For ship owners and P&I brokers, there are five

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4 Foreword For ship owners and P&I brokers, there are five seasons in a year!! Spring, Summer, Autumn, Winter and more importantly the P&I renewal season. The P&I renewal season can encompass all the elements of the other four seasons, being the high and low depressions of P&I renewal negotiations. The P&I renewal season will soon be upon us and it is again the time of the year for the annual checkup of the wellbeing of the P&I insurance market and this we do, in the form of the 8th Omni P&I Report on the state of the market for both Mutual Clubs and Fixed premium facilities, the two distinct markets. The International Group of 13 Mutual Clubs is in all probability going to again prescribe the bitter pill of general increases, which in turn might lead to more vessels moving between the clubs. Let us hope that the benign claims experience of the clubs results in a corresponding benign general increase. This coupled with increased profitability for the year ending 20 February 2014 and club free reserves now exceeding USD 4 billion, it is not the time to again burden members with more general increases? The number 13 is considered an unlucky number and whether that ultimately becomes a lesser number or more probably a greater number within the IG Clubs remains to be seen. It seems that the European Commission will just not go away with the announcement of yet another review, this time of the Club s pooling arrangements (IBER review) Since our report last year, there has been further growth in the Fixed P&I market with the notable addition of Turk P&I Sigorta in With so many fixed premium providers it will inevitably put pressure on premium levels, much to the benefit of the ship owner. So to put it very simply, the Mutual market are likely to be seeking increases in premium/calls, modest we hope, whereas the Fixed market will struggle to maintain existing levels of premium and might have to consider reductions, depending on record of the ship owner. IG Group Pool reinsurers are expected to be hit by the increase in cost of wreck removal of Costa Concordia and Rena so we must be prepared for an increase in RI cost, particularly with the final claim estimate for these two losses appearing to increase on a daily basis. It will be interesting to see at the forthcoming renewal season, how much migration of tonnage there will be from Mutual to Fixed premium basis, however, we must remember that this is not an option for the majority of ship owners. We hope this Report will assist you in understanding the P&I Insurance market and evaluating the results of each club and insurer. ADDITIONAL CURRENT TALKING POINTS: Mutual Clubs diversification into non P&I business- good, bad or necessary development to keep the rating agencies happy? Maritime legislation- ever growing burden on ship owners leading to increase risk to P&I insurers. For example: * Nairobi Convention- Wreck Removal * IMO SOLAS- Bulk liquid blending prohibited * Athens Convention- Passenger Liability increases * LLMC- 50% increase in limit of liability World fleet capacity growing with new buildings exceeding scrapping- continued pressure on freight rates. Power of Club Letter of Undertaking. Shortage of skilled crew members. Sharing of statistics between Clubs would this be a useful development! Better incentives for ship owners with good records. MLC- unpaid crew wages an issue for Clubs to address, but outside of Pooling arrangement! Expect downward trend in Release Call percentage to continue. What Rules? Hamburg, Hague, Hague-Visby, now Rotterdam Rules. IG Club free reserves now exceed USD 4 Billion. Trade Sanctions ever increasing problem for owners and insurers alike. Container Vessels Wrongly declared cargo serious ongoing problem Calcium Hypochlorite for example. 2

5 FIXED WHERE SHOULD HE MIGRATE TO? MUTUAL 3

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7 TABLE OF CONTENTS I. INTRODUCTION 6 Recent developments 6 Maritime Labour Convention 8 Wreck Removal Convention 9 Pool and Re-Insurance 11 Underwriting 12 Claims 14 Movement of Accounts during the 2014 Renewal 16 What Do We See on the Horizon? 18 II. INTERNATIONAL GROUP CLUBS 19 American Club 20 Britannia 22 Gard 24 Japan Club 26 London Club 28 North of England 30 Shipowners Club 32 Skuld 34 Standard Club 36 Steamship Mutual 38 Swedish Club 40 UK Club 42 West of England 44 III. OTHER P&I FACILITIES INCLUDING FIXED PREMIUM MARKET 47 British Marine 48 Carina 49 Eagle Ocean Marine 50 Hanseatic P&I 51 Ingosstrakh 52 Lodestar Marine 53 Navigators 54 Osprey 55 RaetsMarine 56 Rosgosstrakh 57 Turk P&I 58 5

8 INTRODUCTION INTRODUCTION RECENT DEVELOPMENTS Sanctions Ukraine & Russia Recent developments regarding sanctions worldwide are now focused on the sanctions at the Black Sea Region, Ukraine and Russia. These sanctions are especially important for owners and operators trading to these countries. With regard to financial sanctions in respect of Ukraine, the designated individuals and entities should be regularly checked. See our website for a relevant list. Should an individual or entity be listed, any transaction with them will be subject to financial sanctions. With reference to Ukraine, financial restrictions are imposed for the import into the European Union of goods originating in Crimea or Sevastopol. In this regard, relevant Circulars that are from time to time circulated at web sites of P and I Clubs should be regularly checked for the details of these financial sanctions regarding the goods originating in Crimea and/or Sevastopol. The circulars may be found on the P&I clubs web sites. See our web site for examples. However, there are some exceptions in respect of above mentioned sanctions imposed for the goods originating in Crimea and/or Sevastopol: In case a contract has been concluded before 25 June 2014, said contract and its ancillary contracts are allowed to be executed until 26 September This time scale can be extended. If an individual and/or an entity provides a minimum of 10 days advance notice to their EU Member State Competent Authority in respect of the trade of goods which are preferential origin status in accordance with Regulation (EU) No 978/2012 and Regulation (EU) No 374/2014 or the EU-Ukraine Association Agreement, the trade of these goods might not be subject to the financial sanctions. Ukraine also stated that any vessel, regardless of the trading activity, calling at Crimea and Sevastopol ports are being determined and listed and those vessels may be arrested or even confiscated if they then call to a Ukrainian port. Although there is no such application of the Ukrainian government yet, this issue should be taken into consideration when fixing vessels for these ports. With regard to the details of Russia Sanctions, Council Regulation (EU) No 833/2014 ( the Russian Sanctions Regulation ) which targets directly Russia s state finances, energy and arms sectors should be checked. With reference to the financial sanctions in respect of Russia, the designated individuals and/or entities and transactions which involve the manufacturing or distributions of arms and related materials should be regularly checked. See our web site for a reference the relevant lists. Should an individual and/or entity or a transaction is listed they are subject to financial sanctions. The prohibitions are summarized as follows: -sale etc. of dual-use goods or technology, to any natural or legal person, entity or body in Russia or for use in Russia, if those items are or may be intended, in their entirety or in part, for military use or for a military end-user; -the provision of technical assistance or brokering services related to dual-use goods and technology, to any natural or legal person, entity or body in Russia or for use in Russia, if the items are or may be intended, in their entirety or in part, for military use or for a military end-user; -the provision of financing or financial assistance related to dualuse goods and technology, to any natural or legal person, entity or body or designated banks in Russia or for use in Russia, if the items are or may be intended, in their entirety or in part, for military use or for a military end-user. The abovementioned transactions are exports of certain energyrelated equipment and technology to Russia including: -line pipe, drill pipe, casing and tubing used in oil or gas drilling, rock-drilling or earth-boring tools, certain types of pumps, liquid elevators, mobile drilling derricks, floating or submersible drilling or production platforms, and other oil and gas drilling related equipment. A list of CN codes has been published to help exporters identify restricted items. Export licenses will be denied if the equipment is provided under a contractual obligation which was entered into on or after 1 August 2014 and there are reasonable grounds to consider that the products are destined for projects pertaining to deep water oil exploration and production, Arctic oil exploration or production, or shale oil projects in Russia. Russian and Ukrainian sanctions may be limited or lifted in full in the near future but recent situation may affect the trading activities to such areas. TABLE NO. 1 / Investment Results USD million *In this and other graphs 2014 means policy year 2013/2014 6

9 INTRODUCTION INTRODUCTION TABLE NO. 2 / Total Assets USD million No TABLE NO. 3 / Free Reserves USD million

10 INTRODUCTION INTRODUCTION MARITIME LABOUR CONVENTION 2006 The MLC that establishes an owner s obligations towards the crew has now been in force for a year and at the time of writing 61 States constituting 80% of the world fleet has ratified the Convention. The main points of the Convention was to establish minimum requirements for the seafarers to work on a ship, as well as stipulating proper conditions of employment, accommodation and recreation facility requirements and minimum standards for food, health, care, welfare and social security. The Convention contains requirements for compensation for occupational injury, death and long term disability and requirement for repatriation of the seafarers in case where they became abandoned due to the ship-owners insolvency. For these requirements the Convention required Certificate of Financial Security, which the P&I Clubs provided, even though the costs of repatriation due to the ship-owners insolvency, was not covered by the Club rules. In April 2014 a meeting was held by the Special Tripartite Committee established according to the Convention, and at that meeting it was decided to increase the obligations under the Convention to also secure payment of wages and outstanding entitlements for abandoned seafarers for a period up to 4 months. These obligations are also to be backed by Certificates of Financial Security. Again, the Clubs have been requested to consider issuing such certificates, even though the payment of wages and outstanding entitlements are not covered by the club rules. The Boards of the Clubs will now have to decide if they are willing to extend their Certificates to cover these additional obligations that currently fall outside Club cover. The amendments to the Convention are expected to enter into force in 2017, so there is ample time for the Club Boards to make their decisions. That vessels comply with the requirements of the Convention is controlled by the Flag States, so as part of a Ports State Control, the inspectors will also check that the minimum requirements of the MLC are fulfilled. In the year that has passed since the Convention came into force, we have been advised that more than 20 vessels have been detained due to MCL violations. In this respect it should be remembered that initially the Convention was only in force in 30 countries, where-as progressively it will cover 61 countries with more to come. So there are now many more places where the requirements under the Convention are controlled. TABLE NO. 4 / Free Reserves over GT Free Reserves USD m Entered Tonnage (owned) GT m Ratio USD AMERICAN CLUB ,24 BRITANNIA ,37 GARD ,06 JAPAN CLUB ,70 LONDON CLUB ,71 NORTH OF ENGLAND ,38 SHIPOWNERS ,67 SKULD ,46 STANDARD CLUB ,51 STEAMSHIP MUTUAL ,38 SWEDISH CLUB ,53 UK CLUB ,26 WEST OF ENGLAND ,78 8

11 INTRODUCTION INTRODUCTION WRECK REMOVAL CONVENTION The Wreck Removal Convention (WRC), which was agreed at an IMO Conference in Nairobi in 2007, will enter into force 14 April The Convention intends to provide a set of uniform international rules for the prompt and effective removal of wrecks located within the Exclusive Economic Zone or 200 NM outside the territorial waters of a state that is party to the convention. A convention state can also declare to extend the convention to its own territory. The convention defines what is a ship and a wreck, as well as a maritime casualty. It imposes an obligation to remove the wreck if it poses a hazard to navigation or the marine environment, or related interests, such as affecting the maritime coastal, port and estuarine activities, including fisheries activities, tourist attractions, health of the coastal population including conservation of marine living recourses and wildlife as well as offshore and underwater infrastructure. There is an obligation on the Master and Operator of a vessel to report to the affected State if a vessel has been involved in a maritime casualty resulting in a wreck. It is defined what has to be reported, as well as what the State shall use of criteria for their evaluation of if the wreck exposes a hazard, and thus can be ordered removed. The Convention imposes a rather strict liability on the shipowner, only excluding liability if the wreck was caused by act of war, hostilities, civil war, or a natural phenomenon of an exceptional, inevitable and irresistible character, or was caused with intent by a 3rd party or, was caused by negligence or wrongful act of a Government responsible for the maintenance of lights or other navigational aids. Here it should be noted that Piracy, is not an exclusion. The liability under the Convention can be limited according to the 1976 Limitation Convention. However a number of nations have excluded wreck removal from the 1976 Limitation Convention, so the result is that in a number of States the liability for wreck removal cannot be limited. As an example of this can be mentioned the Costa Concordia in Italy and the Rena in New Zealand, where the owners could not limit their liability and the costs of these wreck removals have run into the hundreds of millions of USD. According to the Convention the participating states must require vessels under their flag, with a tonnage above 300 GT to have compulsory insurance for wreck removal, and the vessels must have a certificate of appropriate insurance or other financial security to be issued by the state of the ships register. The Wreck Removal Convention stipulates a Direct Action against the insurers, but with the insurers having the same defences as the ship-owners would have had if he had been sued first. In states, that have not excluded wreck removal from limitation under the1976 Limitation Convention, it means that the state will have a direct action against the insurer for an amount up to the limitation amount. When the Limitation amount has been exhausted no more claims can be brought against the ship-owner or the insurer. In states, that have excluded wreck removal from limitation under the 1976 Limitation Convention, it means that the state will have a direct action against the insurer for an amount up to the limitation amount. When the limitation has been exhausted the state can continue the claim against the ship-owner, who in turn will then approach his insurer for re-imbursement for claims up to any applicable limitation amounts under the insurance. Even though there is a Direct Action provision in the Convention, we understand that the Clubs will issue the required certificates, as wreck removal is fully covered under Clubs rules and as the amount for which there is direct action - under the insurance certificate - is limited to the limitation amount under the 1976 Limitation Convention. TABLE NO. 5 / Release Calls , , ,5 12, , % *For West of England, the Release percentage is of the net Advance Call premium, i.e. Advanca Call premium excluding the Group reinsurance cost. Updates will be available on 9

12 INTRODUCTION INTRODUCTION TABLE NO. 6 / IG Market Reinsurance Structure for 2014/2015 Policy Year P&I 3.08bn- 2.08bn- COLLECTIVE OVERSPILL EXCESS OF UNDERLYING m m INTERNATIONAL GROUP OF P&I ASSOCIATIONS GENERAL EXCESS OF LOSS REINSURANCE CONTRACT STRUCTURE OWNED AND CHARTERED ENTRIES (INCLUDING OVERSPILL PROTECTION, HYDRA PARTICIPATION, POOLING AND INDIVIDUAL CLUB RETENTIONS) 12 MONTHS AT NOON GMT 20TH FEBRUARY, 2014 THIRD LAYER EXCESS OF UNDERLYING OIL POLLUTION 1.08bn bn SECOND LAYER 95% SHARE SECOND LAYER 95% SHARE 580m m FIRST LAYER 65% SHARE HYDRA 30% SHARE FIRST LAYER 65% SHARE HYDRA 30% SHARE 80m - 60m - 45m - 30m - 9m - UPPER- UPPER POOL - REINSURED BY HYDRA UPPER POOL - REINSURED BY HYDRA LOWER POOL- REINSURED BY HYDRA LOWER POOL INDIVIDUAL CLUB RETENTION (ICR) 5% ICR 10% ICR Single per - vessel retention Owned Entries P&I & OIL POLLUTION 350m m 80m - 60m - 45m - 30m - 9m - FIRST LAYER 65% SHARE UPPER- UPPER POOL - REINSURED BY HYDRA UPPER POOL - REINSURED BY HYDRA HYDRA 30% SHARE LOWER POOL- REINSURED BY HYDRA LOWER POOL INDIVIDUAL CLUB RETENTION (ICR) 5% ICR 10% ICR - 100m Chartered Entries Multi- Year Fixed Placement. 5% share Updates will be available on 10

13 INTRODUCTION INTRODUCTION POOL AND RE-INSURANCE Burdened by the Costa Concordia and the Rena wreck removal cases in 2011, where the total reserves have now been reported to be estimated at USD Million and USD 450 million respectively, changes were again made to the IG Clubs Pool arrangement to lessen the blow of the increases of the reinsurance premiums. The Pool level for the individual Clubs was retained at USD 9 million, but the Pool Layer shared by the Club was increased from USD 70 million to USD 80 million. The Clubs also increased their proportion of the cover by taking a 5% co-insurance of the layer from USD 80 Million to USD 100 million in addition to the Pool s 30% co-insurance of the layer from USD 80 Million to USD 580 million. In order to minimize the premium increases the Clubs purchased a multi-year fixed premium cover for 5% of the layer from USD 100 Million to USD million. The combined effect of these changes to the Pool and the Reinsurances has lessened the increase of the Reinsurance Premium for Cargo vessels to approximately 5% and 20% for passenger vessels The total premium for the Clubs reinsurance program is now more than USD 650 Million compared to USD 410 million in Also it must be borne in mind that as the Pool level has increased from USD 70 million to USD 80 million. as well as the additional 5% of the layer from 80 million to 100 million, a higher proportion of larger claims will be borne directly by the Clubs, and thus gives room for more fluctuation in the Clubs own claim results. We are aware, though, that most Clubs have some kind of reinsurance programs to ease any such fluctuations. Finally, the US oil pollution voyage surcharge has been removed reflecting the continued improvement in the record of the dirty tanker sector. TABLE NO. 7 / IG Market reinsurance rates for 2014 policy year TONNAGE CATEGORY USD per GT % CHANGE from 2014 TANKERS CARRYING PERSISTENT OIL AS CARGO 0, TANKERS CARRYING NON-PERSISTENT OIL AS CARGO 0, DRY CARGO VESSELS 0, PASSENGER VESSELS 3, Updates will be available on 11

14 INTRODUCTION INTRODUCTION UNDERWRITING Although it works in the background, the insurance coverage provided by P&I Clubs perform a critical role in meeting the limits of liabilities and providing broad range of covers that are needed to transport basic needs of consumers, as the vast majority of goods are shipped by means of vessels. It lies in today s underwriting philosophy that generating profit for Clubs is no longer just producing minimum technical results to be compensated by income from passive financial investments. The way to go in recent years is called diversification. This includes buying managing agencies, forming syndicates at Lloyd s and introducing new range of insurance products. This move is also welcomed by the rating Agencies. During policy year, shipping trade has not been easy for many shipowners. In addition to the high operating expenses shipowners were asked to contribute to general premium increases varying between 2.5% to 12% giving an average ratio of 6.89%. Some of the Clubs also made adjustments in their level of deductibles and also increases on their FD&D terms. Most of the P&I Clubs were able to secure the level of GI they requested and some of them with additional increases due to unfavourable loss records. Looking at the reinsurance tariff rates during 2014, the percentage of change has been between 5.26% -5.28% for tankers and dry cargo vessels. There has been a 20% surcharge on passenger vessels that can be attributable to the deterioration of the Costa Concordia claim. There are some positive developments on claims trends compared to previous year as there is a reduction in the number of claims reported to the Group Pool (layer of USD 9 million-70 million). The number of claims for the 2013 year has come down to 17 totalling less than USD 300 million which is an improvement on the previous years with 25 claims in These developments resulted in the increase in clubs free reserves for the 2013 collectively going up by USD 244 million. Compared with the previous year this is almost a double increase. All of the clubs have reported profitability with Gard announcing the highest at USD 49 million surplus maintaining their position as the wealthiest of the Clubs with USD 944 million free reserves. The IGA continued to keep a close eye on the regulatory developments such as the Athens Convention 2002 protocol which brought higher limits in passenger liability. By virtue of this Protocol, passengers will have the right to submit a direct claim against the financial security provider or insurer if the incident happened during the course of carriage based on strict liability of the carrier. In addition to this, on 20 August 2013, Maritime Labour Convention (MLC) 2006 entered into force bringing in additional liabilities for P&I clubs. What will become an additional burden on Clubs is the new requirement in 2016 under MLC being the back wages owed to crew following a shipowner s insolvency. In order to respond to the requirements under MLC 2006, the Clubs incorporated some provisions in their rules for the 2013/2014 period that may need further amendments depending on future developments. You will find a separate article in the Introduction section of this report with more detailed information about the MLC convention. A noticeable development for the Turkish market, in 2014 renewals, has been Skuld s decision to reduce their Turkish membership. Reasons were singleton/doubleton entries not producing enough premium or those with unfavourable loss records were asked to pay significant rises which ended up half the members of this Club renewing with other group Clubs. Another important development has been the establishment of the Turkish P&I just before the Feb 2014 renewals. TPI is presently concentrating on relatively smaller tonnage trading in local Turkish waters operating on a basis of fixed premium. In 2013 London Club has started showing interest also for smaller vessels. This club was traditionally interested in insuring larger tonnage and mainly bulk carriers. It is to the benefit of the shipping market and especially to smaller tonnage operators that there is now an additional capacity. The club is known for their practical and friendly approach towards the claims of its members. It was also reported that Standard Europe P&I Club s London class will now start to offer fixed premium P&I with USD 500 million limit for its members. This Class of the club serves the small size ship owners and it will be an option for its mutual members to consider. In our last year s report we mentioned about fixed facility of Skuld for small size ships. This year we have also seen West of England offering for such tonnage a fixed premium facility for P&I insurance with the same Club rules, including the Omnibus rule. It was also interesting to see enthusiastic efforts of Standard Club in seeking support among other clubs to provide direct guarantee against US OPA 90 pollution risks. It aimed at reducing the cost for the members who have to buy additional cover via other insurers. We will continue to note the underwriting changes in 2014 and hope to explore these in our next report. 12

15 INTRODUCTION INTRODUCTION TABLE NO. 8 / General Increases % 2007/ / / / / / / /15 American Club Britannia 5 23,8 12, ,5 2,5 Gard Japan Club ,5 12, ,5 London Club 7,5 17, ,5 10 North of England 7,5 17,5 17, ,5 Shipowners Skuld 2,5 7, Standard Club ,5 5 7,5 12,5 Steamship Mutual , ,5 10 Swedish Club 7, ,5 2,5 5 7,5 7,5 UK Club 7,5 17,5 12, ,5 10 West of England* ,5 7,5 * For West of England the percentage is of the net ETC premium i.e. ETC premium excluding the Group reinsurance cost. Updates will be available on TABLE NO. 9 / Underwriting Performance USD million No Clubs

16 INTRODUCTION INTRODUCTION CLAIMS The P&I business, particularly the claim handlings are definitely becoming more and more important, as shipping is continuing to face increased liabilities, international maritime and national legislation and regulations. Clubs have reported high levels of claims activity within the USD 9 million retention, although it seems less than last year. Cargo claims, continued to be the largest category of claims at the low level i.e. up to USD 1 million. Other categories of claims have experienced higher claim amounts, in particular collision and removal of wreck. The high value claims, in excess of USD 1 million, whilst representing less than 1% of the total number of claims, have consistently accounted for approximately half of the total value of the claims. Human error is the first and major factor for the claims. COSTA CONCORDIA is a good example how the human error could cause catastrophic results and claims. The majority of this claim is loss of life and wreck removal. The removal and demolition of COSTA CONCORDIA is now expected to cost in excess of USD 1.5 billion and the RENA, which also occurred in 2011, more than USD 450 million. Today most cargoes except bulk cargoes are containerized. Undeclared or misdeclared cargoes is a major problem and lead huge risk to life and property. P&I Clubs have been involved in a number of multi-million dollar incidents caused by misdeclared cargo, specifically involving calcium hypochlorite on container ships. No doubt that there is need for further work to be done in this area. Although there is slow global economic recovery in progress, there has been an increase in the number of failures to pay hire and demurrage, ship performance disputes due to high bunker prices, delays and sanction enquiries. Thus, the demand for the FD&D services remains high. Turning to the pool claims of the year 2013/2014, 17 pool claims with a total value of 302 million, were notified to the International Group. However, the indication is that 2013/2014 will be a better year for pool claims than recent years, in particular the 2011/2012 policy year, which included both Rena and Costa Concordia cases. Having reviewed the nature of the pool claims, 7 out of the 17 claims involved collision, which for some resulted in grounding, fire on board and pollution. One ship was breaking into two following grounding and one ship sank following structural failure that led to the vessel breaking into two. In that respect, perhaps the P&I Clubs would prefer to cover RDC as it traditionally was the case i.e. one fourth only, but due to pressure from brokers and practical reasons, clubs are now regularly covering four fourths. The Ebola outbreak in West Africa has resulted in a number legal and commercial considerations. Safe Port is one of them. Do the owners have to follow charterers order and proceed to a port where there is an outbreak of Ebola and what if the outbreak is only nearby the port? If the vessel has called a port where there is an outbreak of Ebola and subsequently is delayed in a subsequent port of call, will the vessel then be off hire, and what will be the situation if stowaways from an affected area is found on board? We shall not try to answer the questions in this short article but refer you to articles from the leading maritime law firms and the P&I clubs. It should also be mentioned that this is not a new situation. An example is SARS (Severe Acute Respiratory Syndrome) which broke out in Hong Kong in TABLE NO. 10 / Pool Shares 2014/2015 % Before L/R After L/R 2,6 3,1 9,0 7,8 16,1 16,6 8,3 9,4 4,1 3,7 10,6 12,1 3,8 3,8 6,6 4,8 8,9 8,7 7,7 7,9 4,9 7,8 11,0 8,5 6,4 5,

17 INTRODUCTION INTRODUCTION TABLE NO. 11 / Supplementary Calls % 2005/ / / / / / / / / /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 Club 40/40 40/89 40/89 40/75 40/40 40/40 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 30/30 20/20 Shipowners 25/0 25/0 10/0 10/0 10/0 0/0 0/0 0/0 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 Club 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0 Steamship Mutual 0/0 0/12,5 0/14 0/20 0/0 0/0 0/0 0/0 0/0 0/0 Swedish Club 0/0 0/35 0/35 0/0 0/0 0/0 0/0 0/0 0/0 0/0 UK Club 0/0 0/20 0/25 0/25 0/0 0/0 0/0 0/0 0/0 0/0 West of England* 20/35 20/55 20/55 20/65 20/20 30/30 30/30 30/30 35/35 35/35 * For West of England the percentage is of the net ETC premium i.e. ETC premium excluding the Group reinsurance cost. Updates will be available on TABLE NO. 12 / Average Expense Ratio % 19,3 8,0 11,3 5,7 8,4 12,5 18,0 12,3 10,9 11,3 12,1 9,4 14,2 5 years at

18 INTRODUCTION INTRODUCTION MOVEMENT OF ACCOUNTS DURING THE 2014 RENEWAL The shipping market conditions have now been difficult for 5-6 years with average earnings for almost all types of vessels, significantly below the 10 years average. The 2014 renewals took place under these tough market conditions and furthermore were negatively affected by Sanctions and War Risk Area Restrictions. Although there are no solid signs for improvements in shipping earnings in the near future, the world fleet grew by an estimate 3.8% in terms of GT, close to GT 1.14 billion and by 1.7% in vessels numbers in It is expected that both number of vessels and tonnage will grow for the next 10 years. Gard, North of England, UK, Skuld and Steamship are some of the clubs with more tonnage on the books after completion of 2014th renewals, although it is not the spectacular gains of previous years. Gard declared a rise of 7.1%, North of England and UK Club by 4%, Steamship Mutual by 4.85%. General Increases requested by Clubs followed similar pattern to the previous year where the lowest was 2.5% of Britannia and the highest was 12.5% of Standard Club. IT IS NOT LIMITED TO BELOW LIST BUT WE HAVE SEEN THE FOLLOWING CHANGES; American Club won Saga Cruises from Steamship Mutual. They lost Saltchuk Resources to Steamship Mutual. Gard won partial fleet of Yasa, Glory Navigation from Britannia. They lost Klaveness, Fjordl, Eidsvaag, Halten and Stornes to Skuld and Hydor. London Club won partial fleet of Zodiac Maritime and Eastern Pacific from Standard Club. They lost Entrust to Skuld North of England won partial fleet of Zodiac Maritime, Eastern Pacific, Thenamaris, J Lauritzen, Saga Shipping, Alstership, Erwin Strahlmann and NCC from Standard Club, Swedish Club, British Marine and IF insurance group. They lost Ultrabulk, Cosco Dalian, PT Arpeni, Reederei Hinsch to Steamship Mutual, Skuld and Hydor Shipowners won partial fleet of Ocean Tanker from North of England. They lost IDO, Dentur and Uzmar to Turkish P&I Skuld won Saltchuk, Torm, Cosco Dalian, PT Arpeni, Entrust, Meratus Line, Klaveness, Fjord from UK Club, American Club, Britannia, Nepia, London, BML, and Gard. They lost Geden, Mardeniz, Med Marine, Intertrade to West of England, Standard Club, Turkish P&I and Hydor. Standard Club won Mardeniz. They lost Zodiac Maritime, Eastern Pacific, Ocena Tanker, Thenamaris, Samsung Logix, Daewoo and Keumyang to North of England, North of England, London Club, Shipowners Club, Steamship Mutual and Korean P&I Steamship Mutual won Ultrabulk, Samsun Logix and Daewoo from North of England and Standard Club. They lost Saga Cruises to American Club Swedish Club won partial fleet of Yasa. They lost J Lauritzen to North of England. UK Club won partial fleet of BW from Britannia. They lost Yasa to Gard and Swedish Club. West of England won partial fleet of Geden from Skuld. Turk P&I won IDO, Uzmar, Dentur from Shipowners and Med Marine from Skuld. Korean P&I won Keumyang from Standard Club 16

19 INTRODUCTION INTRODUCTION TABLE NO. 13 / Entered Tonnage GT million * Skuld is only Owned tonnage TABLE NO. 14 / Owned and Chartered Tonnage Split GT million Owned Chartered N/A 75 N/A *Skuld report the fixed business net premium in % of the total net premium, which is 28% 17

20 INTRODUCTION INTRODUCTION WHAT DO WE SEE ON THE HORIZON? For many years now the IG Club s have insisted that P&I rates have to be increased and this has resulted in most clubs applying General Increases of varying percentages. Every year the reason is different. One year it was pool claims, another year crash of the stock market, increase of overall claims, Solvency II requirements, S&P requirements, etc. The graph showing the free reserves however do not change and in fact most of the Clubs show an increase in their free reserves. This year the claims experience of certain Clubs will show favourable results, however we think that these clubs will still charge general increases. We see that there are new Clubs and fixed premium facilities emerging. Turkish P&I is one of the new comers established to provide P&I cover mainly for domestic waters. China P&I and Korean P&I are two clubs which are providing cover on mutual basis and they are two candidates to IGA membership. We think the Clubs who diversify their product line to meet industry expectations will be the main players on the horizon. Amongst the P&I Clubs, it has recently been a new fashion to provide cover within different areas, mainly for H&M. The Swedish Club were the pioneers and along with Gard are the market leaders for the one stop shop. Skuld have now followed them but taken a different route by way of establishing a Lloyd s Syndicate. We are sure that we will very soon see other clubs follow suit. Current diversification options are forcing us to think there might be reversion in terms of products where H&M and P&I risks will be combined in same policy sometime in the near future. 18

21 II. INTERNATIONAL GROUP CLUBS 19

22 AMERICAN CLUB At the renewal, a premium increase of 10% was announced and the actual cash increase ended up being 6%, exclusive of additional reinsurance costs. Higher deductibles and other modifications of the insurance conditions came to 2%. Irrespective of this increase of close to 8%, the net premium declined by USD 4.1 million to USD 89.4 million. This is a 4.4% decline in the net premium. One should then think that the tonnage entered declined, but that is not the case. The tonnage increased with approximately 4 %, so the reduction in net premium is probably a result of the churn effect during the policy year. The total expenditure came to USD million and the underwriting result was therefore negative with USD 10.9 million. The Clubs equities returned 27.9% but because of the more cautious investment policy decided back in 2011, most of the investments are fixed income investment and therefore the overall portfolio returned 6.7% which is not bad. In terms of money, it came to USD 14.1 million, and the free reserves were lifted with USD 3.2 million and now stand at USD 57.3 million. This is an acceptable figure in terms of free reserves over GT, but the size of the club makes it more volatile and that is probably one of the reasons for the S&P rating being BBB-. As the individual retention of the Group clubs grow, many clubs need reinsurance arrangements to secure stability, in particular the smaller clubs, and American club report that it has arranged excess of loss cover for USD 4 million in excess of USD 5 million placed at Lloyd s of London and with Partner Re and a reinsurance for its exposure to the lower Pool with Hannover Re. For 2014 the arrangement with Hannover Re has been expanded through the purchase of a whole account aggregate reinsurance of claims within the Club s retention. The Clubs participation in Eagle Ocean Marine (EOM), a fixed premium program for insurance of P&I and FD&D risks for smaller vessels in local and regional trades, principally in the East Asia, Europe, Africa and other areas outside United States, has been increased from 15% to 20%. An excess of loss reinsurance of USD 25 million in excess of USD 25 million has been purchased from the Lloyds market making available primary cover up to USD 50 million. Further developments of Eagle Ocean have taken place in 2014 making cover available for up to USD 100 million and for vessels larger than the original GT 12,500 cap. Tonnage by Vessel Type Tonnage by Area GENERAL CARGO, CONTAINER VESSELS& RO-ROS TUG/BARGES/ SMALL CRAFT NORTH AMERICA OTHER BULK CARRIERS ASIA TANKERS EUROPE 20

23 Entered Tonnage GT million AMERICAN CLUB OWNED/MUTUAL CHARTERED/FIXED TOTAL S&P Rating Free Reserves USD million 2011 BB 2012 BB BBB BBB Supplementary Calls Policy year Original % Final/Current American Club Consolidated Financial Year Summary USD million 2010/ / / /2014 TOTAL CALL NET PREMIUM TOTAL EXPENDITURE UNDERWRITING RESULT INVESTMENT INCOME TOTAL FREE RESERVES

24 BRITANNIA The tonnage of the Club increased during the year with just under GT 2 million but at the renewal approximately GT 4.5 million was not renewed, leaving the Club with GT 2.5 million less owned tonnage and GT 2.0 million less chartered tonnage. Owned tonnage is still sizable and stands at GT million and the chartered tonnage at GT 23.0 million, producing total entered GT million. The Club is reporting that incurred claims in the 2013/14 policy year were just under USD 205 million, the highest ever level at the 12-month stage. The number of claim notifications has gone down from 6,889 the previous year to 5,821 in 2013/14 a fall on over 15%. However, 40 claim notifications are expected to cost the Club USD 1 million or more each high value claims - and these 40 notifications accounts for more than 55% of the total cost of claims for the year. Only two of the high valued claims are expected to exceed pool level USD 9 million. Charterers claims are not included in the high value claims because of the Clubs reinsurance arrangements in respect of chartered entries. Although the Club s net premium has gone down by USD 9.5 million, it must be taken into consideration, that a premium discount for P&I was offered on renewing 2013/14 tonnage, amounting to USD 10.3 million across the membership, as well as a waiver of half of the 50% deferred call for FD&D in the 2012/13 policy year, amounting to USD 1.4 million. The underwriting result is still negative, minus USD 21.9 million, but much better than last year s minus USD 70 million. With a net investment result of USD 55.8 million a surplus of USD 33.9 million is raising the free reserve to USD million. After all, a reasonable result. The Club s first interactive assessment by Standard and Poor s (S&P) have just been announced. S&P finds that the Club s competitive position and business risk profile is strong, while the financial risk profile is very strong and an A rating was given. Tonnage by Vessel Type Tonnage by Area GENERAL CARGO OTHER AMERICAS OTHER 1% 5% 6% %3 TANKERS (OTHER) BULK CARRIERS SCANDINAVIA ASIA TANKERS CONTAINER VESSELS EUROPE 22

25 Entered Tonnage GT million BRITANNIA OWNED/MUTUAL CHARTERED/FIXED TOTAL S&P Rating Free Reserves USD million 2011 Api 2012 Api 2013 Api 2014 A Supplementary Calls Policy year Original % Final/Current , Britannia Consolidated Financial Year Summary* USD million 2010/ / / /2014 TOTAL CALL NET PREMIUM TOTAL EXPENDITURE UNDERWRITING RESULT INVESTMENT INCOME TOTAL FREE RESERVES *Boudicca s results is fully consolidated into the figures above 23

26 GARD Once again there is very positive reporting from the Gard Group. The Club was able to lift its Free Reserves to USD 944 million, an increase of USD 50 million from the previous year. Gross Premium for the Group increased 8.4% to USD 959 million and the Group as whole achieved a Combined Ratio of 97%. For P& I the Combined Ratio was 102%, which is in line with the Clubs strategy to be within 105%, however aiming at a Combined Ratio that is slightly below costs. The underwriting deficit on the P&I was more than covered by a positive underwriting result from the Marine and Energy side. The Club s investments yielded a gain of 4.3% giving a return on investments of USD 76 million. The gross P&I premium was USD 621 million. For the 5th year in a row the Club reduced the ETC premium for it mutual members, by reducing the Deferred Call from 25% to 15%. The amount ceded to members was USD 35 million. Tonnage in the Club increased to GT 187 million, a 7% increase that is well above the world tonnage increase and above the average increase of the IG fleets, which cements the Clubs position as the largest of the P&I Clubs. Last year we reported that the Club had 7 Pool claims in the 2012 insurance year. In 2013 insurance year the Club did not see any claims in excess of USD 10 million. These numbers just shows the volatility and the random at which, such big claims happen. The Club opened an office in Rio de Janeiro, subsequent to receiving license to write reinsurance business in Brazil. An office was also opened in Singapore, which provides underwriting and claims handling for the wider geographical area of South East Asia and Oceania. In the Clubs continued efforts to enhance the product range for its members and clients, the Group introduced two new insurances. A property insurance to cover damage or loss of containers as well as a Ship Managers Liability policy to cover the liabilities arising from negligence in the performance of their contractual obligations was a year of change for Gard, as Rolf Thore Roppestad, a long-time employee of Gard, was appointed as new CEO, replacing Claes Isacson, who sadly passed away earlier in the year. New Chairman of the Board became Bengt Hermelin, Semco Shipholding, Singapore, who took over from Stephen Pan, World Wide Shipping, Hong Kong, who has been on the Clubs board for almost 2 decades. Although there are changes at the top it is with people who have both served the Club for a long time, so we expect no major changes, but continued steady progress. Even though the Gard Group obtained very good results for 2013, it still cautions that the marine insurance market for all lines of its business is very competitive, so it calls for prudent risk selection and correct pricing of all its insurance portfolios. Tonnage by Vessel Type Tonnage by Area OFFSHORE VESSELS OTHER DRY CARGO GAS CARRIERS CAR CARRIERS 4% 2% 5% 3% 5% PASSENGER & CRUISE VESSELS TANKERS GREECE AMERICAS 14% 9% ASIA MOU GERMANY REST OF EUROPE CONTAINER VESSELS BULK CARRIERS NORWAY 24

27 Entered Tonnage GT million GARD OWNED/MUTUAL CHARTERED/FIXED TOTAL *The Owned Tonnage figure includes MOUs S&P Rating Free Reserves USD million 2011 A 2012 A 2013 A A Supplementary Calls Policy year Original % Final/Current Gard Consolidated Financial Year Summary USD million 2010/ / / /2014 TOTAL CALL NET PREMIUM TOTAL EXPENDITURE UNDERWRITING RESULT INVESTMENT INCOME* TOTAL FREE RESERVES* *Investment Income and Free Reserves are given at Group level 25

28 JAPAN CLUB 2013/14 was the second year for the Medium Term Operational Plan JPI s Change, and the Club almost performed according to the plan. The fleet was stable at GT 91.8 million owners tonnage (2012/13 GT 91.6 million ), but the charterers portfolio decreased to GT 11.4 million., so now the total fleet stands at GT Million. Gross Premium increased to USD million from USD the previous year. The Club struggled with the JPY that weakened towards the USD from JPY 79 to JPY 90. Therefore the so-called Abenomics, the financial stimulus program in Japan, did not give much help to the Club that saw the investments give a surplus of USD 24.8 million compared to a gain of USD 34.2 million the year before. The decreasing JPY diluted the premium for own account, but it achieved a technical result of minus USD 9.8 million, which was somewhat better compared to the year before, where it had an underwriting loss of USD 26.3 million. Overall the Club s financial year produced a surplus of USD 15.0 million, when accounting in JPY. But when the figures are converted into USD the result of the year actually slightly decreased the Free Reserves from USD million to USD million. The Club experienced a slight decrease in the number of claims, however the Club experienced 2 pool claims. 50% of the claims are cargo claims, 30 % crew claims and the Club saw a reduction of the collision cases. The Club has been very active in its Loss Prevention efforts by having seminars, workshops and arranging visits to their members and their vessels, and the Club intends to maintain these activities. The Club has had a reasonable financial income result, apart from the depreciation of the JPY, however the claims-side has improved considerably, which seems to show the positive results from the Loss Prevention efforts of the Club. However, the Club has not been able to increase the fleet on the Owners side, and has actually seen quite a reduction on the Charterers side, so this part of the JPI s Change plan has not been accomplished. Progress in this direction will hopefully be achieved by the opening last autumn of an office in Singapore, that is established to perform underwriting - and claims-service. The Club expects that by operating this office they will not only increase the membership, they also hope that it will assist in having a better spread of members geographically as well as country wise. The Club has improved the financial performance, but still has a way to go in relation to its ambition to increase the owned tonnage of the club to GT 100 million As the Club s official accounts are expressed in JPY, the reporting in USD is inaccurate due to the changes in the rate of exchange from year to year. Tonnage by Vessel Type Tonnage by Area* GENERAL CARGO CONTAINER VESSELS LPG AND LNG 5% 2% 2% OTHER LIBERIA BAHAMAS MARSHALL ISLAND SINGAPORE 6% 5% 4%2% 2% PHILLIPINE OTHER HONG KONG CAR CARRIERS BULK CARRIERS TANKERS JAPAN PANAMA *The percentages is by ship s registry 26

29 Entered Tonnage GT million JAPAN CLUB OWNED/MUTUAL CHARTERED/FIXED TOTAL S&P Rating Free Reserves USD million 2011 BBBpi 2012 BBB 2013 BBB BBB Supplementary Calls Policy year Original % Final/Current Japan Club Consolidated Financial Year Summary* USD million 2010/ / / /2014 TOTAL CALL NET PREMIUM TOTAL EXPENDITURE UNDERWRITING RESULT INVESTMENT INCOME TOTAL FREE RESERVES *The accounts for Japan Club are not easy to reconcile in USD as the clubhave their accounts in Yen, and there in the year has been considerable changes in the rate of exchange between the two currencies. 27

30 LONDON CLUB All in all a positive year for the Club, that saw positive development for tonnage, premium and investments, but a bigger deficit on the underwriting result. The Club made a year surplus of USD 6.6 million, which raised the Free Reserves to USD million. This increase was achieved due to a 7% return on investments, whereas the underwriting result was negative, USD 18.7 million. Investments made a profit of USD 24.4 million, which was obtained due to the Clubs relatively high appetite for investments risks. Of the invested capital 25.2% was in stocks, 62.4% fixed income and 12.4% in cash and alternative investments. By having a relative high exposure on the stock market, the Club gained well on the worldwide recoveries of the stock markets in The Club had a moderate increase of the fleet, by adding GT 2 million, so now standing at GT 43.3 million. Of the vessels added to the Club almost 1/3 were new buildings, so the average age of the entered owners tonnage is today just under 9 years. On the claims-side, the Club saw a further moderation in the number of attritional claims, but the average cost of the claims increased. There was also an increase of the medium and high severity claims, so the total claims for the year reached USD 93 million, which is up USD 10.3 million, on the previous year. At the renewal 2013, the Club had a General increase of 12.5% that raised the gross premium for the year to USD million net premium USD 86.1 million. Operating expenses were stable at USD 11.9 million, however as claims increased to USD 93.0 million, there was a total expenditure of USD million, which produced a technical result of minus USD 18.8 million. A deterioration, compared with the year before. At the renewal 2014 the General Increase was 10%, and the Club also sought to increase the deductibles. The financial result for 2013/14 is consistent with the Clubs mutual, not-for-profit business model, where positive investment returns have a part to play in achieving a balanced operating result. But at the same time the Club s underwriting plan targets improved technical performance along with progress towards a combined ratio which should produce a break-even financial result or better. For the financial year 2012/13 the Clubs business model worked out fine with an operating surplus of USD 6.6 million, but the Club is heavily dependent on a high return on investments, as the underwriting results have been consistently negative for the last 5 year. Even with a 10% General Increase at the 2014 renewal the Club would need very good claims-figures to reach their underwriting target of a break-even/or better. Tonnage by Vessel Type Tonnage by Area GAS CARRIERS GENERAL CARGO AMERICAS CONTAINER VESSELS 3% 2% NORTHERN EUROPE BULK CARRIERS SOUTHERN EUROPE TANKERS ASIA 28

31 Entered Tonnage GT million LONDON CLUB OWNED/MUTUAL CHARTERED/FIXED TOTAL S&P Rating Free Reserves USD million 2011 BBBpi 2012 BBBpi 2013 BBBpi 2014 BBBpi Supplementary Calls Policy year Original % Final/Current London Club Consolidated Financial Year Summary USD million 2010/ / / /2014 TOTAL CALL NET PREMIUM TOTAL EXPENDITURE UNDERWRITING RESULT INVESTMENT INCOME TOTAL FREE RESERVES

32 NORTH OF ENGLAND A busy and eventful year culminating with the historic merger with Sunderland Marine. North has taken another great leap forward by finalizing the merger with Sunderland Marine, and thereby creating the North Group. The Group expects the total premium to be USD 500 million with total assets of USD million and Free reserves of USD 350 million for the 2014/15 year. The merger was approved 28 February 2014, so now the Group is working hard at integrating the two entities to obtain the full benefits of the merger. Sunderland Marine, that has roots back to 1882, is a specialist in fishing vessels, small crafts and aquaculture risks and it has some 29 thousand policies in 50 countries, as well as offices in Australia, Canada, the Netherlands, New Zealand, South Africa and USA. The merger has created a Group with greater diversification of product lines, where cover can be offered World Wide to all segments of shipping, from small fishing vessels to the largest of ships. In our Report this year we review the facts and figures for North P&I Club only, as the effects of the merger will only be visible in the figures for the present policy year that ends 20/02/2015. North had a good year, where premium increased to USD million and the fleet increased 4% to GT 131 million of own tonnage and almost GT 50 million charterers tonnage. The Club experienced its two most expensive claims in The M/V Start, a pollution and wreck removal case in South Africa and the M/V Wu Yi San a collision with a Terminal in South Korea. The total liabilities for these 2 claims are expected to be USD 165 million, but due to the International Pool and Re-insurance arrangements the Club will only bear approximately USD 35 million of these costs. Despite the two big claims the Club had a good claims year with a reduction in the number and value of claims up to USD 1 million. Net claims reduced by USD 22 million to USD 231 million, which created a Combined Ratio of 90.1% - a good improvement on the previous 2 years. A surplus underwriting profit of USD 20.4 million was achieved. The investments gave a return of 1.94% or USD 13.1 million, so in total the Club had a surplus of USD 33.5 million. However, due to a change of how to record the Clubs Pension obligations, a deficit of USD 33.5 million (due to unusually low interest rates) had to be reported directly in the Clubs balance sheet, so the surplus from the technical result and the investments, was wiped out by the Pension reporting change. But with no surplus or loss the Club maintained the Free Reserves at USD million, which seems to be at the lower end of the scale for a fleet of this size. The Clubs has implemented a new organizational structure designed to improve operational effectiveness and service. The geographical teams have been restructured to five areas: Americas and UK, Middle East and India, Asia Pacific, Europe and Greece. It will be interesting to see to which extent the former Sunderland offices will be utilized by the Group. Irrespective of the merger the Club - or now - the Northern Group maintains its strategic vision to be the most costeffective Marine insurance group providing the highest levels of service. Tonnage by Vessel Type OTHER OTHER Tonnage by Area GENERAL CARGO LNG CAR CARRIERS SCANDINAVIA TANKERS AMERICAS 1% 2% 4% 2% 7% 6% SOUTHERN EUROPE MIDDLE EAST CONTAINER VESSELS BULK CARRIERS ASIA PACIFIC NORTHERN EUROPE 30

33 Entered Tonnage GT million NORTH OF ENGLAND OWNED/MUTUAL CHARTERED/FIXED TOTAL S&P Rating Free Reserves USD million 2011 A 2012 A 2013 A 2014 A Supplementary Calls Policy year Original % Final/Current North of England Consolidated Financial Year Summary USD million 2010/ / / /2014 TOTAL CALL NET PREMIUM TOTAL EXPENDITURE UNDERWRITING RESULT INVESTMENT INCOME TOTAL FREE RESERVES * * Reduced with USD 33,5 million due to pension obligations 31

34 SHIPOWNERS CLUB The club is presenting an acceptable result with combined ratio 98.9% and an increase in the number of vessels entered. Traditionally the Club has always focused on smaller vessels, but the Club is now accepting dry cargo and tankers up to GT 20,000 and within the offshore specialist sector even larger units, with some barges entered over GT 30,000. This change is reflected in the tonnage by vessel type where barges are now the largest group accounting for 31% of the entered tonnage. It will be interesting to follow the development in the Clubs portfolio going forward. The Club has closed the Canadian branch in Vancouver, as the volume of business was not sufficient to justify a full service branch. On the other hand, a new branch has been opened in Hong Kong, but in the first instance this will not operate as a full service branch as the intention is to service the Hong Kong members from Singapore in the short term. The Club is still growing in a controlled way both in terms of vessels entered and in tonnage. The number of vessels grew by 1,118 or 3.4% to 33,899 vessels and the tonnage grew by GT 1,7 million or 7.8% to GT 23,6 million, which is slightly lower growth than last year. The net premium grew by USD 13.0 million or 6.5% to USD million. The total expenditures came to USD million and the Club produced a positive underwriting result of USD 2.3 million. The Club reports that its absolute investment return on the consolidated portfolio came to 4.4%, not much in the present market, but a result of the portfolio consisting of 76% fixed income securities and cash and 24% equities. In order to secure a continued stable development the Club have placed a three-year stop-loss cover with Swiss Re for claims up to USD 1.5 million, with the previously existing layers of reinsurance with Lloyd s and Munich Re, covering in excess of USD 4 million up to the Club s retention on the Pool of USD 9 million. On the claims side the Club saw a continuation of the trend also reported by other clubs of a greater number of larger claims in the range of USD 1 million to USD 5 million. These claims are now protected by the stop-loss cover and other reinsurance facilities mentioned above, but that has of course its price. However with the exception of cargo claims then all claims categories have decreased in terms of USD per GT. Tonnage by Vessel Type YACHT AFRICA Tonnage by Area PASSENGER VESSELS HARBOUR FISHING 8% 4% 4% 2% BARGES CANADA & USA AUSTRALIA, NZ, SOUTH PACIFIC 1% 10% 4% 3% OTHER S.EAST ASIA & FAR EAST SOUTH, CENTRAL AMERICA TANKERS OFFSHORE MIDDLE EAST & INDIA DRY CARGO EUROPE 32

35 Entered Tonnage GT million SHIPOWNERS CLUB OWNED/MUTUAL CHARTERED/FIXED TOTAL S&P Rating Free Reserves USD million 2011 BBBpi 2012 A A A Supplementary Calls Policy year Original % Final/Current Shipowners Club Consolidated Financial Year Summary USD million 2010/ / / /2014 TOTAL CALL NET PREMIUM TOTAL EXPENDITURE UNDERWRITING RESULT INVESTMENT INCOME TOTAL FREE RESERVES

36 SKULD Also for 2013 Skuld is able to present an annual review with an underwriting surplus. It is now the 11th year in a row that Skuld ends up with an underwriting surplus, which is a record that will be difficult to beat. On the other hand an underwriting surplus is necessary if Skuld wants to grow and that is the goal. More tonnage or rather more business will require more capital, in particular higher free reserves. The Net premium has gone up by USD 45.1 million or 16,2 % and now stands at USD million. Total expenditures amount to USD following an increase of 15.2 percent leaving an underwriting surplus of USD 3.9 million. Together with the investment income of USD 27.1 million less taxes of USD 2.0 million, it raises the free reserves by 8.5 % to USD million. With respect to investments Skuld still keeps a moderate risk profile with the majority of the invested assets allocated to low risk bonds. The consequence is a return of 5.4 % in a year where the stock market generally has gone up by a greater percentage. Contributions to the pool is based on the individual clubs statistics. For 2014/15 the Clubs share of the pool is 6.6% while the loss ratio adjusted contribution is 4.8% meaning approximately 27% better than average. Therefore, although the Pool Claims are random by nature, then some clubs are over time hit harder than others and that is of course why a loss ratio system has been implemented. Skuld have abolished the use of general increases. However as Members still see or feel that general increases are imposed on them, we are still of the opinion that it would be fairer to the members and in fact more in line with Skuld s transparency policy, if the Club announce general increases, now that in reality they are there anyway. At the 2014 renewal, Skuld lost market share in Turkey. One reason was premium increases another being the claims service. We are currently waiting to see if the Club s claims service will improve and respond with promptness and suitability to the needs of their members. The Club s Annual Review for 2013 states Service and Competence You Can Rely On which is exactly what is required going forward. The heading of CEO s Douglas Jacobsohn s report is: Diversification and a robust bottom line. No question that for many of the clubs diversification has come to stay. For Skuld the Lloyds syndicate Skuld 1897 is important and the expectation is that by 2020 commercial operations will deliver half of Skuld s premium income. One most hope that at that time Skuld 1897 will also contribute to positive result. In 2013 the Lloyds Syndicate generated less premium and higher operating expenses than in 2012 producing a loss on USD 8.6 million. The Lloyds syndicate is still young but the question is how many years will losses be tolerated on a new business venture before it is necessary to review the strategy. With the continued pressure on Hull & Machinery rates it is difficult to see how this book of business can grow in the current market conditions. The Club has implemented a member bonus system. We have been informed by the club that it has not declared any dividend yet to owners. The dividend will be gradually built up as the Club grows the Lloyd s business. Each policy year in Lloyd s are open for three years before they close and dividends are paid out. The Club has concluded the start-up phase of the syndicate and expects positive results to be accumulated going forward. The Club will monitor the performance and consider on an annual basis if there are sufficient surpluses from the individual policy years to distribute dividends. So no accurate prediction of when dividend can be expected paid. In April 2014 it was announced that Ståle Hansen was appointed new CEO from the beginning of Ståle Hansen has been with Skuld since 2002 and COO for the latest four years. There is no doubt that he knows the business extremely well and we wish him good luck in his new position. Douglas Jacobsohn the present CEO will continue as an Executive board member where it is understood, he will be specifically committed to the 2020 goals of the club. Tonnage by Vessel Type Tonnage by Area OTHER AMERICAS PASSENGER VESSELS 8% TANKERS CONTAINER VESSELS EUROPE ASIA PACIFIC BULK CARRIERS & GENERAL CARGO 34

37 Entered Tonnage GT million SKULD OWNED/MUTUAL FIXED NET PREMIUM IN % OF TOTAL NET PREMIUM % 15% Skuld is no longer reporting fixed business in GT. We are therefore reporting the fixed business net premium in % of the total net premium S&P Rating Free Reserves USD million 2011 A A A 2014 A Supplementary Calls Policy year Original % Final/Current Skuld Consolidated Financial Year Summary USD million 2010/ / /2013* 2013/2014* TOTAL CALL NET PREMIUM TOTAL EXPENDITURE UNDERWRITING RESULT INVESTMENT INCOME TOTAL FREE RESERVES *Skulds share of Syndicate 1897 is consolidated into the figures. 35

38 STANDARD CLUB The Club improved its performance considerably ending up with a combined ratio of 101.5% and underwriting result minus USD 4 million - in contrast to the preceding year where the combined ratio was 113% and underwriting result minus USD 40 million. At the renewal 2014/15 the club announced a general increase of 12.5% and if achieved then it must be expected that the Club will return to underwriting surpluses and a combined ratio below the magic 100. Owned/mutual tonnage was stable with GT 95 million while the chartered tonnage went down a little to GT 26 million. The reduction in the charter tonnage is not affecting the net premium income that much as the net premium increases were around 10%, no doubt a consequence of general rate increases. On the claims side the Club has, like other clubs, seen that the total incurred claims cost being concentrated in a relatively small number of large claims. The top 20 claims by value, of which two have been notified to the Pool, accounted for over two-third of the overall cost for the year. With respect to a specific claims group the Club is reporting that the cost of fines has increased substantially and that MARPOL claims continue to be a source of concern. The Club launched in 2012 covers for Kidnap and Ransom, Traders and Intermediaries risks and is now reporting significant interest from members and some interest from non-members in these products. In April 2013 the Club launched a Hull facility with support of leading London market hull underwriters and the club is reporting that a number of covers have been bound, without mentioning how many. The Club has also launched a fixed premium P&I cover with limits up to USD 500 million. This facility is now the major reinsurer of Turkish P&I, a new fixed premium facility you can read about in section III of this P&I report. The investment portfolio of the club has not changed much, consisting mainly of Sovereign Bonds (44%) and Corporate Bonds (31%), while Equities is now (15%). This reflects a fairly cautious investment policy, but on the other hand the result is a return of only 0.6% in a year where equities have gone up with much higher percentages. As a consequence the net investment income comes to only USD 10 million and with an underwriting loss of USD 4 million the Clubs free reserves have only increased by USD 6 million from USD 363 million to USD 369 million. Tonnage by Vessel Type Tonnage by Area USA PASSENGER VESSELS & FERRY OTHER TANKERS REST OF ASIA GREECE OFFSHORE 9% 3% 12% 9% REST OF THE WORLD JAPAN 22% 7% 6% 6% GERMANY DRY BULK CONTAINER & GENERAL CARGO REST OF EUROPE REPUCLIC OF KOREA CANADA ITALY 36

39 Entered Tonnage GT million STANDARD CLUB OWNED/MUTUAL CHARTERED/FIXED TOTAL S&P Rating Free Reserves USD million 2011 A 2012 A 2013 A 2014 A Supplementary Calls Policy year Original % Final/Current Standard Club Consolidated Financial Year Summary USD million 2010/ / / /2014 TOTAL CALL NET PREMIUM TOTAL EXPENDITURE UNDERWRITING RESULT INVESTMENT INCOME TOTAL FREE RESERVES

40 STEAMSHIP MUTUAL After 2 years with losses the Club now looks to be back on the right track by posting a surplus of USD 14.9 million, increasing the Free Reserves to a total of USD million. For the 2013/14 policy year, the General Increase was 7.5%, which made the year end with a Combined Ratio of 96.7%, a great improvement from a C/R of 112.5% the year before. The Club aims to have a 3 year rolling C/R of 100%. Owners tonnage increased from GT 65.3 million to GT 68.7 million and the Charterers book increased at renewal from GT 37 million to GT 45 million, so a total fleet of GT million. The Club has stated that Growth is not a priority for the Club, however it has also stated that the Boards target is to increase the tonnage 110% of the growth of the IG as a whole. They reached their goal this year with a 5% increase of the owned tonnage and indeed with the increase of 22% on the Charterers business. The gross premium for 2013/14 was USD million, up USD 30 million from the previous year. The Club experienced a reduction of 22% in the costs of the attritional claims up to USD , but saw that claims in excess of this amount increase both in numbers and in value, in particular the claims between USD 1.8 million and USD 9 million. The Club experienced 2 pool claims in the policy-year. Net claims for the year amounted to USD million, down from USD the year before, so producing a technical surplus for the year of USD 9.3 million. The Club has a conservative investment policy and in the present market it yielded a modest return of 0.9 %, giving a net of USD 5.7 million on the Non-Technical account. Traditionally Steamship has not ventured into other lines of insurance, but has now expressed that if the risk profile is acceptable and real benefits can accrue to ship-owners then the board will give any proposal careful consideration. So the Club now intends to offer cover for War, Piracy and related Hull risks, as well as for Kidnap and Ransom and War P&I risks. This diversification is intended to reduce conflict between underwriters providing separate coverage as it is now all provided for under one roof and it is expected to produce surplus both for the Club and the Members. Steamship will also streamline its organization and structure. Previously it operated 2 Clubs, SSM Bermuda and SSM London. The intention is now to only operate SSM London as the underwriting unit and SSM Bermuda will continue as its re-insurer. At the renewal the Club had a General Increase of 10% and also increased deductibles. There was a certain deselection of members as well, so with the streamlining of the organization, a diversified product-line, higher deductibles and premium, it looks very much as if Steamship have paved the way for another positive year. Tonnage by Vessel Type OTHER Tonnage by Area MIDDLE EAST & INDIAN SUB-CONTINENT GENERAL CARGO LATIN AMERICA 6% 3% BULK CARRIERS 7% FAR EAST CRUISE & FERRY NORTH AMERICA CONTAINER VESSELS TANKERS EUROPE 38

41 Entered Tonnage GT million STEAMSHIP MUTUAL OWNED/MUTUAL CHARTERED/FIXED TOTAL S&P Rating Free Reserves USD million 2011 A A A A Supplementary Calls Policy year Original % Final/Current 0 12, Steamship Mutual Consolidated Financial Year Summary USD million 2010/ / / /2014 TOTAL CALL NET PREMIUM TOTAL EXPENDITURE UNDERWRITING RESULT INVESTMENT INCOME TOTAL FREE RESERVES

42 SWEDISH CLUB The Club managed to bring its consolidated combined ratio down to 94% from 110% in 2012 and produce a positive result on USD 17 million overall corresponding to an increase on around 11% of the free reserves, although the finance income was not very impressive. The combined ratio for P&I alone was 113% down from 124% in 2012 clearly an improvement but still on the high side. Owned/mutual GT is reported to be GT 37.1 million, an increase of GT 1.3 million and the fixed business GT 19.2 million bringing the total to GT 56.3 million a total increase on GT 4.5 million or almost 9%. The total consolidated calls and premiums came to USD million and the net premium to USD Although the gross premium is increased with USD 2 million then the net premium is reduced with USD 3.8 million. With total expenditures on USD 117,7 million the club ends up with an underwriting profit on USD 8.1 million. On the investment side, the club maintained an 80/20 mix between fixed income and equities. However with a overweighting in emerging markets and in consequence the total return came to only 3% or USD 8.9 million opposed to 7% or USD 22.4 million last year. The Club is reporting that the claims frequency is reduced during 2013, but large claims continue to rise, a general pattern across most of the IG clubs, although Swedish Club have had no Pool claims in It also appears that claims within Marine and Energy must have come down as the combined ratio for that part of the business was 70% as opposed to 97% for the preceding year. The Club has reinforced its commitment to the Norwegian market. The team has been increased and both marketing and claims service is now offered from the office in Oslo that mainly deals with the energy market. The energy subclass is now generating a profit. Free access for members to Maritime Resource Management training (MRM) is offered for a period of two years in the belief that loss prevention training is the most effective tool available to reduce exposure to accidents. Yes, training is probably an effective tool, but many owners organize training in one or the other way themselves and the question you can raise is whether a P&I club necessarily shall offer free training, which of course then is paid as a general cost. Tonnage by Vessel Type Tonnage by Area OTHER OTHER PASSENGER VESSELS 1% BULK CARRIERS, GENERAL CARGO & RO-RO ASIA PACIFIC TANKERS SOUTH EUROPE CONTAINER VESSELS NORTH EUROPE 40

43 Entered Tonnage GT million SWEDISH CLUB OWNED/MUTUAL CHARTERED/FIXED TOTAL S&P Rating Free Reserves USD million 2011 BBB 2012 BBB BBB BBB Supplementary Calls Policy year Original % Final/Current Swedish Club Consolidated Financial Year Summary* USD million 2010/ / / /2014 TOTAL CALL NET PREMIUM TOTAL EXPENDITURE UNDERWRITING RESULT INVESTMENT INCOME TOTAL FREE RESERVES * Include the H&M class of business 41

44 UK CLUB The Club is getting closer to its long term goal of achieving a combined ratio of 100% or better with this years combined ratio being 102%. In recognition of the measures taken, S&P have restored the Club s A (stable) rating. W ith the Club s general increase of 10% where approximately 7,5% was achieved, there is a hope that next years Combined ratio will be below 100%, provided of course that the club is not hit with an increase in claims not covered by reinsurance. The Club was successful in attracting further tonnage and the owned/mutual book grew with additional GT 4 million to GT 124 million. The chartered/fixed entry has for some years been stable on GT 80 million and this year is no different. The number of claims are going slightly down, but the average cost of claims is increasing. Only one percent of the claims exceed USD 0,5 million, but these claims represent 60% of the total claims cost. Pool Claims are random by nature, but on the other hand contributions to the pool is based on the individual clubs statistics. For 2014/15 the Clubs share of the pool is 11.0% while the loss ratio adjusted contribution 8.5% meaning approximately 22% better than average. In order to manage claims volatility the Club is buying reinsurance to protect a surge in the frequency of the smaller claims and the impact of a single major loss. That makes sense as it levels out the impact of claims volatility.the Club is not buying protection for the day-to-day claims as in the long term that will always end up being more expensive than picking up the claims one self. The asset allocation of the Club is relatively conservative and the result is an investment return of USD 36.4 Million net of finance costs of USD 8.3 million. In the 2014 Report & Accounts it is mentioned in the introduction that the investment return is 4,5% (USD 44 million) but that figure does not take into account finance cost. With a combined ratio of 102% the underwriting loss came to USD 6 million and with the investment return of USD 36,4 million and other adjustments, in particular an adjustment on the Clubs cash flow hedging reserve of USD 5.9 million, the free reserves are lifted from USD 494 million to USD 528 million, comprising the underlying free reserves of USD 430 million and hybrid capital of USD 98 million. Tonnage by Vessel Type Tonnage by Area OTHER PASSENGER VESSELS 5% 3% BULK CARRIERS, GENERAL CARGO AMERICAS EUROPE, MIDDLE EAST & AFRICA GAS CARRIERS CONTAINER VESSELS ASIA PACIFIC TANKERS 42

45 Entered Tonnage GT million UK CLUB OWNED/MUTUAL CHARTERED/FIXED TOTAL S&P Rating Free Reserves USD million 2011 A A A A Supplementary Calls Policy year Original % Final/Current UK Club Consolidated Financial Year Summary USD million 2010/ / / /2014 TOTAL CALL NET PREMIUM TOTAL EXPENDITURE UNDERWRITING RESULT INVESTMENT INCOME* TOTAL FREE RESERVES** *** *Investment income is net of finance costs USD 8,3 million **Include the Hybrid Capital raised in /14 USD 98,3 million *** Include for 2013/14 Cash flow hedging reserve USD 5.9 million and reduction in hybrid capital on USD 1,4 million 43

46 WEST OF ENGLAND For the 6th year in a row, the Club posted improvements in the underwriting result. The Combined Ratio was 100.8%, well within the Clubs target of 105%. Also posting a positive result on the financial side, the Club could add USD 18.8 million to the Free Reserves that now stands at a comfortable USD million. The main contributor to the Clubs improved financial performance is a continuing lower level of own claims, very much helped by the Clubs decision at 2011 renewal to reduce the exposure to some higher risk entries. This result can be clearly seen as the Combined Loss Ratio since 2011 has gradually reduced from 118% to now 100.8%. In addition, the Club has benefitted from a substantial reduction of its contribution to the IG Pool Claims, where its share today is 5.88%, down from 14% some years ago. The owned fleet grew almost 9% from GT 52.7 million in 2013 to GT 57.2 million after renewal The Charterers entries have also had a good increase to an estimated GT 22 million. In 2013 the Club established a facility for Fixed Premium cover for vessels up to GT It appears that the Club has had limited success with this facility, but is of the view that it enables the Club to compete more effectively in specific markets, where commercial fixed premium facilities may otherwise appear more attractive. However, the Club also expresses that for this segment prudent underwriting is essential. On the financial side the Club had a return on investments of 2% on invested capital, but due to an increased valuation of the Clubs owned office at Tower Bridge in London, the total return on assets stood at 3.4%, a total of USD 20.2 million. The Club has a very conservative investment policy, and realizing a low return on some parts of the portfolio during the year, the Club has slightly adjusted the investment policy. The Club performed very well during the year and seems to be on target for their set goals with a 9% increase of the owned tonnage, a 9.5% increase of the Free Reserves and a Combined Loss Ratio of 100.8%. However, the Club warns that all these positive factors may not continue, so they express caution on the view expressed by Brokers, that Clubs during difficult years for the shipping-industry, should support their members by not charging increases of the premiums, as the Clubs are already Overcapitalized. The Club states that This view ignores the current pressure of increased regulation and, even more so, pressure from those same commentators for Clubs to maintain credit ratings at a level regarded as acceptable security. Such a requirement demands that premium levels are unlikely to be capable of being relaxed. This would suggest the Club is clearly building up to a renewal again with General increases. Tonnage by Vessel Type Tonnage by Area OTHER FERRIES & PASSENGER VESSELS GENERAL CARGO/REEFERS 2% 3% BULK CARRIERS AMERICAS GREECE 16% EUROPE MIDDLE EAST & AFRICA CONTAINER VESSELS TANKER & OBO S ASIA 44

47 Entered Tonnage GT million WEST OF ENGLAND OWNED/MUTUAL CHARTERED/FIXED TOTAL S&P Rating Free Reserves USD million 2011 BBBpi 2012 BBB BBB 2014 BBB Supplementary Calls Policy year Original % Final/Current West of England Consolidated Financial Year Summary USD million 2010/ / / /2014 TOTAL CALL NET PREMIUM TOTAL EXPENDITURE UNDERWRITING RESULT INVESTMENT INCOME TOTAL FREE RESERVES

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49 III. OTHER P&I FACILITIES INCLUDING FIXED PREMIUM MARKET Omni is a leading marine insurance broker offering a wide range of marine insurance products to its clients. The fixed premium market is a considerable part of our business, therefore it is important that we have a good working relationship and co-operation with these market players, which is beneficial for both our clients as well as business partners. The number of fixed premium P&I insurers today is more than the numbers of Clubs in the International Group. Even within the International Group, some of the Clubs, such as Skuld, West of England and Britannia have already started offering terms on a fixed premium basis for certain type of tonnages. This comes with lower limits than the IG Clubs but still sufficient enough for the trade of certain ship owners. This comes with the added advantage of no exposure to any unbudgeted calls. Each of these insurers, where some act as underwriting agencies, have their small differences which can make themselves attractive for certain type of business. The ever increasing number of P&I insurers provide huge capacity for the brokers which can make a broker s life both easy and difficult. Easy on the fact that Brokers are able to make available several choices for their clients. Difficult on the basis that it is inevitable that some underwriters will be upset as only one of them would be winning the business. With ever increasing underwriting capacity of fixed premium insurers nowadays it is not just small tonnages being targeted any more. Although the fixed premium insurers face the threat by the names of long established Group Clubs, at the same time the International Group has started to lose business of larger tonnage to those insurers outside the Group. So the fight is fierce. It will be a big challenge for insurers in this market to make a living due to high competition and over time some might be forced into consolidations. Only time will tell and it is now time to do some business! 47

50 BRITISH MARINE Founded in 1876, British Marine specialises in underwriting P&I, H&M and FD&D insurances for small to medium sized ships up to GT 10,000 with the ability to go up to GT 20-25,000 if the profile fits. Initially a mutual insurer, British Marine was demutualized in 2000 and as of 2005, the company is a whollyowned subsidiary of the QBE Group, a major international insurance group. The written gross premium of British Marine within QBE is around USD 100 million for 2013 whereas the same of the QBE Group is USD 17.9 billion (compared to USD 18.4 billion in 2012). As a commercial insurer British Marine offers fixed cost insurance backed by QBE s A+ rated security, whilst maintaining the tradition of mutual insurance by providing a high level of service to their clients. In 2011 BML decided to withdraw from the Turkish market, which already is a hot spot for many P&I insurers, and to this date this continues. The company currently has 7,500 vessels entered for P&I with income of USD 100 million gross premium. It appears the number of vessels had to come down from last year due to global competition among the fixed premium insurers. BML have joined forces with the QBE offices in Asia to create a unified P&I product for the Far East. QBE Asia P&I will deliver an enhanced P&I offering to our Far East based Assureds, 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 will be used and the expertise of the BM London office and QBE Asia offices will be called upon to enhance service to Assureds and Brokers. BM also writes a substantial book of small vessels H&M business (100% basis and in house claims and processing). Tonnage by Vessel Type Tonnage by Area FISHING OTHER GENERAL CARGO SCANDINAVIA OTHER YACHT UNITISED CENTRAL AMERICA SOUTH AMERICA EUROPE TANKERS SMOOTH WATER NORTH AMERICA BULK CARRIERS TUGS AND BARGES FAR EAST MIDDLE EAST 48

51 Carina is the trading name of certain Lloyd s underwriters (rated A+ by S&P) and is managed by Tindall Riley Marine (UK) Limited trading as Carina Managers. CARINA Tindall Riley also manages the Britannia P&I Club, which primarily focuses on larger ships. Carina was launched on 1 March 2013 offering standard P&I cover for owners and charterers of up to USD 50 million or USD 500 million at the insured s option and also a number of additional covers such as Contractual, Specialist Operations, and Legal Assistance and Defence Cover. Carina s underwriting and claims teams have considerable experience in the small ships market. They are backed up by Tindall Riley s comprehensive support functions, including accounts, IT, risk management and documentary services. Carina has a network of over 400 correspondents worldwide to provide advice and assist insured s in relation to any claim or casualty. Carina has seen a significant increase in the number of ships insured and growth in written premium since last year and it is noted that as at July 2014, 4,250 ships are insured with total GT of 2 million. Cover is provided to shipowners worldwide with a focus on ships up to GT 5,000. The majority of the business gained to date has been in Europe and Asia although there has also been support from brokers and owners in South America. Carina does 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 continues to develop its business further in its existing and new markets. Tonnage by Vessel Type Tonnage by Area OTHER SOUTH AMERICA FISHING PASSENGER VESSELS GENERAL CARGO TUG AND BARGES RUSSIA AND UKRAINE EUROPE TANKERS FAR EAST 49

52 EAGLE OCEAN MARINE Having been established to meet the demands of smaller ship operators and 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 increase the Eagle Ocean Marine product. Eagle Ocean Marine can provide cover up to USD 100 million for P&I. The company has seen a steady growth of premium income with an estimate of USD 7 million for with number of vessels reaching 268. Entered tonnage is currently GT 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 recognized worldwide. Tonnage by Vessel Type Tonnage by Area RO/RO OTHER FISHING FERRY GENERAL CARGO CONTAINER VESSELS TUG AND BARGES SOUTH EAST ASIA EUROPE MIDDLE EAST AFRICA TANKERS BULK CARRIERS FAR EAST ASIA AMERICAS 50

53 Hanseatic P&I is an insurance consortium founded in 2005 with initially German insurers however as of 2012, Hanseatic introduced various Lloyd s Syndicates to its primary consortium to further strengthen their capacity. HANSEATIC P&I Today the primary consortium is made of ANV, Novae, Navigators and Torus, Hiscox along with Uniqa Osterreich Versicherungs AG. The reinsurance carriers are Allianz Global Corporate & Speciality AG, Swiss Re and Lloyd s of London. Since its establishment the consortium has been fully managed by Zeller Associates Management Services GmbH, Hamburg with a representative office in London. Hanseatic P&I is able to provide P&I cover for all types of vessels with a limit up to USD 500 million. The markets Hanseatic serve are Europe, Russia, Turkey, Middle East, North Africa and recently expanded to include Far East and Asian Regions. The cover risk appetite of Hanseatic P&I and FDD are small and medium size general cargo and container vessels as well as liquid cargo tankers and dry bulkers. Additionally Hanseatic has an excellent underwriting expertise for traditional, offshore, ports and terminals and specialist vessels of any type. In 2013 the Hanseatic P&I insured GT 2.8 million and had a premium incomwe of USD 19.5 million, which represents a similar performance compared to All the insurers and reinsurers in Hanseatic s consortium have A or AA ratings by Standard s and Poor. Tonnage by Vessel Type Tonnage by Area TANKERS OFFSHORE FISHING OTHER SOUTH AMERICA OTHER BULK CARRIERS GENERAL CARGO FAR EAST MIDDLE EAST TUGS AND BARGES CONTAINER VESSELS EUROPE 51

54 INGOSSTRAKH Ingosstrakh has been established in 1947 as an administrative division of the USSR Ministry of Finance and now serves as a multi-line national insurer and leader in the Russian insurance market. Standard & Poor s rating for Ingosstrakh is BBB- stable. Being the oldest insurance company in Russia, Marine division of the company offers both H&M insurance (including Loss of Hire and Builders Risks) and P&I cover (including CL and FD&D). Ingosstrakh holds 44% of the Russian P&I market. Ingosstrakh provides a standard P&I cover on a fixed premium basis and it s protected by a reinsurance program placed with London and international reinsurers. Starting as from 1st January 2014 Ingosstrakh has increased limit of liability for P&I up to USD 1 billion and become the only P&I insurer in the Russian marine market offering such limits. H&M capacity also increased to USD 100 million. Ingosstrakh s current portfolio consists mainly of owners/ operators from Russia, East-European Countries and Turkey even though about two thirds of Ingosstrakh s tonnage fly foreign flags. In 2013 Ingosstrakh not being a member of IG P&I Clubs was included into the list of approved insurers in accordance with the Notification of Ministry of Shipping of India. Ingosstrakh covers a wide range of ships, from very small inland operation vessels through to larger (in excess of GT 20,000) ocean going vessels. Ingosstrakh accepts various types of vessels, but avoids passenger vessels carrying more than 1,000 passengers or US flagged or crewed vessels. In 2013 Ingosstrakh overall gross premium (including nonmarine) exceeded USD 2 billion. Marine claims for the same period were settled in the amount of USD 26 million. Tonnage by Vessel Type Tonnage by Area YACHT PASSENGER VESSELS RO/RO FISHING TANKERS REEFER OTHER DRY CARGO CONTAINER VESSELS CAMBODIA ST.VINCENT OTHER ST KITTS AND NEVIS AZERBAIJAN BELIZE RUSSIA BULK CARRIERS TUG AND BARGES UKRAINE PANAMA 52

55 Lodestar Marine is one of the newest and dynamic operations providing P&I Fixed Premium Insurance solutions to owners, charterers and operators of small to medium sized and specialist ships, including yachts, since late LODESTAR MARINE It also provides shipowners and operators with additional covers including Charterers Liability, Specialist Operations, Contractual Liabilities, Shipowners Liability (SOL), Salvors Liability, War Risks and Defence Costs (FD&D). Security of up to USD 100 million is provided by RSA, with Lloyd s of London and company market providing further A rated security for limits up to USD 500 million (USD 400 million in excess of USD 100 million). In 2013, Lodestar has successfully written 1,700 vessels with approximately GT 2.5 million producing a gross income of USD 25 million. As of mid 2014 Lodestar has also started offering hull and machinery and war risks insurance however the security (in place of RSA) is via various Lloyd s syndicates currently being Ascot, Hardy and Canopius as the leads. Lodestar is able to write large bulk carriers up to 30,000 and it s expected in time that they will look at larger vessels as well. The success of Lodestar is down to the strength of their service and the experienced team. It is also noteworthy that they have been accepted as a credible player in the P&I market by major charterers and port authorities. Tonnage by Vessel Type Tonnage by Area OTHER FISHING OTHER YACHT GENERAL CARGO FAR EAST AND INDIA EUROPE PASSENGER VESSELS OFFSHORE BULK CARRIERS 8% CONTAINER VESSELS SOUTH AMERICA NORTH AMERICA TUGS AND BARGES TANKERS MIDDLE EAST 53

56 NAVIGATORS Navigators P&I is part of the Navigators Group, an international specialty insurance holding company, with a strong competitive position and brand name in the marine insurance segment of the property/casualty insurance industry. The group has solid underwriting expertise in its specialized niche and is one of the leading underwriters in the U.S. and global marine insurance markets. Headquartered in New York City, Navigators has offices in major insurance centers in the United States, the United Kingdom and Continental Europe, the newest office opened being in Copenhagen. It also owns and operates Lloyd s Syndicate The Group is very solid, with total assets in excess of USD 4 billion and gross written premium of USD 1.37 billion in 2013 and a statutory surplus of USD 804 million. It must be noted that the Group is involved in many lines of business such as Marine & Energy, Property and Casualty, Management and Professional Liabilities. The combined loss and expense ratio of marine business for both US and UK offices is 87.3%. Navigators, specialising on smaller tonnage and restricted trading limits, has certain variations, exclusions under their rules when compared to other similar insurance providers. They think in their view these risks not to be so important for the vessels they target, however we recommend the shipowners to check these exclusions with their brokers if it suits their business. We also think it is important to mention that among other fixed premium providers that they do not require steel preloading surveys to be carried out. The P&I operations of Navigators are based in London and insure about 1,600 vessels of about GT 2 million and posted premium income for 2012 of USD 22 million. It insures any type of vessels except passenger vessels, private pleasure / yachts or US flagged vessels. Limit of liability provided is USD 500 million and can insure vessels up to GT 10,000 but exceptions made when larger vessels form part of a fleet. The Group has A Excellent by A.M. Best and A Strong by Standard and Poor s. Tonnage by Vessel Type Tonnage by Area OTHER OTHER EUROPE TANKERS GENERAL CARGO ASIA BULK CARRIERS MIDDLE EAST TUG AND BARGES SOUTH AMERICA CENTRAL AMERICA 54

57 OSPREY Osprey has been established as an Underwriting Agency since Head Office in London, a short distance from the Lloyd s of London Building, Osprey is the oldest provider of fixed premium Protection and Indemnity Insurance (P&I) in the London market. Osprey Underwriting is able to offer P&I, Hull insurance and Hull and P&I War Risks Insurance solutions to the commercial marine industry. Coverage is provided worldwide to owners of smaller craft and vessels on a fixed limit, fixed premium basis. Osprey covers a large variety of vessels from tugs &barges, offshore supply vessels to submarine and research vessels. Dry cargo vessels are covered up to GT 25,000 with a limit up to USD 500 million any one accident or occurrence. However hull limit is reduced to USD 5 million and USD 1 million for IV showing their concentration on small crafts. Coverage available to assured operating worldwide including USA. Osprey is an Agent of Underwriters at Lloyd s and is authorised under the terms of Binding Authorities to underwrite and administer claims on behalf of those supporting Lloyd s Underwriters. All Osprey products are Lloyd s security. Lloyd s of London is A+ rated by S&P, AM Best and Fitch Rating Agencies. The Agency has the ability to provide Lloyd s letters of Undertaking and access to a Bank Guarantee facility in the event Security is required in a claim context. Tonnage by Vessel Type Tonnage by Area MARINE CONTRACTERS DRY CARGO OTHER SOUTH AMERICA AFRICA PASSENGER/ PLEASURE CRAFT OILFIELD TUG AND BARGES ASIA CARRIBEAN FISHING VESSELS EUROPE USA 55

58 RAETS MARINE RaetsMarine, founded in 1993, is a fixed premium P&I insurer with head office in Rotterdam and subsidiaries in Paris, London and Singapore. RaetsMarine forms part of the Amlin Group. RaetsMarine operates worldwide and targets small to medium sized cargo vessels and has a special interest in insuring specialist craft. Products can be tailored to specific needs and combination of products can be made by which they aim to provide optimum service and support to their clients. There are no restrictions as to vessel age and singletons will be quoted. The P&I business forms 60% of the total business. In 2013 Raets covered GT 169 million / 47,200 vessels being combined figures for both owned and chartered tonnage. The anticipated combined premium turnover is expected to be USD 90 million. RaetsMarine provides limits up to USD 500 million. RaetsMarine is one of the market leaders in Charterer s Liability Insurance. RaetsMarine can handle any type of charterer and provides limits up to USD 500 million. Amlin Europe N.V. has A- (stable) by Standard and Poor s and A+ (stable) by Fitch. (Both numbers relates to any vessels entered irrespective of time and not on annual pro rata basis) Tonnage by Vessel Type Tonnage by Area OTHER (SPECIALIST CRAFT) BULKER CARRIERS OTHER PASSENGER VESSELS YACHT 18% 22% GENERAL CARGO SOUTH AMERICA MIDDLE EAST TANKERS FAR EAST FISHING VESSELS TUG&BARGES EUROPE 56

59 Established in 1921, Rosgosstrakh Group of companies (RGS) is a major insurance player in the Russian market with more than 45 million individuals and 240,000 corporate clients from all over the country. ROSGOSSTRAKH RGS has more than personnel working from 83 regional branches and offices throughout Russia. The group also comprises of Rosgosstrakh Bank. RGS is the 81st largest company in Russia according to Russian Rating Agency Expert Ra. It s also the market leader in terms of premium collected among Russian Insurance companies, and as of 2012 also second in terms of premium collected when it comes to Marine Insurance. (USD 26 million in 2013 which is slightly higher than 2012). RGS is rated BB-/ruAA- (Outlook stable) by S&P and has been given the highest rating by Expert Ra (A++). P&I portfolio is now reached almost GT 1.5 million, serving the client with a P&I capacity of USD 500 million, placed with reinsurers rated not less than A+ by S&P. With the enhancement of the marine division in 2007, RGS has developed a highly professional team of marine claims handlers who have an average of 16 years hands-on experience. RGS also implemented an electronic claims system named GURU similar to Lloyd s (X-changing). RGS settles around 300 marine claims a year, from personal injury to catastrophic losses and complex General Average cases with multiple parties involved. The total amount of reimbursements paid to the clients for the last three years is estimated USD 45 million. Tonnage by Vessel Type Tonnage by Area RO/RO OTHER BELIZE RESEARCH BULKER SUPPLY BOATS 11% TANKERS PANAMA CAMBODIA OTHER ICE BREAKER DRY/GENERAL CARGO PASSENGER VESSELS RUSSIA TUGS AND BARGES 57

60 TURK P&I Turk P& I Sigorta A.S. was established in December 2013 in order to ensure that all cabotage ships have liability insurance with appropriate limits in accordance with the international conventions. It is owned by a consortium of six companies, three marine related service providers (Omur Denizcilik A.S., Vitsan Denizcilik A.S. and Metropole Denizcilik) and three state owned insurance companies (Ziraat Sigorta A.S., Halk Sigorta A.S. and Gunes Sigorta A.S.) The Government does not have a shareholding but have a representative on the board of the company. Turk P&I has been founded to provide Fixed Premium Insurance solutions to vessels engaged primarily in cabotage trade. Its portfolio consists mainly of owners/operators of small to medium sized ships however, it also has insurance solutions to specialist ships, including passenger crafts, yachts, diving boats and fishing vessels as well. The P&I cover is protected by a reinsurance program with limit of liability of up to USD 500 million. The underwriting team consists of five underwriters and from they welcomed 53 new Assured operating 324 vessels of various types. Turk P&I now works with 10 brokers on a global basis. The company has written USD 4.5 million premium within 3 months. Besides providing insurance coverage to the cabotage sector, Turk P&I has the goal of sharing information and experience with the sector members and the Company is working closely together with the government in achieving this goal. Turk P&I offers its experiences to the Turkish Shipping sector and became a leader in Turkish insurance market by giving the best-quality P&I insurance product with the highest-level liability limits. Tonnage by Vessel Type OTHER DRY CARGO TUGS PASSENGER FERRY FAST FERRY RO/RO PLEASURE CRAFT CAR FERRY 58

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66 Whilst every effort has been made to ensure that the information contained in the following report is accurate and up-to-date at the time of printing, this cannot be guaranteed by us. Under no circumstances shall Omni Ltd. be responsible or liable for any loss or damage caused directly or indirectly by the use of this information. Created by 64

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