRM) issuing free licences to members over a two year period. This demonstrates our belief in MRM as the most effective tool to reduce exposure to accidents.


Tanker 20%

Europe60%

Asia Pacific40%

Bulker /general cargo40%

Passenger3%

Container31%

Others1%


Mut

ual C

lubs


Income Statement (year ending December) USD 000s

Alternative Investment

2%

Emerging market bonds

4%

Euro Soverign

bonds 4%

Euro Sovereign

bonds 4%

EuroCorporate

bonds 6%


2014 2013

Income


Excess Calls 0 0



Expenditure






Tax/interest charged 0 0

Overall result 1,306 614

Free reserves (includes reserves available to non P&I business) 168,000 151,000


Rating BBB+ BBB+



Policy year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014






US core bonds56%

Equities24%

“A noticeable improved swing in underwriting results has been a boost to the Club. It performed solidly as it looks to other areas to further diversify its book. We expect the Club will look to consolidate their latest results by holding a strong line at renewal.”Aon Comment





UK P&I ClubThe United Kingdom Mutual Ship Assurance Association (Bermuda) Limited Thomas Miller P&I Ltd, 90 Fenchurch Street, London, EC3M 4ST, UK ukpandi.com t +44 (0)20 7283 4646



Total chartered GT

2014 2013 2012 3,569 3,455 3,346

2014 2013 2012 124,000,000 120,000,000 112,000,000

2014 2013 2012 80,000,000 80,000,000 80,000,000

Manager’s comment The Club has produced a surplus this year of USD 30 million, which, together with gains on foreign exchange contracts, takes the Club’s total free reserves and hybrid capital to USD 528 million; this is made up of underlying free reserves of USD 430 million and hybrid capital of USD 98 million. The year benefited from a favourable release of claims reserves from previous policy years, but this was partly offset by a more costly 2013 policy year. In addition there was a healthy investment return of USD 44 million (4.5%).

The Club’s return to the top level of our industry, has been recognised by Standard & Poor’s in their decision to restore the Club’s full “A (Stable)” rating.

Having restored the Club’s financial position, we have now to make sure that we put a similar level of effort into maintaining our reputation for best in class service.


Bulker / general cargo39%

Asia Pacific38%

Europe, Middle East & Africa

53%

Americas9%

Tankers27%

Container14%

Others17%

Passengers3%


Mut

ual C

lubs



Absolute return funds

6.9%


2014 2013

Income


Discount n/a -7,231

Gross Premium 396,281 352,950

Excess Calls 0 0


Total Income 302,779 279,760

Expenditure








Free reserves including Hybrid capital 528,342 493,831

Free reserves excluding Hybrid capital 430,004 394,056


Rating A A-



Policy year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014






Fixed interest66.72%

Equities19.20%

Cash7.18%

“Another excellent underwriting performance resulting in a pleasing return to S&P’s A rating (from A-). The Club have shown a marked improvement seeing them back at ‘top table’. The difficult part is to stay there and with that we expect to see a firm hand at renewal.”Aon Comment


West of EnglandWest of England Ship Owners Mutual Insurance Association (Luxembourg) Tower Bridge Court, 226 Tower Bridge Road, London, SE1 2UP, UK westpandi.com t +44 (0)20 7716 6000



Total chartered GT

2014 2013 2012 2,917 2,870 3,030

2014 2013 2012 58,900,000 53,100,000 50,900,000

2014 2013 2012 21,200,000 est. 21,800,000 est. 15,000,000 est.

Manager’s comment Key performance indicators reflect a continued strong performance, with a combined ratio of 100.8% and free reserves increasing to a record level of USD 216 million.

Lower levels of Members’ claims have again had a positive impact on the Club’s overall financial performance and the trend of the last three years appears to be continuing into 2014 at the half year point. In addition, claims projections on older policy years have also reduced.

This continuing strong financial performance, together with our commitment to service has led to significant growth in tonnage from existing and from new Members in 2014, with the Club’s Mutual GT increasing to over 63 million.






Greece 15.8%

Other6.3%

Asia Pacific 38.4%

Americas 5.8%

Other Europe 33.8%

Tanker & OBOs27.5%

Bulk cargo carriers39.2%

General cargo & reefers

12.6%

Container15.8%

Other 2.0%

Passengers2.9%

Mut

ual C

lubs





Absolute return0.7%

Fixed income 50.5% Cash

26%

Equities 14.5%Property

8.3%


2014 2013

Income


Excess Calls 0 0


Total Income 166,942 166,296

Expenditure










Rating BBB BBB



Policy year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014



“Another good year for the Club which has seen a significant turnaround in the Club’s finances and one we trust will catch the eye of Standard & Poor’s. A great deal of work has been done and to continue in that vein we expect a firm renewal stance.”Aon Comment


P&I Comparative Data

P&I C

ompa

rati

ve D

ata


Combined Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Free Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Gross Call / GT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Net Claims / Net Call Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Free Reserves / Net Call Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Net Claims/ Net Call Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Pooling Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Data based on information supplied by the Clubs themselves


American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

Free Reserves Combined Ratio

Net claims / GTGross call / GT

Free reserves / Net call incom Net claims / Net call income

0%0

0

0%

50%

100%

150%

200%

250%

300%

0%

20%

40%

60%

80%

100%

120%

140%

0

1

2

3

4

5

6

7

8USD

2

4

6

8

10

12

USD

100,000,000200,000,000300,000,000400,000,000500,000,000600,000,000700,000,000800,000,000900,000,000

1,000,000,000USD

20%

40%

60%

80%

100%

120%

140% 2014

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

20132014 2013

2014 20132014 2013

2014 20132014 2013

Combined ratio

P&I Comparative DataTraditionally the popular method of comparing the financial health of the Clubs has been to generate key performance indicators around Gross Tonnage (GT), call income, claims and reserves. Although we have used GT as part of our analysis, we do not consider it the most useful constant. A Club with a high USD per GT ratio is not necessarily an expensive or conservative Club; one with a low figure, likewise, is not necessarily competitive, as GT does not give any allowance for the type of vessels within the Club nor the individual retentions or loss records they may carry. We have always said that since premium is the underwriter’s assessment of risk it is more valid to use annual call income to generate comparative analytical data.

Over the last few years a small number of Clubs have called less than their originally estimated deferred calls. Variations from the estimated total call tend to be rare and give a distorted view of a Club’s financial position. We therefore do not include these adjustments in analysis and use the original estimated total call for comparisons. In the past when conducting this analysis we have not included the effect of unbudgeted supplementary calls as this would similarly distort the findings. Conversely, any adjustment will be evident in a Club’s free reserves and therefore these adjustments have been included.

Year end February 2014NB: (incurred claims + expenses) / (premium - reinsurance)

Notes

1. Net annual call income excludes the cost of reinsurance and the product of an excess call.

2. UK Club free reserves include ‘Hybrid’ capital.

3. The reduction in Gard’s 2012/13 and 2013/14 deferred call has been reinstated.

4. American Club’s ratios and free reserves are in respect of the years 12 months at 1st December 2013 and 2014.

P&I C

ompa

rati

ve D

ata


American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest




0%0

0

0%

50%

100%

150%

200%

250%

300%

0%

20%

40%

60%

80%

100%

120%

140%

0

1

2

3

4

5

6

7

8USD

2

4

6

8

10

12

USD

100,000,000200,000,000300,000,000400,000,000500,000,000600,000,000700,000,000800,000,000900,000,000

1,000,000,000USD

20%

40%

60%

80%

100%

120%

140% 2014

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

20132014 2013

2014 20132014 2013

2014 20132014 2013

Free reserves

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest




0%0

0

0%

50%

100%

150%

200%

250%

300%

0%

20%

40%

60%

80%

100%

120%

140%

0

1

2

3

4

5

6

7

8USD

2

4

6

8

10

12

USD

100,000,000200,000,000300,000,000400,000,000500,000,000600,000,000700,000,000800,000,000900,000,000

1,000,000,000USD

20%

40%

60%

80%

100%

120%

140% 2014

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

20132014 2013

2014 20132014 2013

2014 20132014 2013

Gross call / GT

Total gross call income shown as USD per total Gross Tonnage (GT) entered for owners’ risks.

Gross call income reflects the Club’s total income (inclusive of group reinsurance costs) as an assessment of current and future risk. Total entered GT is a measure of the size of the Club, but provides no indication of current or future risk. The rating which is expressed as a USD per gross ton can give some assessment of the Club’s membership risk profile.


American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest




0%0

0

0%

50%

100%

150%

200%

250%

300%

0%

20%

40%

60%

80%

100%

120%

140%

0

1

2

3

4

5

6

7

8USD

2

4

6

8

10

12

USD

100,000,000200,000,000300,000,000400,000,000500,000,000600,000,000700,000,000800,000,000900,000,000

1,000,000,000USD

20%

40%

60%

80%

100%

120%

140% 2014

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

20132014 2013

2014 20132014 2013

2014 20132014 2013

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest




0%0

0

0%

50%

100%

150%

200%

250%

300%

0%

20%

40%

60%

80%

100%

120%

140%

0

1

2

3

4

5

6

7

8USD

2

4

6

8

10

12

USD

100,000,000200,000,000300,000,000400,000,000500,000,000600,000,000700,000,000800,000,000900,000,000

1,000,000,000USD

20%

40%

60%

80%

100%

120%

140% 2014

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

20132014 2013

2014 20132014 2013

2014 20132014 2013

Free reserves / Net call income

Net claims / GT

Free reserves shown as a percentage of net annual call income.

Net call income reflects the Club’s assessment of current and future risks and free reserves are the Club’s safety net. The greater the ratio between free reserves and net call income the greater the Club’s safety net.

Total net claims shown as USD per total GT entered for owners’ risks.

Net claims are the Club’s actual current exposure (and a guide to future exposure). Total entered GT is a measure of the size of the Club. The rating which is expressed as a USD per gross ton can give some assessment of the Club’s membership risk profile.

P&I C

ompa

rati

ve D

ata


American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest




0%0

0

0%

50%

100%

150%

200%

250%

300%

0%

20%

40%

60%

80%

100%

120%

140%

0

1

2

3

4

5

6

7

8USD

2

4

6

8

10

12

USD

100,000,000200,000,000300,000,000400,000,000500,000,000600,000,000700,000,000800,000,000900,000,000

1,000,000,000USD

20%

40%

60%

80%

100%

120%

140% 2014

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

20132014 2013

2014 20132014 2013

2014 20132014 2013

Net claims / Net call income

Total incurred losses shown as a percentage of net annual income.

Net call income reflects the Club’s assessment of current and future risk. Net claims are the Club’s actual current exposure (and a guide to future exposure). The lower the ratio between net claims and net call income the more favourable the underlying underwriting position.

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ishUKWest

2014 pooling contributions

2014 2013

0%2%4%

6%8%

10%12%14%16%

18%20%

Pooling contributions

The Clubs pool claims between USD 9 million and USD 80 million, while claims between USD 9 million and USD 45 million are pooled according to the International Group’s pooling contribution formula, which is based on premium, tonnage and claims thirds adjusted by loss ratio.

Last year Aon reported that changes to the pooling contribution mechanism meant certain Clubs faced a large adjustment to their percentage contribution to the Pool. Twelve months on, and despite these changes, a further run of large losses and a contribution formula that responds more rapidly, has meant some Clubs have seen an additional large adjustment this year.

With losses contributing to three of the most expensive loss years on record, a number of Clubs will be facing significant additional costs. The above illustrates the change in contribution for each Club between 2013 and 2014, although it should also be noted that a Club’s contribution percentage should be considered within the context of the Clubs’ size.


P&I Club MarketReference

P&I C

lub

Mar

ket

Ref

eren

ce


2014 Policy Year Mutual Reinsurance Structure . . . . . . . . . . . . . . . . . . 44

Excess of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

2013 and 2014 Policy Year Rating Comparison . . . . . . . . . . . . . . . . . . . 44

Group Excess Reinsurance Historical Rating 1998-2014 . . . . . . . . . . . . 45

Pooling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

International Group Excess of Loss Reinsurance Rates . . . . . . . . . . . . . . 46

Release Calls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

P&I Class Supplementary Call History . . . . . . . . . . . . . . . . . . . . . . . . . . 47

P&I Class General Increase History . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47


2014 Policy Year Mutual Reinsurance Structure

Excess of loss The 20 February 2014 renewal was another difficult one for shipowners. As well as P&I Clubs once again asking for general increases in excess of inflation, the underwriters of the International Group’s excess of loss reinsurance programme were also asking for increases.

The reasons used for increased premiums will be familiar to all owners and primarily revolve around the substantial increases in cost for the Rena and Costa Concordia claims. There was only one claim in the 2013 policy year large enough to reach the first general excess layer being the grounding of the bulk carrier Smart off South Africa. This is another wreck removal, but will be finalised for a much lower cost than either Costa Concordia or Rena.

The increase in costs, as usual, were passed straight through to owners rather the Clubs absorbing any of the increase. The West of England treat International Group excess of loss reinsurance as a completely separate cost, but all other Clubs apply the general increase to premiums including the reinsurance rates. This means that over successive general increases the increases in reinsurance

cost we have seen over the last couple of years have been compounded. The West of England deserve more recognition than they receive for their transparent policy on this matter.

The structure of the International Group excess of loss programme changed reasonably significantly at 20 February 2014. Many had predicted the increase in the inception level to USD 80 million. The increased retention as well as being a way of keeping the increase down is part of a wider feeling within the International Group that Hydra could be used to retain more risk. The more interesting change is the involvement of Berkshire Hathaway who now take a 5% layer from USD 100 million to USD 1.1 billion.

Historically separate rating categories, determined by vessel types, have been utilised to allocate premium and this format continued for the 2013/14 policy year with upward variations in the individual rating categories as shown below:

2013 and 2014 Policy Year Rating Comparison

Vessel Type 2012/13 2013/14 Difference Difference

Dirty Tankers $0.7565 $0.7963 + $0.0398 + 5.26%

Clean Tankers $0.3245 $0.3415 + $0.0170 + 5.24%

Dry Cargo $0.4942 $0.5203 + $0.0261 + 5.28%

Passengers $3.1493 $3.7791 + $0.6298 + 20.00%

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PoolingThe International Group pooling structure was left relatively unchanged at the 20 February 2014 renewal. As was mentioned in last year’s review, the larger Clubs have been pushing for increased individual Club retentions for many years but despite this the retention for each Club remained at USD 9 million. We expect to see this increased to USD 10 million over the next couple of renewals.

The Pool limit was increased from USD 70 million to USD 80 million. This has been done by increasing the Upper Upper Pool which now covers the USD 60 million to USD 80 million layer. This layer also maintains the 5% individual Club retention for the Club that brings a claim to the Pool. The rest of the Pool structure beneath this level remains the same, with the 10% individual Club retention in the USD 15 million in excess of USD 45 million layer. This means that for a claim that reaches all the way through to the excess of loss contract, the Club bringing the claim to the pool will retain USD 11.5 million in total before their contribution to the Pool for the loss.

The increased retention to USD 80 million will have ameliorated a small amount of the increases demanded by reinsuring underwriters. The increase was kept to 10% with the biggest individual percentage increase of 20% being applied to passenger ships. This is a reaction to the deterioration in the Costa Concordia estimate over the course of the 2013 policy year. Increasing the retention of Hydra, the International Group captive, is a long term objective of the International Group and we predict we will see this increase further from USD 80 million over the next couple of years.

Claims that exceed the overall limit of the Group’s excess reinsurance contract, including the reinsured overspill layer, are then pooled among the Group Clubs. The overall limit for this overspill remains unchanged at 2.5% of the limitation funds under the 1976 Limitation Convention for all mutual ships entered in the Group Clubs.

Group Excess Reinsurance Historical Rating 1998-2013

‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘13 ‘14‘12

Dry cargo

Dirty tankersPassengerClean tankers

‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘040.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Group Excess Reinsurance Historical Rating 1998-2014

Vessel Type 2012/13 2013/14 Difference Difference

Dirty Tankers $0.7565 $0.7963 + $0.0398 + 5.26%

Clean Tankers $0.3245 $0.3415 + $0.0170 + 5.24%

Dry Cargo $0.4942 $0.5203 + $0.0261 + 5.28%

Passengers $3.1493 $3.7791 + $0.6298 + 20.00%


International Group Excess of Loss Reinsurance Rates

Release Calls as at September 2014

5% ICR

10% ICR Upper Pool USD 45 million – USD 60 million reinsured by Hydra

Lower Pool USD 30 million – USD 45 million reinsured by Hydra

Lower Pool USD 9 million – USD 30 million

Individual Club Retention (ICR)

First Layer 65%

Unlimited Reinstatements

Coinsurance 30%

Reinsured by Hydra

Oil Pollution

USD1,000 million

USD1,000 million

USD500 million

USD500 million

USD 20 million

USD 15 million

USD 15 million

USD 21 million

USD 9 million

USD 3,080 million

USD 2,080 million

USD 1,080 million

USD 580 million

USD 80 million

USD 60 million

USD 45 million

USD 30 million

USD 9 million

Owned Entries

Protection & Indemnity

Collective Overspill

One Reinstatement

Upper-Upper Pool USD 60 million – USD 80 million reinsured by Hydra

USD 3,100 million

USD 2,100 million

USD 1,100 million

Third Layer


Second Layer 95%


Second Layer 95%


****

* *

First Layer 65%


Coinsurance 30%

Reinsured by Hydra

American Britannia Gard Japan London North Shipowners Skuld Standard Steamship Swedish UK West

2012 20 7.5 5 5 15 5 0 0 3 5 7.5 12.5 5

2013 20 10 15 5 15 5 0 0 4 10 12.5 20 15

2014 20 17.5 20 5 15 20 0 15 8 25 20 15 30

* Coinsurance 5% reinsured by Hydra USD 80 million – USD 100 million.

** 5% reinsurance by Berkshire Hathaway from USD 100 million – USD 1.1 billion on a multi-year fixed placement basis.

Release Calls The issue of the Clubs charging release calls and the level of those release calls is a constant matter of controversy in the P&I world. Many owners, brokers and certainly the fixed premium P&I market feel release calls are only used as a deterrent to prevent ship owners moving their business when they are unhappy with their P&I Club. At Aon we understand the reason for release calls in a mutual market and agree in the majority of circumstances they are necessary, however, the levels charged by certain Clubs can be deemed unjustifiable. With Gard, for example, we have a Club that gives money back to the Membership in most years, but feels it needs a cumulative release call of

40% across the three open years. Since the end of the last EU investigation, release calls have been reduced by most Clubs and we applaud the stance taken by those Clubs that have brought them down to sensible levels. However, there are still many Clubs boasting of their financial prowess, whilst maintaining release calls of 15% plus on multiple policy years. Whilst this continues there will be no stopping many in the market justifiably saying release calls are used purely to prevent business from leaving the Club. The below table sets out release calls at the time of writing.

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P&I Class General Increase History

P&I Class Supplementary Call History

Original estimate/actual or current estimate as percentage of advance call/estimated total call as applicable.

Percentage of advance call/estimated total call as applicable including any change in budgeted supplementary call estimate.

Excess Supplementary Call

Reduced Supplementary Call

Policy Year 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15

American Club 0/20 0/35 0/30 0/25 20/20 25/25 25/25 0/0 0/0 0/0

Britannia 40/30 30/30 30/30 40/40 40/ 32.5 40/40 40/40 40/40 45/45 45/45

Gard 25/20 25/20 25/25 25/ 25 25/10 25/15 25/20 25/15 25/15 25/25

Japan Club 30/30 30/60 30/30 30/ 30 40/40 40/50 40/40 40/40 40/40 40/40

London Steamship 40/40 40/89 40/89 40/75 40/40 0/0 0/0 0/0 0/0 0/0

North of England 0/0 0/0 0 /0 0/0 0/0 0/0 0/0 0/0 0/0 0/0

Shipowners’ 25/0 25/0 25/ 0 25/0 10/0 10/0 10/0 10/0 0/0 0/0

Skuld 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0

Standard 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0

Steamship 0/0 0/12.5 0/14 0/20 0/0 0/0 0/0 0/0 0/0 0/0

Swedish 0/0 0/35 0/35 0/0 0/0 0/0 0/0 0/0 0/0 0/0

UK 0/0 0/20 0/25 0/20 0/0 0/0 0/0 0/0 0/0 0/0

West of England 20/35 20/55 20/55 20/65 30/30 30/30 30/30 30/30 35/35 35/35

Policy Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

American Club 17.5 10.0 10.0 10.0 20.0 20.0 0.0 2.0 5.0 10.0 10.0

Britannia 8.5 7.5 2.5 5.0 23.8 23.8 5.0 5.0 5.0 16.5 2.5

Gard 7.5 5.0 7.5 5.0 10.0 10.0 0.0 0.0 5.0 5.0 5.0

Japan Club 0.0 0.0 0.0 10.0 20.0 20.0 12.5 10.0 3.0 5.0 7.5

London Steamship 15.0 12.5 12.5 7.5 15.0 17.5 5.0 5.0 5.0 12.5 10.0

North of England 17.5 12.5 7.5 7.5 20.0 17.5 5.0 3.0 5.0 15.0 7.5

Shipowners’ 0.0 0.0 0.0 5.0 15.0 15.0 5.0 0.0 0.0 5.0 5.0

Skuld 15.0 7.5 5.0 2.5 7.5 7.5 5.0 n/a n/a n/a n/a

Standard 20.0 12.5 5.0 5.0 15.0 15.0 3.0 3.5 5.0 7.5 12.5

Steamship 20.0 12.5 5.0 9.0 15.0 15.0 5.0 0.0 5.0 7.5 10.0

Swedish 15.0 10.0 10.0 7.5 15.0 15.0 2.5 2.5 5.0 7.5 7.5

UK 17.5 12.5 12.5 7.5 17.5 17.5 5.0 5.0 3.0 7.5 10.0

West of England 15.0 12.5 12.5 5.0 15.0 15.0 5.0 5.0 5.0 7.5 7.5

Average 13.0 8.8 6.9 6.7 16.1 16.1 4.5 3.4 4.3 8.9 7.9


Specialist MarketsFixed P&I ProvidersThere is little by way of an easy ride for the Fixed P&I provider. All too often they struggle to see the major fleets, not aided by what we feel, are still heavy release calls. Acceptable blue cards for some can be an issue along with limits. Still the Fixed P&I market has never been stronger with a number of Group Clubs entering this arena.

Staying with the Group Clubs Fixed P&I providers, should there be a clear message from the International Group on what is to be considered International Group Agreement (IGA) bound and what is free business? We continue to hear mixed signals with a number upholding the spirit of the rules, whilst others take a wholly different approach.

The Fixed Insurer does not have a second chance; their underwriting must reflect the risk at hand. There is no ‘churn’ effect here and all too often they find it impossible to compete with the Group Clubs when ‘free business’ is on offer.

We feel the Fixed P&I providers should look to widen their book, perhaps larger vessels, specialist units, higher limits. Certainly show, as a few now do, more imagination, bearing in mind they do not have any ‘non-poolable’ issues to concern themselves with. There are a number of areas that are not over congested with capacity - short term risks and break up voyages spring to mind.

For sure fixed P&I is a firm fixture in the market place, whether we see some consolidation remains to be seen.

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British Marine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Carina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Eagle Ocean Marine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Hanseatic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Hydor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Lodestar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Navigators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Osprey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

RaetsMarine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Charterama . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Charterers Club . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Norwegian Hull Club . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

Specialist Market Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Commentary on individual insurers has been supplied by Aon and the insurers themselves.


Insured GT by vessel type


British MarinePlantation Place, Fenchurch St, London, UK EC3M 3BD british-marine.com t +44 (0)20 7105 5555

Key Data Carrier: QBE S&P Rating: A+ Limit of Cover: USD 1bn

Annual P&I Income

Entered Tonnage

Number of Vessels

2013 2012 2011 100,000,000 106,000,000 125,000,000

2013 2012 2011 11,000,000 12,000,000 12,600,000

2013 2012 2011 7,500 9,500 n/a

Aon Comment “With 138 years of experience British Marine is one of the longest established fixed premium markets offering P&I, Charterers Liability, Hull & Machiney and Defence products. They specialise in small to medium size tonnage and can offer limits at the highest end of the fixed premium market, up to USD 1 billion. A strong claims team continues to be an asset to British Marine.”

Manager’s comment As one of the longest established P&I provider in the fixed premium sector, our facility is accepted by the Flag States. 2013 saw increased competition as new fixed premium competitors imitating the BM model came on line putting downward pressure on rating. We have joined forces with our QBE offices in Asia to create a unified P&I product for the Far East “QBE Asia P&I” with underwriting, claims and administration being handled by a combination of BM and QBE staff based in Singapore. The British Marine terms and conditions and claims handling philosophy are being used and the expertise of the BM London office and QBE Asia offices are called upon to enhance service to Assureds and Brokers. This is progressing well in what is a very competitive and price sensitive market.

Insured GT vessel type

Misc. Carriers

10%

Middle East & Indian

Subcontinent 15%

South America 5%

African Continent

3%

Eastern Europe & Cental Asia

4%

Northern & Central America

11%

Scandinavia 5%

Northern Europe

21%

Southern Europe

14%

Far East & Australasia

22%

General Cargo 25%

Barge 6%

Tug/Utility 7%

Bulker Types 18%

Smoothwater 9%

Unitised 9%

Tanker 5%

Fishing 7%

Dredgers 1%Yacht

3%

Insured GT by region

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CarinaRegis House, 45 King William Street, London, UK EC4R 9AN carinapandi.com t +44 (0)20 7407 3588

Key Data Carrier: 100% Lloyd’s S&P Rating: A+ Limit of Cover: USD 500m

Annual P&I Income

Entered Tonnage

Number of Vessels

2013 2012 2011 Not available n/a n/a

2013 2012 2011 2,000,000* n/a n/a

2013 2012 2011 approx. 4,250 n/a n/a

Aon Comment “Carina is a fixed premium facility, managed by Tindall Riley Marine (UK) Limited, trading as Carina Managers, offering P&I cover for owners and charterers of smaller ships up to 5,000 GT. Cover is provided up to USD 500 million and is backed by Lloyd’s A+ rated security. It is encouraging to see strong growth particularly in Asia since Carina’s launch in early 2014.”

Manager’s comment We have seen a significant increase in the number of insured ships and the written premium since last year. Cover is provided to shipowners worldwide with a focus on ships below 5,000 GT. We do not write US business and most of the tonnage insured is trading locally or on inland waterways. A bespoke Carina yacht policy was launched on 1 January 2014, which provides comprehensive P&I cover for yacht owners trading worldwide. Carina tailors its covers to suit the needs of the insured and only binds business where the premium is appropriate to the risk. Since the launch of Carina, we have received considerable support from brokers and owners worldwide.


Tug 11%

Asia 30%

UK/Europe 42%

South America

7%

Russia/Ukraine 21%

Passenger 14%

Work 5%Fishing

5%Other

7%

Dry Barge 26%

General Cargo 24%


* As at 1st July 2014

Tanker 8%




Eagle Ocean Marinec/o Eagle Ocean Agencies, Inc. One Battery Park Plaza - 31st Floor, New York, NY 10004 United States eagleoceanmarine.com t +1 212 847 4600

Key Data Carrier: American Club S&P Rating: BBB- Limit of Cover: 100m

Annual P&I Income

Entered Tonnage

Number of Vessels

2013 2012 2011 7,000,000 6,250,000 5,000,000

2013 2012 2011 590,000 600,000 470,000

2013 2012 2011 268 263 169

Aon Comment “Formed in 2010 Eagle Ocean Marine is operated by Eagle Ocean Agencies which is an affiliate of Shipowners Claims Bureau, Inc., managers of the American P&I Club. This allows the facility to draw upon some of the expertise and service of the American Club including the ability to issue American Club guarantees. Eagle Ocean has recently increased its P&I limit from USD 50 million to USD 100 million which we believe will assist the team with further growth of the Eagle ‘book’ as they open the product up to a wider audience of shipowners.”

Manager’s comment With security provided by the American Club, Eagle Ocean Marine has continued to see stable growth over the past year, building their book of business whilst maintaining a conservative approach to underwriting. The American Club’s recent S&P upgrade from BB+ to BBB- (stable) is expected to augment the Eagle Ocean Marine product, fostering further growth over the next 12 months. Eagle Ocean Marine continues to have a strong presence in China and South East Asia, following a commitment by the American Club to increase its representation in the area. Eagle Ocean Marine has also benefited from having the ability to issue American Club guarantees, enhancing its claims handling service and American Club blue cards, which are recognised worldwide. The facility also enjoys a relatively low cost base, reducing the pressure to grow simply to meet operational overheads.



Tug/Barge 47%

Asia Pacific 59%

Europe 6%

Others33%

Americas 2%

Tank 23%

General Cargo 20%

Ferry 1%

Fishing 1%

Bulk 3%

Ro/Ro 2%

Containership 3%

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Hanseaticc/o Zeller Associates Management Services GmbH, Kreuzfahrtcenter, Van-der-Smissen-Str. 1, 22767 Hamburg, Germany hanseatic-underwriters.com t +49 40 3890739 0

Key Data Carrier: Hanseatic Underwriters Consortium S&P Rating: A+ Limit of Cover: USD 500m

Annual P&I Income

Entered Tonnage

Number of Vessels

2013 2012 2011 19,500,000 20,700,000 16,750,000

2013 2012 2011 2,700,000 2,400,000 2,100,000

2013 2012 2011 1,750 1,560 1,390

Aon Comment “Hanseatic P&I is an insurance consortium managed exclusively by Zeller Associates Management Services GmbH and provides fixed premium P&I up to limits of USD 500 million. The consortium has diversified its risk appetite on a geographical basis although it retains a focus on small to medium sized general cargo and container vessels as well as liquid cargo and dry bulkers. The London based representative office still continues to be a key element to the growth of Hanseatic through the London broking community.”

Manager’s comment With strong security and excellent reinsurance support, Hanseatic is able to provide P&I cover for all vessel types with a limit up to USD 500 million. The markets Hanseatic has traditionally served are Europe, Turkey, CIS, Middle East and North Africa but there has been a recent commitment to global growth and the brand is seeing success in the Far East and Asia markets as well as South America.

Target vessel types are dry bulk, general cargo and container ships up to 30,000 GT as well as tankers to 20,000 GT, and inland and offshore craft. Cover for charterers’ risks to 70,000 GT and FD&D insurance is also offered.

The business established a representative office in London during 2012.


Containership 18%

Axxsx%

Asia Pacific 20%

Europe 72%

Americas 4%

Others 4%

Bulk 26%

General Cargo 37%

Tug/Barge 8%

Ro/Ro 2%

Other 4%

Fishing 3%Tank

2%





HydorJonasmyra 20, 1390 Vollen Norway hydor.no t +47 2241 5000

Key Data Carrier: Brit Syndicate 2987 S&P Rating: A+ Strong Limit of Cover: USD 500m

Annual P&I Income

Entered Tonnage

Number of Vessels

2013 2012 2011 9,000,000 5,000,000 2,000,000

2013 2012 2011 1,300,000 1,200,000 1,000,000

2013 2012 2011 388 306 198

Aon Comment “Hydor was established in 2010 and began writing business in 2011 for vessels up to 10,000 GT. The facility is backed by 100% Lloyd’s security through Brit Syndicate 2987 and offers owners P&I, Charterers Liability and Defence products up to a USD 500 million limit. Hydor saw some additional growth at the Club renewal date of 20 February, demonstrating the fixed market’s ability to be an attractive alternative to the larger Clubs in the small ships sector. Claims servicing is provided by C Solutions Limited, a legal and claims consultancy.”

Manager’s comment Hydor AS has over the past year further positioned themselves as a professional fixed priced Owners’ and Charterers’ P&I facility, providing customised solutions for clients both in their Norwegian home market as well as internationally. Hydor AS continuous to shape their competitive edge, thus working with the client, rather than for the client


Fishing vessel 15%

Far East 8%

West Europe

2%

Germany 41%

Greece 2%

Denmark 4%

Norway 21%

East Europe

12%

Americas 9%

Dry Cargo 71%

Reefer 5%Other

2%

Well boat 1%

Tank 3%

Tug/barge/offshore 3%

Others 1%


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Lodestar35 Seething Lane, London, UK EC3N 4DQ lodestar-marine.com t + (0)20 7068 8300

Key Data Carrier: RSA, Lloyd’s & Company markets S&P Rating: A Limit of Cover: USD 500m

Annual P&I Income

Entered Tonnage

Number of Vessels

2013 2012 2011 approx. 25,000,000* n/a n/a

2013 2012 2011 2,756,154 1,777,512** n/a

2013 2012 2011 1,623 963 n/a

Aon Comment “Lodestar has now been in the market for two years and since its launch in September 2012 has seen strong growth in what still remains a very competitive market. This is partly attributable to an imaginative approach to underwriting and support from the broking community. Lodestar continues to offer fixed premium P&I, Charterers Liability and Defence products up to a USD 500 million limit and maintains a RSA A rated security.”

Manager’s comment Two years into our journey and no longer the new kids on the block, we have established ourselves as one of the leading Fixed Premium P&I providers. This year we have insured 410 Assured from 75 different countries. Stiff competition has not hampered our growth, achieved through a ‘Mutual’ style philosophy to claims handling, innovative underwriting and good quality security, service and product. Whilst price remains an important factor in an Assured’s decision where to insure, we have maintained our underwriting discipline throughout.

This is also a relationship driven industry and we travel extensively in an effort to meet as many of our Assured as possible. Collectively our Underwriting and Claim teams spend 45 weeks on the road per annum. Consequently we have restructured our Underwriting and Claim departments to ensure that we always have adequate cover in our London office and that our high level of service is maintained.


Tug/Barge 11%

Tank 9%

Offshore 7%

Others 13%

Asia Pacific 26%

Europe 50%

Americas 11%

Bulk 15%

Ro/Ro 6%

Ferry 3% Containership

6%

Fishing 3%

General Cargo 38%

Dredger 2%


* July 2014 ** As at 29.07.2013




Navigators7th floor, 2 Minister Court, Mincing Lane, London, UK EC3R 7BB navg.com t +44 (0)20 7220 6900

Key Data Carrier: Navigators S&P Rating: A strong Limit of Cover: USD 500m

Annual P&I Income

Entered Tonnage

Number of Vessels

2013 2012 2011 21,430,000 22,000,000 22,500,000

2013 2012 2011 2,000,000 2,100,000 2,200,000

2013 2012 2011 1,575 1,680 n/a

Aon Comment “Established in 2004, Navigators is a fixed premium facility providing P&I to shipowners and charterers. Re-insurance is provided by Navigators Insurance Company and the risk appetite remains consistent and is for most vessel types under 10,000 GT excluding passenger vessels and those with U.S Flag/ US trading. It will be interesting to see how the new management influences the dynamic going forward.”

Manager’s comment Navigators have offices in the US, London, Antwerp, Stockholm, Copenhagen and Lloyd’s representative offices in Shanghai and Rio.

We have opened an office in Rotterdam and Milan and will be opening offices in Paris and Dubai shortly. Navigators are also in the process of establishing a separate European Insurance Company in London enabling the company to accept business from any EU country. This company is expected to be operational by March 2015.


Tanker 10%

Americas/Central America

9%

Europe: Western Europe ex UK

10%

Asia Pacific/East Asia 30%

Rest of World 16%

Europe: Central & Eastern

17%

Americas/South

America 11%

General Cargo 56%

Bulker 10.5%

Tug 5%

Barge 6.35%

0ther 5.35%

Fishing 3.7%

OSV 3.1%

Middle East & Africa Middle East

7%


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OspreyFountain House, 8th Floor, 130 Fenchurch Street, London, UK EC3M 5DJ osprey-uwr.co.uk t +44(0)20 7283 1277

Key Data Carrier: Lloyd’s of London S&P Rating: A+ Limit of Cover: USD 500m

Annual P&I Income

Entered Tonnage

Number of Vessels

2013 2012 2011 30,000,000 38,500,000 41,000,000

2013 2012 2011 n/a n/a n/a

2013 2012 2011 1,800 2,500 3,100

Aon Comment “Osprey is a long established fixed premium P&I provider and they have recently increased their limit of cover from USD 100 million to USD 500 million which will open the insurer up to those clients requiring the higher limits. It is pleasing to see that Osprey have also recently opened a claims handling office in the US (Louisiana) which will allow the insurer to maintain its strong roots in US brown water business as well as assisting with claims coming from South America.”

Manager’s comment Osprey Underwriting Agency is a specialist fixed premium marine insurance provider who offer P&I and a variety of other marine insurance products. The Agency remains a stable and consistent market focused on providing quality insurance products with the best possible service and security. All Osprey products are written on behalf of Lloyd’s of London which is rated A+ (stable) by the ratings agencies. The Agency insures clients all over the world, including the USA, operating a wide range of vessel types and is supported by an extensive network of Lloyd’s Agents and Correspondents. The Agency offers limits for P&I coverage up to USD 500 million and Hull & Machinery up to a value of USD 5 million.

In addition to the head office in London, the Agency now also has offices in the USA and Canada.


Oilfield 15%

Asia 22%

South America

13%

USA 61%

Fishing 22%

Tug/Barge 41%

Misc. 5%

Marine contractors

8%

Passenger/pleasure craft 7%


Dry Cargo 2%

Europe 2%

Caribbean 1%

Africa 1%




RaetsMarineFascinatio Boulevard 622, 2909 VA CAPELLE A/D IJSSEL, the Netherlands raetsmarine.com t +31-10-2425 000

Key Data Carrier: Amlin Overseas Holding Limited S&P Rating: A- Limit of Cover: USD 500m

Annual P&I Income

Entered Tonnage

Number of Vessels

2013 2012 2011 15,366,000* 15,806,600 16,262,048

2013 2012 2011 21,000* 23,000 23,783

Aon Comment “RaetsMarine is a specialist P&I and Marine insurance provider. Founded in 1993, RaetsMarine Insurance B.V. is a 100% subsidiary of Amlin Plc providing Shipowners’ P&I, Charterers Liability (including Damage To Hull) and Multimodal solutions at fixed cost up to limits of USD 500 million. Although the fixed market has generally faced downward pressure on rating due to competition, strong service and an innovative approach to underwriting means, RaetsMarine continues to show strong growth.”

Manager’s comment We operate in a fixed premium market with increasing competition and our clients are still facing difficult market circumstances. It is inevitable that due to the increasing number of competitors and difficult market circumstances the premiums are under pressure as clients tend to go for the lowest premium. Mastering the risk in full detail, knowing your client and translating this knowledge into controlling the risk and offering the right insurance solutions for clients will be vital for the future. We heavily invest in that. As one of the leading fixed premium facilities we continue innovating our products and services. For us the current market does not form a threat but rather an opportunity to further develop our skills and offer an unrivalled service to our clients.


Russia & CIS 1.50%

North America 1.20%

Africa2.10%

* Forecast

Other Dry Cargo 16.1%

Bulk Carrier 64.7%

2013 2012 2011 77,500,000* 77,000,000 76,200,000

Asia Pacific 34.80%

Europe 41.60%

Middle East India

11.20%

Central-South

America 7.60%

Other 8.3%

Chemical Tanker

7%

Containership (Fully Cellular)

2.1%

Refridgerated Cargo Ship

1.3%

Wood Chips Carrier 0.5%

Spec

ialis

t Mar

kets




CharteramaVeerkade 1 3016 DE Rotterdam charterama.nl t +31(0)10 741 0 741

Key Data Carrier: Royal & Sun Alliance Insurance Plc, United Kingdom S&P Rating: A Limit of Cover: USD 150m

Annual P&I Income

2013 2012 2011 10,000,000 8,000,000 6,000,000

Aon Comment “Despite entering a congested arena, Charterama is becoming a prominent player in this sector. Their knowledgeable team is making steady progress.”

Manager’s comment Charterama started 5 years ago with a small team. Now Charterama has locations in Hong Kong and Rotterdam and the team has grown to a total of 11 people. We speak over 5 different languages and share different cultural backgrounds. Yet we have many in common. We all share the common goal to serve our clients with immediate and expert advice and share our experience with our clients. With a world around us changing rapidly and information available 24 hours a day, it is no longer about the people who have the knowledge but about people who share the knowledge.


General Cargo 30%

Tank 15%

Bulk 45%

Others 10%

Asia Pacific 25%

Europe 50%

Americas 15%

Tug/Barge 2% Fishing

1%

Ro/Ro 2%

Containership 5%





Charterers Club65 Leadenhall Street, London, UK EC3A 2AD exclusivelyforcharters.com t +44 (0) 20 7702 3928

Key Data Carrier: Great Lakes/Munich Re Group S&P Rating: AA- Limit of Cover: USD 500m

Annual P&I Income

2013 2012 2011 28,200,000 27,200,000 25,500,000

Aon Comment “The Charterers P&I Club have maintained a strong position in a competitive market. They enjoy a number loyal clients and despite continued pressure on premium levels, are seeing a steady increase in their portfolio; added no doubt by their decision to open an office in Dubai.”

Manager’s comment The Charterers P&I Club was set up in 1986 to fill the gap between the no-frills cover being offered by commercial underwriters and the owner orientated cover available from the owners P&I Clubs. Originally run as a mutual, the Club de-mutualised in 1999 and became a fixed premium operation offering the ethos of Club style service but with fixed premiums.

The Club employs experienced maritime lawyers and commercial claims handlers who use their expertise to help manage claims and problems that an assured experiences. We have offices in London and Shanghai and a claims handling presence in Dubai and Madrid.

The Club currently insures around 300 clients from liner operators to trading houses.

Over the past 12 months the Management Company (Michael Else/Sextant Marine) have opened a strategic hub in Dubai to allow the Club to service the overseas markets more efficiently. Gavin Ritchie and Christopher Else currently represent the Club in the region.


Australasia 12%

Asia 41%

Africa 3%

Middle East/India

11%

Americas 5%

Europe 28%

Liner 18%

Bulkers 76%

Tanker 3%

Other 3%


Spec

ialis

t Mar

kets




Norwegian Hull ClubOlav Kyrresgate 11 NO-5014 Bergen norclub.no t +47 55 55 95 00

Key Data Carrier: Norwegian Hull Club S&P Rating: A- June 2014 Limit of Cover: USD 200m

Annual P&I Income

2013 2012 2011 11,000,000 11,500,000 11,000,000

Aon Comment “Another fairly recent entrant to the Charterers market who has taken a positive step in evaluating their underwriting philosophy. There is a lot of capacity at this time, though the solid client base of the Norwegian Hull Club will be a great help.”

Manager’s comment NHC’s Charterers liability portfolio has seen stable growth since its establishment six years ago however a review last year revealed a need for a revised strategy and focus areas, due to a high claims frequency and a break even result in a soft market. The Club did the same exercise with our Hull portfolio in 2007/08, resulting in a continuous improvement in technical Loss Ratio over the past four years, hence we expect same effect for the Charterer’s Liabilities product over time. As a consequence of the clean up, we expect written P&I premium to be somewhat reduced next year, whilst the pricing model’s expected profit on the remaining portfolio has increased. Correspondingly, more focus is put on synergies from the Clubs Hull portfolio, developing business through existing Client relationships. Further, as a part of the revised strategy, increasing capacity is under evaluation.


Bulk 70%

Asia Pacific 40%

Americas 5%

Others 5%

Europe 50%

Othersx%

General Cargo 20%

Tank 10%


* Estimate


Specialist Market Summary

* RSA provide security up to USD 100 and Lloyd’s of London and company markets provide security for limits up to USD 500 Million.

Specialist Market Security S&P Rating Limit Owners P&I Max GT.

British Marine (est 1876) QBE A+ 500m

Exceptional 1 BnNo cap, speciallity is small & medium sized vessels

Carina (est 2013) Lloyd’s of London A+ 500m 5,000

Eagle Ocean Marine (est 2010) The American Club BBB- 100m 25,000

Hanseatic Underwriters (est 2005)

Hanseatic Underwriters Consortium A+ 500m 30,000

Hydor (est 2010)

Lloyd’s of London - Brit Syndicate A+ 500m 10,000

Lodestar Marine (est 2012) RSA* A 500m 20,000

Navigators (est 2004)

Navigators Insurance Company A 500m 10,000

Osprey (est 1991) Lloyd's of London A+ 500m 25,000

RaetsMarine (est 1993)

Amlin Overseas Holding Ltd A- 500m N/A

Charterers Club (est 1986)

Great Lakes / Munich Re AA- 500m N/A

Charterama (est 2009) RSA A 150m N/A

Norwegian Hull Club (est 2008) Norwegian Hull Club A- 200m N/A

Specialist Market Security S&P Rating Limit Owners P&I Max GT.

British Marine (est 1876) QBE A+ 500m

Exceptional 1 BnNo cap, speciallity is small & medium sized vessels

Carina (est 2013) Lloyd’s of London A+ 500m 5,000

Eagle Ocean Marine (est 2010) The American Club BBB- 100m 25,000

Hanseatic Underwriters (est 2005)

Hanseatic Underwriters Consortium A+ 500m 30,000

Hydor (est 2010)

Lloyd’s of London - Brit Syndicate A+ 500m 10,000

Lodestar Marine (est 2012) RSA* A 500m 20,000

Navigators (est 2004)

Navigators Insurance Company A 500m 10,000

Osprey (est 1991) Lloyd's of London A+ 500m 25,000

RaetsMarine (est 1993)

Amlin Overseas Holding Ltd A- 500m N/A

Charterers Club (est 1986)

Great Lakes / Munich Re AA- 500m N/A

Charterama (est 2009) RSA A 150m N/A

Norwegian Hull Club (est 2008) Norwegian Hull Club A- 200m N/A

Contacts

Chris ChadwickClient [email protected]+44 (0)20 7086 4185

Chris GimsonClient [email protected]+44 (0)20 7086 3155

David MahoneyClient [email protected]+44 (0)20 7086 3601

Verity Davis Client [email protected] +44 (0)20 7086 3130

Nicola MooreClient [email protected]+44 (0)20 7086 2811

Nik RockliffeClient [email protected]+44 (0)20 7086 4271

Risk. Reinsurance. Human Resources.

© Aon plc 2014. All rights reserved.The information contained herein and the statements expressed are of a general

nature and are not intended to address the circumstances of any particular individual

or entity. Although we endeavor to provide accurate and timely information and

use sources we consider reliable, there can be no guarantee that such information

is accurate as of the date it is received or that it will continue to be accurate in the

future. No one should act on such information without appropriate professional

advice after a thorough examination of the particular situation.

Aon UK Limited is authorised and regulated by the Financial Conduct Authority.

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