International Insurance and Reinsurance Brokers. The P&I

International Insurance and Reinsurance Brokers The P&I Report 2018

The P&I Report 2018 Contents WORLD CUP RESULTS 10-13 P&I Market Share 14 General Increases 17 Freight, Demurrage and Defence Summary 19 THE FIXED P&I MARKET 22-23 About Us 4-7 P&I Team Contacts 8-9 World Cup Results 10-12 Summary of 2017/18 Club Results 13 P&I Market Share 14 Standard & Poor s Ratings of P&I Clubs 15 Average Expense Ratios (AER) 16 General Increases 17 Supplementary Call Record 18 Freight, Demurrage and Defence Summary 19 Pooling and Reinsurance 20 Excess of Loss Reinsurance Rates 21 Estimated cost of notified Pool claims 21 Fixed Premium P&I 22-23 P&I Club Information 24-25 American Steamship Owners Mutual Protection & Indemnity Association, Inc. 26 The Britannia Steam Ship Insurance Association Ltd 27 Gard P&I (Bermuda) Ltd 28 The Japan Ship Owners Mutual Protection & Indemnity Association 29 London Steamship Owners Mutual Insurance Association Ltd 30 The North of England P&I Association Ltd 31 The Shipowners Mutual Protection & Indemnity Association (Luxembourg) 32 Assuranceforeningen Skuld 33 The Standard Club Ltd 34 Steamship Mutual Underwriting Association Limited 35 The Swedish Club 36 The United Kingdom Mutual Steam Ship Assurance Association (Bermuda) Ltd 37 The West of England Shipowners Mutual Insurance Association (Luxembourg) 38

Introduction In June 2018, Tysers was purchased by Integro. We are currently in the process of combining the wholesale businesses (including marine) of each company and will continue to operate under the Tysers name. This will approximately double the size of the overall wholesale / marine business, providing us with an even better negotiating position. The Tysers culture and ethos matches that of Integro, so clients will continue to enjoy the same levels of service and professionalism from our larger but still niche team Christopher Spratt, Director 4

The P&I Report 2018 ABOUT TYSERS Founded in 1820, Tysers is a leading independent international Lloyd s broker that is based at the heart of the world s premier insurance market in London. Tysers employs some 260 people; handles around US$925 million of annual premiums; and works with leading re/insurance markets worldwide to deliver risk solutions to a global client base. Client satisfaction is paramount to us, and our increasing business retention rates are testament to this. From negotiating cover to claims management, our servicing teams develop close working relationships with you, providing expert advice on all aspects of insurance and risk management. 5

ABOUT INTEGRO Integro is a leading specialty insurance brokerage firm, serving clients in over 125 countries from more than 40 offices across the globe. The business is active in a range of speciality areas, including Aviation; Benefits Consulting; Entertainment & Sport; Financial Institutions; Healthcare; Marine/Energy; Professional Services; Real Estate/Construction; Reinsurance; Retail/Consumer Services; and Transportation & Logistics. We have pioneered a unique approach to managing risk: we begin by taking the time to get to know our clients inside and out. Then we deploy superior analytical methodologies to deliver the in-depth and timely information necessary to recommend the best program design and coverage to fit our clients specific needs. Integro placed in excess of US$1.2bn annual premiums in 2017. 6

The P&I Report 2018 Key Strengths Global expertise With particular strength in the UK, Europe, Indian sub-continent, South East Asia, the Far East and South America. Established market presence Strong relationships with all 13 Clubs in the Group and selected Fixed Market insurers, facilitate competitive pricing. Extensive experience Our team has a unique blend of expertise available to clients, having worked previously for International Group P&I Clubs, leading insurers and other major brokers. Reinsurance expertise Our reinsurance clients range from the London Market to other major marine underwriting centres, P&I Clubs, fixed premium and overseas insurers. Proactive claims service Our integrated claims team is involved in all accounts from day one, before any loss occurrence. The broking and claims teams work in harmony to deliver a complete service. Areas of Expertise Protection and Indemnity, FDD, other Marine Liabilities including Contractual and Specialist Operations Charterers Covers Containers and Chassis Tailor made Crew Insurance Ship Agents Liabilities Ports and Terminals Loss of Hire/ Trade Disruption Hull & Machinery War Risks Piracy Kidnap and Ransom Reinsurance Builders Risks including Related Delay Covers and Contract Repudiation Mortgagees Interest 7

P&I Team Contacts Martin Hubbard Email: martin.hubbard@tysers.com Direct line: +44 (0)20 3037 8309 Mobile: +44 (0)7971 501747 Over 40 years P&I experience, mainly as a Senior Underwriter and Director with the Steamship Mutual Underwriting Association Ltd. Joined Tysers in 2005. Ian Harris Email: ian.harris@tysers.com Direct line: +44 (0)20 3037 8301 Mobile: +44 (0)7881 265060 Ian joined Tysers from Willis in January 2014, and has over 40 years P&I and H&M experience, including ten years in claims. Simon Smart Email: simon.smart@tysers.com Direct line: +44 (0)20 3037 8303 Mobile: +44 (0)7801 553866 Simon joined Tysers in 2012 having previously worked with Marsh and JLT and brings almost 25 year experience in P&I. Piers O Hegarty Email: piers.ohegarty@tysers.com Direct line: +44 (0)20 3037 8315 Mobile: +44 (0)7971 501742 Joined the Marine Division in 1999 having previously been with Sedgwicks and Aon. 8

The P&I Report 2018 Tom Walker Email: tom.walker@tysers.com Direct line: +44 (0)20 3037 8329 Mobile: +44(0)7971 501762 Tom joined Tysers 10 years ago and has worked with the Marine Claims & Political Violence & Terrorism teams, and for the last 6 years with the Marine team. Chris Sydenham Email: chris.sydenham@tysers.com Direct line: +44 (0)20 3037 8340 Mobile: +44 (0)7971 501772 Over 30 years with Tysers specialising in Marine and Aviation Claims. Chris is also Deputy Chairman of the LIIBA Marine Claims Sub-Committee. Tom Wilson Email: tom.wilson@integrogroup.com Direct line: +44 (0)20 3915 0418 Tom has over 35 years experience working in all classes of marine coverage and developed a niche in Port Package insurances. Tom is on the Marine Executive of LIIBA. Martin Cook Email: martin.cook@integrogroup.com Direct line: +44 (0)20 3915 0168 Martin has more than 30 years experience in the marine market, initially in claims followed by 24 years as a broker. 9

world cup results International Group Free Reserves rise by over $300m to $5.6 billion Summary The Clubs continued to grow their free reserves in 2017/18, although this time it was investment returns which produced the goods - $543m compared to $368m last year. The average net combined ratio rose from 94.39% to 104.17%, resulting in a technical underwriting loss of $89m (2016/17: $127m surplus). However, there is no cause for alarm, as the technical loss is net of returns to members totalling $173m, with Gard leading the way with a $99m return following its decision to cancel its deferred call for 2017/18. The table shows the growth of the International Group s free reserves over the last six years. Individual performances Gard continues to play a game which makes it unbeatable, while Britannia s change of style produced a solid performance and it is a worthy runner-up. UK also had an excellent year, but we did not see any premium returns, presumably as it focused on ensuring it could redeem its hybrid capital of $100m, an interesting and controversial tactic adopted ten years ago to ensure its A-rating and which was ended in July this year. Year Owned GT Free Reserves (US$) Reserves per GT 2012/13 1,036,000,000 4,086,000,000 $3.94 2013/14 1,076,000,000 4,318,000,000 $4.01 2014/15 1,104,000,000 4,623,000,000 $4.19 2015/16 1,154,000,000 4,826,000,000 $4.18 2016/17 1,204,000,000 5,303,000,000 $4.40 2017/18 1,245,000,000 5,643,000,000 $4.53 Skuld and Shipowners both turned in solid performances, but lacked the sparkle to make the final. We are still waiting for Skuld s Syndicate at Lloyd s to add to profitability. at least its pension performance appears to be stabilising, while Standard s performance was hindered by an own goal from its Lloyd s Syndicate. Swedish Club showed some good progress but still needs a bigger spread to compete with Steamship and West failed to reproduce England s finest. their good form of recent years, with both suffering an increase in claims and needing investment income to produce small surpluses. Steamship, though, did return $25m to members by means of a 10% return on 2015. London Club had the worst underwriting performance in the Group and needs to rethink its longterm strategy, Japan Club s various plans failed to produce the expected results while the American Club, well they do not play proper football North had a somewhat boring year, but in the USA, do they? 10

The P&I Report 2018 2018: The Result 3. PLAYED WELL WINNER P 2. RUNNER U 4. MISSED OUT Technically 5. GOOD TRAINING PROGRAMME BUT SMALL SQUAD 6. KNOCKED OUT IN EARLY STAGES What does 2019 hold? emerging rather than react to a single returns before there is any question of We shall be reviewing with keen year of an increase in large claims. general increases. We hope the majority interest the 2018 half-year results view prevails and all Clubs will be for those Clubs which publish them. Shipowners Club has stated it will cover persuaded to hold off for at least another We imagine investment returns will any underwriting loss in 2018/19 from year to see if there are any concrete be down, but our main concern will investment income and free reserves. signs of an upward trend in claims. be to see the development of claims, This should be the position adopted by all as some Clubs appear to be dropping of the Group Clubs whose free reserves Excess Loss reinsurance hints that a general increase for 2019 have risen by an average of over $300m The International Group has for many may be on the cards. American Club, per annum over the last five years, and years used Miller Insurance as its broker Steamship, UK and West look to fall into would be around the $6 billion mark if for the Excess Loss contract, with Aon this category, and London Club would nine Clubs had not given some generous Benfield looking after the reinsurance no doubt like to have one, but the rest of returns and cash distributions over the of Hydra. Earlier this year, the Group the International Group appears content same period. The Clubs must use their decided to put the broker arrangements to wait and see if a new claims trend is reserves, then reconsider premium out to tender and, lo and behold, Miller 11

Insurance and Aon Benfield were appointed! The arrangement is slightly different, though, in that Miller Insurance is now the flag broker for both the Excess Loss and Hydra programmes, with Aon Benfield appointed as co-broker on both. The International Group has stated This new arrangement will deliver greater value to the Group by enhancing the broking expertise and skills available through the co-broking arrangements, whilst at the same time delivering financial efficiencies. With only one claim on the Excess Loss contract since 2015 (Skuld s KEA TRADER wreck removal in 2017 estimated to cost the reinsurance around $30m), we trust we can look forward to suitable improvements in terms for next year. We shall report further in our usual P&I Update towards the end of the year. Diversification and consolidation Some commentators are questioning whether diversification is beneficial for the Clubs. Our view remains that you just have to look at Gard to see that it does, if done properly, and the acquisition of established facilities is far preferred to start up operations. Skuld with SMA and North with SMI appear to be working well, with the latter now stripped down to core business, and we should not forget Swedish Club has been writing hull and P&I successfully for many years. It is still early days for the American Club s American Hellenic Hull facility, with 2017 showing a loss which the company expects to reduce as a large portion of unearned premium converts to earned and is added to the books. The doubts arise from the results to date for the Skuld and Standard startup Lloyd s Syndicates. The negative results can be put down to some extent to timing entering the marine market during a very soft phase - but the need for immediate growth has no doubt led to some unrealistic pricing, something not required when taking over an established book of business. Skuld appears to be turning the corner, but only in terms of reducing losses to an acceptable level, while Standard s Syndicate appear to have considerable more work to do, reporting a combined ratio for both 2016 and 2017 over 150% producing a combined loss of GB 60m and resulting in some capital providers calling it a day. The Club has been replacing key personnel and is trying its hand at new, non-marine risks such as Fine Art and Specie. Clubs such as UK and Standard still appear to be interested in consolidation, and Gard s outgoing Chairman would like to see it among other Clubs to facilitate an increase in Club retentions. It is indeed a strange state of affairs when the three smallest Clubs have a combined market share (by tonnage) of just 7% (88m GT) which would rank them 9th of eleven and, indeed, we would suggest that any Club with less than 100m GT should be looking around with a view to the long-term future. No Club has needed an unbudgeted call since 2010 and the first one to require one will undoubtedly struggle to survive. Consolidation now, while results are good and financials are solid, will preserve the long- term stability of the Group. Release calls We are pleased to see release calls continuing to fall, with Britannia joining Shipowners Club in having a zero call for all years. Seven Clubs now have a zero release call for 2016/17 and we expect the downward trend to continue. A notable exception to this trend is Gard, which still has release calls for 2016 and 2017 despite cancelling the deferred call for both years on the basis, we are told, of a wish to maintain a set structure for reducing the Release Call percentage by policy year under normal circumstances. That looks to be Norwegian conservatism at its most extreme, and hard to justify. Release Calls as at September 2018 Policy Year American Britannia Gard Japan London North Shipowners Skuld Standard SSM Swedish UK West of England 2016 10 0 5 3.6 12.5 0 0 3 0 0 5 0 0 2017 20 0 15 3.6 15 5 0 7.5 0 2.5 12.5 5 7.4 2018 20 0 20 3.6 15 15 0 15 6 12.5 15 10 15 Japan and West report their Release Calls as a percentage of Advance Call. In order to be consistent with other Clubs, all our figures are expressed as a percentage of estimated total premium. West Release Call does not apply to Excess Loss Reinsurance element of premium. 12

The P&I Report 2018 Summary of 2017/18 Results Club U/W Profit/Loss 2017/18 ($M) Net Combined Ratio 2017/18 Investment Income 2017/18 ($M) Surplus Feb 2018 ($M) Free Reserves Feb 2018 ($M) Total Owned GT Feb 2018 (M) Free Reserves Per Owned GT Feb 2018 American (2) 103.20% 9 6 58 17 $3.37 Britannia* 7 95.98% 65 71 642 107 $6.00 Gard (20) 103% 144 115 1,249 223 $5.59 Japan 10 100.50% -2 8 227 94 $2.42 London (15) 118.70% 21 7 195 45 $4.29 North (8) 103.80% 29 20 451 142 $3.17 Shipowners 2 99.10% 47 48 342 25 $13.41 Skuld 2 99% 46 48 442 93 $4.73 Standard (25) 107% 52 31 462 132 $3.50 Steamship (31) 112.80% 38 6 516 85 $6.06 Swedish (9) 104.60% 28 19 213 51 $4.18 UK 29 90.50% 36** 72 540*** 139 $3.88 West (28) 116% 30 2 309 91 $3.41 Total (89) Average 104.17% Total 543 Total 453 Total 5,643 Total 1,245 Average $4.53 Note: All figures are net of premium returns, cash distributions and reductions in deferred calls. Figures in orange are consolidated figures covering all lines of business rather than P&I alone. * Includes Boudicca ** UK investment income is net of $7.5m interest paid on hybrid capital. *** Excluding hybrid capital which redeemed August 2018 13

P&I Market Share These comparisons show the relative size of P&I Clubs by owned gross tonnage, financial year income and free reserves as at 20 February 2018. P&I Club Owned GT % Accounting Year Premium $ % Free Reserves $ % Gard* 223,300,000 17.9 681,244,000* 18.5 1,248,567,000 22.1 North of England 142,000,000 11.4 387,599,000 10.6 450,462,000 8.0 UK** 139,000,000 11.2 361,793,000 9.8 539,980,000 9.6 Standard 132,000,000 10.6 334,300,000 9.1 461,500,000 8.2 Britannia 106,900,000 8.6 208,147,000 5.7 641,557,000 11.4 Japan 93,700,000 7.5 214,241,000 5.8 226,524,000 4.0 Skuld 93,400,000 7.5 412,739,000 11.2 442,026,000 7.8 West of England 90,600,000 7.3 213,797,000 5.8 308,533,000 5.5 Steamship 85,100,000 6.8 295,318,000 8.0 515,968,000 9.1 Swedish*** 51,100,000 4.1 147,602,000 4.0 213,472,000 3.8 London 45,400,000 3.6 101,728,000 2.8 194,642,000 3.4 Shipowners 25,486,000 2.0 216,341,000 5.9 341,726,000 6.1 American 17,100,000 1.4 98,389,000 2.7 57,614,000 1.0 Total 1,245,086,000 3,673,238,000 5,642,571,000 * Premium for all lines of business. P&I income $467,425,000 net of waived deferred call ** Free reserves exclude hybrid capital *** Premium for all lines of business. P&I income $95,362,000 net of 4% return 14

The P&I Report 2018 Standard & Poor s Ratings of P&I Clubs Insurance Year 2014 2015 2016 2017 2018 Gard A+ A+ A+ A+ A+ Britannia A A A A A North of England A A A A A Standard A A A A A Skuld A A A A A UK Club A A A A A Steamship A- A- A A A Shipowners A- A- A- A A West of England BBB BBB+ BBB+ A- A- Swedish Club BBB+ BBB+ BBB+ BBB+ BBB+ Japan Club BBB+ BBB+ BBB+ BBB+ BBB+ London Club BBB BBB BBB BBB BBB American Club BBB- BBB- BBB- BBB- BBB- 15

Average Expense Ratios (AER) The AER was introduced in 1998 as a means of comparing the administration costs of the mutual P&I Associations under the terms of their exemption from the E.U. Competition Directive. The Clubs are only obliged to report their five-year AER and most do not show their annual expense ratio. The below figures are all five-year averages. 2014 2015 2016 2017 2018 American Club 19.30% 21.60% 24.20% 25.70% 27.90% Shipowners 18.00% 20.00% 21.00% 22.00% 22.00% West of England 14.24% 14.86% 15.50% 15.15% 14.75% Swedish 12.10% 13.00% 13.30% 13.30% 13.40% Skuld 12.30% 12.90% 12.80% 12.80% 12.70% Standard 10.90% 11.40% 12.20% 12.40% 12.50% Steamship 11.30% 11.80% 12.10% 12.10% 12.20% North of England 12.50% 12.40% 12.40% 12.00% 12.10% Gard 11.30% 11.40% 11.83% 12.02% 11.21% UK Club 9.35% 9.66% 10.28% 10.22% 10.31% Britannia 8.03% 8.43% 9.12% 9.42% 9.73% London Club 8.36% 8.78% 9.52% 9.51% 9.68% Japan Club 5.73% 5.25% 5.18% 5.46% 6.21% Average 11.80% 12.42% 13.02% 13.24% 13.44% 16

The P&I Report 2018 General Increases Shipowners Gard Skuld Steamship Swedish West* American Britannia Standard UK North Japan London 2010 5 0 5 5 2.5 5 4 5 3 5 5 12.5 5 2011 0 0 0 0 2.5 5 2 5 3.5 5 3 10 5 2012 0 5 0 5 5 5 5 5 5 3 5 3 5 2013 5^ 5 8.5 7.5 7.5 7.5 10 16.5 7.5 7.5 15 5 12.5 2014 5^ 5 8.5+ 10 7.5 7.5 10 2.5 12.5 10 7.5 7.5 10 2015 0^ 2.5 0 0 2.5 2.5 4.5 2.5 5 6.5 4.75 3 6 2016 0 2.5 0 0 0 0 2.5 2.5 2.5 2.5 2.5 3 5 2017 0 0 0 0 0 0 0 0 0 0 0 0 0 2018 0 0 0 0 0 0 0 0 0 0 0 0 0 Total 2010/2018 116 122 124 130 131 137* 144 145 146 147 151 153 159 Average 139 * Applies to premium net of Group Excess Loss Reinsurance costs + Estimated ^ Includes any increase in Group Excess Loss Reinsurance costs The total shows the cumulative increase based on 2009 premium of 100. 17

Supplementary Call Record (Original Estimate/Current Estimate) Policy Year American Britannia Gard Japan London North of England Shipowners Skuld Standard Steamship Swedish UK West of England 2010 25/25 40/40 25/15 40/50 0/0 0/0 10/10 0/0 0/0 0/0 0/0 0/0 30/30 2011 25/25 40/40 25/20 40/40 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/-2.50 30/30 2012 0/0 40/40 25/15 40/40 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0 30/30 2013 0/0 45/45 25/15 40/40 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0 35/35 2014 0/0 45/35 25/15 40/20 0/0 0/0 0/0 0/0 0/0 0/-10 0/0 0/-2.50 35/35 2015 0/0 45/40 25/15 40/30 0/0 0/0 0/0 0/-2.50 0/0 0/-10 0/0 0/-3 35/35 2016 0/0 45/45 25/0 40/30 0/0 0/-5 0/0 0/-2.50 0/-5 0/0 0/0 0/0 35/35 2017 0/0 45/45 25/0 40/40 0/0 0/0 0/0 0/0 0/-5 0/0 0/-4 0/0 35/35 2018 0/0 45/45 25/25 40/40 0/0 0/0 0/0 0/0 0/0 0/0 0/-5 0/0 0/0 Called above Estimated Total Call Called below Estimated Total Call Called full Estimated Total Call 18

The P&I Report 2018 Freight, Demurrage and Defence Summary General Increases American Britannia Gard Japan London North of England Shipowners Skuld Standard Steamship Swedish UK Defence Club West of England 2013 10 10 5 0 12.5 10 5 0 15 7.5 5 7.5 9 2014 10 0 10 7.5 10 5 5 0 12.5 10 7.5 5 7.5 2015 4.5 0 10 0 6 2.5 0 0 5 0 5 0 0 2016 0 0 2.5 0 5 2.5 0 0 0 0 0 0 0 2017 0 0 0 0 0 0 0 0 0 0 0 0 0 2018 0 0 0 0 0 0 0 0 0 0 0 0 0 2018 Limits and Deductibles Club Standard Limit Standard Deductible American $2,000,000 $5,000, then 25% maximum $50,000 Britannia GARD $10,000,000 (but $2,000,000 new buildings, conversions and sale and purchase) $10,000,000 (but limit for new building and conversion to be agreed at inception) First $7,500 and thereafter 1/3 of all additional expenses. 25% of the claim with minimum of $5,000 Japan Yen 1.5 billion (Eq. $12,000,000) One third of all costs in excess of $1,000 London P&I $7,500,000 25% of all costs North of England Shipowner Skuld None but $250,000 building, purchase, sale disputes $5,000,000 and $1,000,000 in connection with the building purchase, or sale of the insured vessel $5,000,000 (but $300,000 for alteration, conversion, building, purchase, mortgage or sale of the vessel) 25%, minimum $10,000 maximum $150,000 $5,000 25%, minimum $10,000 Standard $5,000,000 25%, minimum $10,000 Steamship $10,000,000 $5000 then one third overall max $30 000 The Swedish Club $5,000,000 $12,000 but for costs incurred in excess of $250,000 a further deductible of 25% applies. UK $15,000,000 Nil but no cover for disputes under $12,000 West of England $10,000,000 US$5,000 and 25% thereafter, with the deductible capped at US$50,000, except in the case of new building disputes where the maximum deductible is capped at US$100,000. 19

Pooling and Reinsurance Layers of International Group Excess Loss Programme 2018/19 P&I Owned Claims 3.1bn Collective Overspill 2.1bn Third Layer Oil Pollution Claims 1.1bn 1.0bn 600m 100m Second Layer Main Placement 85% First Layer Main Placement 55% Co-ins 30% 3 Private Placements 15% Second Layer Main Placement 85% First Layer Main Placement 55% Co-ins 30% 3 Private Placements 15% Upper Pool (Hydra) 7.5% ICR 50m 30m 10m Lower Pool (Hydra) Lower Pool Individual Club Retention (ICR) Single per-vessel retention 20

The P&I Report 2018 Excess of Loss Reinsurance Rates RATE US $ GT 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 Dirty Tanker Clean Tanker Dry Cargo Passenger 0.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YEAR The Actual rates US$ per GT are: Year 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 Tankers (Dirty) 0.7300 0.8079 0.7554 0.7038 0.6515 0.7565 0.7963 0.7317 0.6567 0.5955 0.5845 Tankers (Clean) 0.3498 0.3667 0.3335 0.3055 0.2798 0.3245 0.3415 0.3138 0.2816 0.2675 0.2626 Dry Cargo 0.3196 0.3695 0.3867 0.3709 0.3561 0.4942 0.5203 0.4888 0.4537 0.4114 0.4038 Passengers 1.4985 1.6026 1.5654 1.4780 1.3992 3.1493 3.7791 3.7791 3.5073 3.3319 3.2707 Estimated Cost of Notified Pool Claims For 2018, there was no change to the Club 500 400 300 200 100 0 254 284.4 418.6 411.6 215.8 284 125.9 227.2 2010 2011 2012 2013 2014 2015 2016 2017 retention of $10m. The Pool structure was amended, with the lower layer limit increased from $45m to $50m and the upper limit to $100m, including an individual club retention of 7.5% for the layer $50m to $100m. The table shows the total cost of Pool claims based on historical thresholds. Estimates in USD millions as at February 2018 21

the fixed p&i market 22 It has been a number of years since we last reported on the P&I fixed premium sector, and we feel that recent changes in this area warrant a general summary on the current state of play. We are only dealing here with facilities generally available to shipowners/operators worldwide so have not included reference to local insurance facilities such as those available in Russia and Korea. The Clubs The biggest change in recent years has been the development of fixed premium options for smaller vessels by the P&I Clubs, such that all the International Group now offers fixed cover in one way or another, leaving one to question whether there is any continued demand for offerings from the commercial market. The P&I clubs offer fixed cover in the following ways: As an integral part of the Club Although in most cases the Clubs arrange separate reinsurance for their fixed business, the ship owners still have the benefit of all the Club s mutual services. Entries are normally restricted in one or more ways: Vessel size: normally restricted to 5,000 or 10,000 GT. Vessel type: some Clubs focus on particular vessel types (Gard and Swedish: offshore units. Skuld: yachts) otherwise, except for tankers/tank barges, most Clubs will accept any type of vessel. Trade: many Clubs concentrate on coastal trade, although Shipowners, London and West appear to have no such restriction other than that naturally imposed by the size/ type of vessels they will insure. Limit: normally $500m but $1 billion is often available if required. The underlying philosophy is that the fixed business should produce a profit and so benefit the mutual membership, which should encourage sensible underwriting although we do see ultra competitive pricing from some Clubs. Under a separate entity, managed by the Club s managers The managers of U.K. Club through Thomas Miller Speciality, Britannia through Carina and American Club through Eagle Ocean Marine have chosen to keep fixed entries separate from the mutual Club, in effect operating as MGAs (Managing General Agents) for the Lloyd s and commercial markets although the American Club does reinsure 55% of Eagle Ocean s first $10m of cover. All offer limits up to $500m and Thomas Miller Speciality and Eagle Ocean will accept vessels up to 25,000GT while Carina will only take smaller vessels under 5,000GT. We do question why some Club managers chose this route. It may be simply a traditional view that fixed and mutual business do not sit comfortably together, but this can to a large extent be overcome by separate reinsurance arrangements and selective underwriting, and Clubs can always reduce their fixed offering or cease it entirely if results are poor. Our main worry with the separate entities is the added pressure on them to reach a sustainable size and spread, which none of them have yet achieved and which runs the risk of prejudicing underwriting discipline. The other concern is their reliance on commercial market capacity; on a stand- alone basis these facilities are small fry for the market and, with many traditional marine markets taking a hard look at their books due to poor results, capacity is likely to become more expensive and harder to find. Common management with Clubs may help, but we believe the integrated facilities are likely to have more bargaining power. We also find it strange that Thomas Miller Specialty and Carina do not take advantage of the UK and Britannia s experienced claims teams, instead employing additional resources.

The P&I Report 2018 The commercial market Recent years have seen the demise of two of the most traditional fixed facilities, Osprey and Navigators, which have been acquired by Thomas Miller Speciality. Neither achieved the scale they needed, with Navigators failing to grow despite two attempts to move forward by employing experienced and expensive P&I Club staff. Insurance companies QBE/British Marine British Marine has been around since 1876 and was a mutual until 2000. It was acquired by QBE in 2005 and is now fully integrated into QBE s European operations although still retaining the British Marine brand name. It offers limits up to $1 billion for vessels up to 20,000 GT and, with annual premium income of around $100m and a long history which has seen it handle efficiently and pay multi-million dollar claims, British Marine has to be regarded as the safest option outside the International Group. Amlin/Raetsmarine Raetsmarine is now fully integrated into Amlin, and the second largest fixed facility behind QBE/British Marine. Across all covers owned, inland craft and charterers it is still someway short of QBE/ British Marine s income but well ahead of the rest of the field. It offers limits up to $1 billion and appears to be willing to cover any type of vessel regardless of age or class. So not very fussy and, so far as we are aware, never tested with a large claim. MGAs Only two are worthy of mention: Lodestar Lodestar was set up in controversial circumstances by former British Marine staff in 2012. Its security is RSA, while Lodestar itself was purchased by Ryan Specialty Group, USA, in February this year. Lodestar offers limits up to $1 billion for vessels under 40,000GT. Premium income is under $25m. Whilst service levels have generally been satisfactory, we are concerned at the staff turnover which has seen good underwriters and claims handlers move elsewhere with worrying regularity. Hanseatic Hanseatic commenced operations in 2005 and until recently was very much a German operation but is now backed by Lloyd s security. It offers limits up to $500m for vessels under 30,000GT, with premium income around $20m per annum. In our view, Hanseatic will remain a bit player and is unlikely to see any meaningful growth. Charterers While all the International Group (with the exception of Shipowners Club which concentrates on owned small vessels) now compete strongly for charterers/traders business, there are three facilities outside the Group which continue to specialise in P&I cover for this type of business: Charterers Club, founded in 1986 as a mutual but now an underwriting agency for Lloyd s security, is struggling to see any meaningful growth with income stuck around the $30m mark. Charterama, set up in Rotterdam as an underwriting agency in 2009 by former Raetsmarine staff. Total income around $10m per annum. Norwegian Hull Club is a hull mutual with a good reputation. It has been writing charterers P&I since 2008, but the book is small with annual premium under $10m. Does the shipping community still need alternatives to the International Group? The answer to this lies in the nature of the shipowner and perceptions which may now be out of date: The ship owner who due to the nature of his fleet or trade, feels he does not need high limits of liability or the full range of mutual services and can find cheaper insurance outside the International Group. Check again, you will be surprised at the competitive approach of the Clubs and the low cost of high limits. Owners who distrust mutuality the potential for unbudgeted supplementary calls and the need to pay release calls to leave. A reasonable point of view, but no Club has had an unbudgeted call since 2010 and many are returning premium. The Clubs have never been so financially strong. Release calls remain a bone of contention, but are slowly declining. If you are still averse to mutuality and your tonnage fits the criteria, go fixed with a Club or talk to British Marine. Owners who want a ticket to trade and would not buy insurance in the absence of regulatory requirements. Go for the cheapest option in the fixed market, take a high deductible/ low limit and do not expect too much by way of service. Owners with vessels which the IG will not write. Mainly old, larger vessels of dubious class, or singletons. Find whatever cover you can and good luck with the claims. 23

P&I Club Information & reviews American 26 britannia 27 japan 29 gard 28 north of england 31 london 30 Introduction The information contained in business acquisition costs. this report is not and is not intended to be a definitive analysis of the Clubs accounts. Solvency margins are calculated as the ratio between total assets and gross outstanding claims. In so far as is possible we have homogenised the data to enable comparison. Calls and Premiums are the consolidated totals for all classes. All monetary figures shown are US dollars. Whilst every effort has been made to ensure that the information contained in the report is accurate and up- The net underwriting statistics to-date at the time of printing, this express the technical result for cannot be guaranteed by Tysers. the year and exclude any non- Under no circumstances shall technical investment income. Tysers be responsible or liable for any loss or damage caused directly 24 Operating Expenses include or indirectly by the publication management expenses and or use of this information.

The P&I Report 2018 steamship mutual 35 shipowners 32 standard 34 skuld 33 swedish 36 uk 37 west of england 38 American 26 Skuld 33 Britannia 27 Standard 34 Gard 28 Steamship Mutual 35 Japan 29 Swedish 36 London 30 UK 37 North of England 31 West of England 38 Shipowners 32 25

American Steamship Owners Mutual Protection & Indemnity Association, Inc. Managers SCB Inc (Eagle Ocean Management LLC) Gross Owned 17,100,000 Chartered 1,500,000 Free reserves 2018 57,614,000 2017 51,418,000 2016 56,410,000 2015 58,600,000 2014 57,344,000 Standard & Poor s Rating BBB 47% 12% Bulkers Tankers 2% by Vessel Type 39% General Cargo / Passenger / Container Tugs / Barges / Small craft We are pleased to see that the Club s centenary year was a satisfactory one so the Club could party happily without any guilty conscience. Due to the continued effect of churn, premium income dipped below the $100m mark but net incurred claims fell by almost 50% to $36m (2016: $71m). A net underwriting loss of $2m was more than covered by an excellent 8% investment return, so an overall surplus of $6m has pushed free reserves up to just under $58m. Operating expenses rose again to over $40m and unless this can be put down to an excess of vodka martinis during the centenary parties, we do wonder when the Club will feel it is necessary to tighten its budget and reverse a trend which has seen operating costs rise by over $6m in the last two years. For the 2017/18 policy year, the Club suffered just four claims in excess of $1m and at year end claims were 27% lower than for 2016/17 at the same stage of development, making it the second lowest year for claims over the last decade. This does not stop the Club from referring to the recent, moderate upturn in losses affecting many Clubs and commenting that the early -2015 to late-2017 period may ultimately be seen as an era of unusually benign claims emergence, with a gradual reversion to the mean possible over the longer-term. Is there a hint here that the Club may be thinking of a general increase for next year? Owned tonnage grew by 1.6m GT during the year to just over 17m, and there was also a small rise in chartered tonnage. The Club only provides some very general information regarding its hull initiative, American Hellenic Hull Insurance Company Limited. This has been operating since July 2016 and we are told it insures some 2,800 vessels and gross written premium is 20% ahead of budget. The gross loss ratio is better than originally expected, auguring well for its contribution to the Club s future results. The hull company s own accounts show gross premium income of $15m and claims of $9m for the first 18 months of operation. Financial summaries show a loss for both 2016 and 2017 which is expected to reduce as unearned income becomes earned. The Club is too small to influence our World Cup results and remains something of a bit player, but with a useful role for certain types of tonnage. 12% 14% 12% 62% Europe / Middle East / Africa Americas by Area China / N. Asia S. & S.E. Asia Year 2018 2017 2016 2015 2014 Calls/Premium 98,389 109,493 97,504 114,798 107,959 Reinsurance Cost 24,194 14,168 16,128 20,553 18,581 Net Claims (incurred) 36,302 70,761 49,364 65,962 65,064 Operating Expenses 40,300 37,744 33,978 34,795 35,250 Net Underwriting Result (2,407) (13,180) (1,966) (6,512) (10.936) Gross Outstanding Claims 193,493 222,214 212,260 228,457 225,545 Total Assets 322,228 334,996 314,387 326,897 328,712 Average Expense Ratio 27.90% 25.70% 24.20% 21.60% 19.30% Solvency Margin 1.67 1.51 1.48 1.43 1.46 Reserves/GT Ratio $3.37 $3.32 $4.00 $4.22 $3.43 All figures $ 000 26

The P&I Report 2018 The Britannia Steam Ship Insurance Association Limited Managers Tindall Riley (Britannia) Limited Gross Owned 106,900,000 Chartered 20,000,000 Free reserves 2018 641,557,000 2017 601,042,000 2016 512,696,000 2015 545,567,000 2014 471,898,000 Standard & Poor s Rating A It looks like the aborted merger with the UK Club has really kick -started this already excellent Club into action. Besides the Hong Kong and Japan initiatives mentioned in last year s Report, it is now looking to open offices in Singapore and Greece and to establish new exclusive correspondents in Taiwan and Denmark. The Club has recently made serious inroads into the Greek market, which now accounts for 9% of total tonnage. Smart new branding has been introduced and we are told the new iconography and sharper colour scheme emphasise Britannia s commitment to continue to serve its Members but always within its core principle of mutuality. If you stare hard enough at the logo, we are sure you will get the message There is also a more user-friendly website and, finally, the Club is renovating its IT systems under an IT stage, compared to 22 at the same stage for the prior policy year. However, these large claims total $63m compared to $35m for 2016/17, although none exceed the Club retention of $10m. Owned tonnage grew from 101m to 107m GT, and chartered tonnage by 4m to 20m GT. Sixteen new owner members and four new chartered accounts were gained during the year and at the 2018 renewal. The Club acknowledges that it is very well funded with capital in excess of both economic and regulatory requirements, and that it must consider how best to support Members. In May 2018, it decided on another cash distribution of $20m to existing members, making a total of $61m returned to Members by reductions in deferred calls and cash distributions since 13% 30% 6% by Vessel Type 34% Transformation project started in January 2018 and expected to take two years to complete. An underwriting surplus of $7m, combined with investment income of $65m, produced a surplus for the year of $71m, pushing free reserves up to October 2016. There looks to be plenty in the kitty for further returns in the near future. Finally, we are pleased to see that given the Club s financial strength, it no longer feels the need for release calls. Other Clubs 17% $642m after capital distributions to members of $30m and including the surplus of Boudicca, the should take note; Britannia, for so long regarded as a bastion of conservatism, is Bulkers/OBO Tankers (Crude) Containers Tankers (Other) Cargo/Other Club s dedicated reinsurer. Net incurred claims for the financial year were up $30m at $145m but well below the 2016 figure of $192m. Attritional claims for the policy year were down, and there were 13 claims in excess of $1m at the 12- month in danger of becoming a trendsetter. A fully deserved runners-up spot, missing out on the Cup only due to its lack of tactical diversity. 5% 2% Year 2018 2017 2016 2015 2014 Calls/Premium 208,147 225,854 260,722 269,726 284,167 32% by Area 45% Reinsurance Cost 30,507 39,498 43,413 48,941 48,616 Net Claims (incurred) 144,828 114,789 192,276 132,991 230,703 Operating Expenses 25,666 25,719 26,986 24,963 26,811 Net Underwriting Result 7,146 45,848 (2,403) 62,831 (21,963) 16% Gross Outstanding Claims 1,142,577 1,173,878 1,308,955 1,093,595 1,122,485 Asia Scandinavia Europe Total Assets 1,807,557 1,796,568 1,853,548 1,663,617 1,618,514 Average Expense Ratio 9.73% 9.42% 9.12% 8.43% 8.03% Solvency Margin 1.58 1.53 1.42 1.52 1.44 Americas Other Reserves/GT Ratio $6.00 $5.96 $4.84 $5.03 $4.37 Please note all figures for Brtiannia have been restated to include those of Boudicca. All figures $ 000 27

Gard P&I (Bermuda) Limited 16% Managers Lingard Limited Gross Owned 223,300,000 Chartered 85,000,000 Free reserves 2018 1,248,567,000* 2017 1,134,862,000* 2016 1,016,697,000* 2015 968,590,000* 2014 944,123,000* Standard & Poor s Rating A+ 5% 14% by Vessel Type 27% Tankers & Gas Bulkers/OBO Containers Dry Cargo 38% Passenger/Cruise/MOU/Other In his final report as Chairman, Bengt Hermelin takes the opportunity to offer some observations on the P&I industry which appear to reflect some frustration with the current administration of the International Group. While reaffirming that the Club is totally committed to mutuality - Mutuality undoubtedly remains the heartbeat of the (Gard) group and one of the foundations if its success and is a strong supporter of the International Group, Hermelin does feel improvements to the IG are needed. He is not happy with the current governance processes including voting rights, and he does have a point here why should the tiny American Club or the localised Japan Club have the same voting rights as a Club with market share of close to 20%? He also feels the work on strategic issues within the IG should be given greater and prompter attention with more willingness for change, and a more progressive attitude to change to meet the needs of the shipowners is required, including a continuous review of the scope of mutual cover. Hermelin s comments reflect the difference between Gard, whose successful diversification and growth has turned it into one of the major marine insurers in the world, and many Clubs who are happy to plod on as if change is a dirty word. His final hope is that there will be consolidation among the smaller Clubs which would facilitate a larger capacity to take bigger retentions something we have supported for the last decade. The financial results for 2017 are very much more of the same. A surplus of $115m was achieved after a return of P&I premium of $79m, following the waiver for the second year running of the 25% deferred call. Before the return the P&I combined ratio was 92%, while Marine & Energy achieved a very creditable 88% with only one major claim. P&I net incurred claims rose by $32m to $357m, with fewer large claims and just one hitting the Pool, although contributions to Pool claims from other Clubs have increased. P&I premium net of the return was down around 12% at $467m. A solid investment return of 6.3% ($144m) helped increase free reserves by $115m to $1,249m, again net of the $79m return. Total owned tonnage (including MOUs) rose by nearly 7m to over 223m GT, with chartered tonnage slightly down at 85m GT. A retention rate of 99% reflects the strengths of the Club, and new business growth was mainly in Greece and Asia. It looks like Gard will remain the Champions of P&I for many years to come. 15% 10% Asia 9% Norway Europe Germany 3% by Area 21% 26% 16% Greece Americas Other Year 2018 2017 2016 2015 2014 Calls/Premium 467,425 531,474 607,260 628,672 585,606 Reinsurance Cost 106,201 117,371 137,214 132,615 141,308 Net Claims (incurred) 357,388 325,585 351,938 421,976 444,645 Operating Expenses 45,490 52,147 50,494 59,723 43,396 Net Underwriting Result (41,654) 37,693 67,614 10,364 (43,744) Gross Outstanding Claims 1,338,266* 1,445,660* 1, 572, 498* 1,379,308* 1,375,264* Total Assets 2,867,126* 3,047,131* 3,012,936* 2,745,611* 2,731,378* Average Expense Ratio 11.21% 12.02% 11.83% 11.40% 11.30% Solvency Margin 2.14* 2.11* 1.92* 1.99* 1.99* Reserves/GT Ratio $5.59* $5.24* $4.72* $5.12* $5.06* Note: items marked * are Group figures and include all business lines, not just P&I. All figures $ 000 28

The P&I Report 2018 The Japan Ship Owners Mutual Protection & Indemnity Association 8% 20% Managers Self-Managed Gross Owned 93,600,000 Chartered 12,100,000 Free reserves 2018 226,524,000 2017 208,423,000 2016 187,130,000 2015 172,369,000 2014 156,012,000 Standard & Poor s Rating BBB+ 12% 4% by Vessel Type 56% Director General Hiroshi Sugiura reports a reasonable set of results for the Club and, in US dollars, free reserves grew by $18m to nearly $227m. Premium income was down $7m to $214m, which the Club blames on churn, and net incurred claims were the same as the previous year at $122m. Sugiura reckons the claims environment in 2017 was less favourable, pointing to an increase in Pool claims from other Clubs while his own Club had just one such claim, and feels close attention needs to be paid to the further development of large claims. The Club has reduced its supplementary call for 2016 from 40% to 30%, the third successive year of reductions. 2017 was the final year of the Club s medium-term Operation Plan to increase quality membership via more competitive insurance products and quality services. While there has been an improvement in loss prevention and claims handling, it is difficult to say the Plan has been a success as entered tonnage remains at the same level as 2015. Owned GT did, though, increase by 2m to 93.6m GT during 2017 thus recovering losses in the intervening years. This Club does enjoy a good plan, which is no bad thing. In order to expand our business base further and ensure the stable management of the Association it has launched a thorough review of its operation, organisation, and insurance products. A new action plan called Leap Forward 2023 Your First Club, Our Best Service has been launched to implement the reform of the Association and make a leap forward to provide Members with higher quality and more reliable services, to meet Members needs and expectations. With Japan hosting the Rugby World Cup in 2019 and the Olympic Games in 2020, now would be a very good time for the Club to market itself abroad and provide an excuse to attend these great events. Unfortunately, though, we still cannot see how the Club can compete for international tonnage against the worldwide spread of the A-rated Clubs. The unavoidable focus on local players prevented a better showing in our World Cup. Bulk carriers Tankers Car Carriers Container Ships General Cargo/Other 22% 17% Panama Others Japan Liberia 6% by Registry 55% Year 2018 2017 2016 2015 2014 Calls/Premium 214,241 221,126 226,280 233,096 237,738 Reinsurance Cost 50,681 49,132 59,229 55,257 56,264 Net Claims (incurred) 121,533 122,604 125,416 155,635 168,548 Operating Expenses 26,536 25,441 25,556 21,488 22,775 Net Underwriting Result 14,164 23,949 16,079 716 (9,849) Gross Outstanding Claims 398,057 367,501 371,395 347,216 391,879 Total Assets 645,160 626,834 584,276 557,348 561,647 Average Expense Ratio 6.21% 5.46% 5.18% 5.25% 5.73% Solvency Margin 1.62 1.71 1.57 1.61 1.43 Reserves/GT Ratio $2.42 $2.28 $2.03 $1.85 $1.70 All figures $ 000 29

London Steamship Owners Mutual Insurance Association Ltd Managers A Bilbrough & Co Ltd Gross Owned 45,400,000 Chartered 13,000,000 Free reserves 2018 194,642,000 2017 188,012,000 2016 160,707,000 2015 157,414,000 2014 160,644,000 Standard & Poor s Rating BBB 2017/18 saw further pressure on the Club s small income base. Premium remined almost unchanged at around $102m, but net incurred claims rose by over $14m to nearly $84m. The net combined ratio of 118.70% resulted in an underwriting loss of $15m, compared to a surplus of $1.7m in 2016, but investment income again saved the day with a decent 5.5% return and a $2m increase in the value of the Club s London property adding $21m to the coffers, so resulting in an overall surplus of $7m for the year and an increase in free reserves to $195m. On a policy year basis, estimated net claims are up $12m on 2016/17 to $62m. The rise is due to an increase of $3m in claims over $1m and $9m in Pool claims from other Clubs, with claims under $1m showing little change on prior years. fixed premium facility for small vessels and in its chartered entries, so overall tonnage now stands at over 58m GT, an increase of around 4m GT. The Club s well regarded claims service does help to ensure loyalty among its current membership. We have mentioned before that we do not believe the Club can grow its market share against the larger A- rated clubs. While its free reserves per GT at $4.29 looks healthy, premium income is the second lowest in the International Group and only just ahead of the American Club which insures just 17m GT. A poor investment return or run of large claims would see the free reserves eroded quickly, and we have to say the best way forwards would be to merge with another Group Club while the going is comparatively good. 18% 3% 5% Owned tonnage grew slightly to over 45m GT, with eleven new members from Europe and Asia, Lack of depth certainly prejudiced the Club s World Cup efforts. 27% by Vessel Type 52% and there has also been growth in the Club s Bulkers LNG/LPG & Tankers Container Cargo 33% 15% S. Europe Far East N. Europe Other 1% by Area 51% Year 2018 2017 2016 2015 2014 Calls/Premium 101,728 102,891 110,072 111,290 106,895 Reinsurance Cost 20,393 20,181 22,670 24,445 20,754 Net Claims (incurred) 83,902 69,472 60,129 104,277 92,956 Operating Expenses 12,655 11,542 11,954 12,483 11,921 Net Underwriting Result (15,222) 1,696 15,319 (29,915) (18,736) Gross Outstanding Claims 298,144 298,867 332,037 346,993 322,827 Total Assets 512,840 501,916 505,479 517,374 492,489 Average Expense Ratio 9.68% 9.51% 9.52% 8.78% 8.36% Solvency Margin 1.72 1.68 1.52 1.49 1.53 Reserves/GT Ratio $4.29 $4.28 $3.62 $3.59 $3.71 All figures $ 000 30

The P&I Report 2018 The North of England P&I Association Limited Managers Self-Managed Gross Owned 142,000,000 Chartered 53,000,000 Free reserves 2018 450,462,000 2017 430,755,000 2016 428,109,000 2015 338,109,000 2014 312,274,000 Standard & Poor s Rating A Chairman Pratap Shrike describes 2017/18 as a positive year delivering further strategic progress and culminating in a successful renewal with an increased membership, underpinned by a strong financial performance. It was actually a bit of a boring year, with the highlight possibly being the stabilisation of the Club s pension scheme deficit and a $28m improvement on last year. A combined ratio of 104% produced an underwriting deficit of $8m while an investment return of 2.87% brought in nearly $29m and resulted in an overall surplus for the year of $20m, pushing free reserves up to $451m. Owned tonnage grew by 2m to 142m GT, and there was also a small rise in chartered tonnage to 53m GT. Most of the growth was from existing Members. Premium income declined from $428m to There were 13 claims notified by Clubs to the Pool in 2017, with a further six notified as having the potential to exceed the Clubs retention. North do not see this as a sign of an increasing claims trend but rather a return to the recent average following a very benign 2016. In a repeat of last year s Report, Shrike again praises the virtues of the International Group mutual system It is important that the full benefits of the IG are clearly communicated and we encourage all clubs to engage in this process we must ensure that we do not prejudice the fundamentals of trust and cooperation, which are so important in supporting the IG mutual system. We do wonder what has prompted this perceived need to repeat, at some length, the obvious benefits of the mutual system and whether his comments are aimed at any Club(s) in particular. 18% 2% 13% by Vessel Type 40% $388m, while net incurred claims were down $2m to $244m. On a policy year basis, claims are down $16m on 2016, with 32 claims over $1m (2016: 34 claims) accounting for 47% of total claim values and claims below $1m are in line with the previous two years. The Club s failure to make our semi-finals is more a reflection of the strength of the opposition than any particular weakness in North. 27% Bulkers Tankers Containers General Cargo Other 12% 6% Europe 10% 36% Asia Pacific Middle East / Other Americas by Area Scandinavia 36% Year 2018* 2017* 2016* 2015* 2014 Calls/Premium 387,599 428,348 489,810 526,007 383,534 Reinsurance Cost 81,326 98,389 128,757 155,438 77,885 Net Claims (incurred) 243,944 246,013 196,040 329,531 231,627 Operating Expenses 77,410 75,698 77,579 69,385 53,175 Net Underwriting Result (15,081) 8,248 87,434 (28,347) 20,847 Gross Outstanding Claims 826,053 865,610 869,420 1,069,483 964,222 Total Assets 1,413,731 1,494,210 1,490,314 1,606,592 1,361,357 Average Expense Ratio 12.10% 12.00% 12.40% 12.40% 12.50% Solvency Margin 1.71 1.73 1.71 1.50 1.41 Reserves/GT Ratio $3.17 $3.08 $3.27 $2.66 $2.40 * From 2015, figures include Sunderland Marine. All figures $ 000 31

THE SHIPOWNERS MUTUAL PROTECTION & INDEMNITY INSURANCE ASSOCIATION (LUXEMBOURG) 12% Managers The Shipowners Protection Ltd Gross Owned 25,486,001 Chartered Free reserves Standard & Poor s Rating A N/A 2018 341,726,000 2017 294,041,000 2016 279,378,000 2015 300,273,000 2014 298,555,000 5% 5% 5% 7% 29% 14% Vessel type by number 8% 20% The Club has reported yet another solid year, with a net combined ratio of 99% - the eighth consecutive year below 100% - and a massive $47m investment return pushing free reserves up from $294m to $342m. Premium income was down $12m at $216m but net incurred claims fell by a similar amount to $136m. Total tonnage was unchanged at just over 25m GT, with a member retention rate of 95% which is impressive in the small vessel sector where loyalty levels tend to be lower than in the large vessel market, and where the Club faces intense competition not only from other International Group Clubs running fixed premium facilities but also from the commercial fixed premium market. We are at times surprised at the lengths to which some small vessel Insurers will go to try to secure new business, quoting at times terms which appear unsustainable. It is reassuring that Shipowners Club maintains its underwriting discipline in the face of such competition and many owners in this sector recognize the quality of the Club and remain loyal. The Club does note that the surplus of capital in the insurance market in recent years has resulted in more competition and reduced margins, and warns that the squeeze on underwriting results means that premiums cannot justifiably be reduced any further. Sensible owners will appreciate that the Club is, by far, the best option for their small craft. Other Clubs should heed the words of Chairman Philip Orme in discussing a potential change to the claims environment: we plan to support our Members through a no General Increase strategy although, given the level of premium and claims, a 2018 technical underwriting result of over 100% seems likely, although not inevitable If the underwriting account needs balancing it is our firm intention to use predicted investment income and, if necessary, accumulated free reserves, for just that purpose. This illustrates clearly how mutuality works in a not for profit organization. A very solid performance in our World Cup, with progress only hindered by its limited tactic of being a Club for smaller vessels. Harbour Barges Fishing Ferries Offshore Dry Tankers Yachts 4% 2% 10% 21% Year 2018 2017 2016* 2015 2014 Calls/Premium 216,341 228,580 209, 881 247,342 243,715 by Area 15% Reinsurance Cost 29,706 27,527 27, 870 36,243 30,664 Net Claims (incurred) 136,165 149,087 136,060 145,493 158,462 Operating Expenses 48,709 49,164 42,704 54,168 52,255 48% Net Underwriting Result 1,761 2,802 3,247 11,438 2,334 Gross Outstanding Claims 425,420 433,441 474,576 390,177 414,065 Europe Americas S.E Asia & Far East Australia/NZ & Pacific Africa/Rest of World Middle East & India Total Assets 859,393 823,121 846,880 764,253 779,090 Average Expense Ratio 22% 22% 21% 20% 18% Solvency Margin 2.02 1.90 1.78 1.96 1.88 Reserves/GT Ratio $13.41 $11.56 $11.34 $12.74 $12.65 * 2016 covers the shortened period of 20th February 2015 to 31st December 2015 All figures $ 000 32

The P&I Report 2018 Assuranceforeningen Skuld 11% Managers Self-Managed Gross Owned 93,400,000 Chartered Free reserves Standard & Poor s Rating A N/A 2018 442,026,000 2017 394,075,000 2016 348,230,000 2015 335,195,000 2014 334,548,000 6% Bulkers Tankers 7% 44% Containers General Cargo Other by Vessel Type 32% Chairman Klaus Kjaerulff is delighted to report the second- best financial results in the Club s history and CEO Stale Hansen concludes that the results and the cases handled over the year show its size and stability cater for both the big casualties and the volatility in our markets. A combined ratio of 99% resulted in a $2m surplus net of a $10m return to members, half of which is a premium credit while the other $5m will be returned to certain members as a performance bonus, a new scheme to benefit members of more than 12 months with positive claims records. This is the 15th consecutive year that Skuld has achieved a positive underwriting result. A good 7% investment return brought in $47m, and free reserves have risen to a record $442m. Premium income for the year rose by nearly $10m to $413m, while net incurred claims rose by around $22m to $252m. Owned tonnage grew by 3m to 93m GT. Chartered tonnage is not divulged, but chartered premium rose by $5m to $43m after a big slump last year. For the 2017/18 policy year, the Club reports a lower level of small claims but an increase in large cases, fifteen in all including six wreck removals, with two hitting the Pool. Hansen states the Club is in a promising phase of improving the results of its Lloyd s Syndicate. The policy year statements show that the loss for 2016 has reduced from $13m last year to just over $9m, and 2017 currently shows a loss of under $5m. Other fixed business shows a profit of over $7m for 2017. This is the first full year with the Skuld Marine Agency (SMA) hull facility as an integrated part of Skuld. Hansen reports that 98% of SMA s former business was renewed on Skuld paper and the agency is delivering ahead of the business plan. The Club is convinced that diversification works We now offer a wider range of insurance products and cover a larger portion of the needs of our members and clients. Our commercial side continues to bring robust stability for our mutual owners. There is no doom and gloom from this Club about the claims environment and a possible need for premium increases. Yet another solid year leaves the Club in a robust position for future growth and cautiously optimistic for the future. Progress to the Cup final was hindered only by the immature position of its diversification policy. 24% 19% Europe Asia Nordic Americas Other 4% by Area 24% 29% Year 2018 2017 2016 2015 2014 Calls/Premium 412,739 403,235 409,980 411,246 379,391 Reinsurance Cost 57,363 71,636 56,663 63,622 56,557 Net Claims (incurred) 251,580 229,143 243,276 259,057 245,554 Operating Expenses 92,224 88,510 87,971 87,781 73,321 Net Underwriting Result 11,572 13,946 22,071 786 3,959 Gross Outstanding Claims 925,721 617,049 583,921 555,116 523,230 Total Assets 1,070,091 1,000,465 918,602 903,704 855,985 Average Expense Ratio 12.70% 12.80% 12.80% 12.90% 12.30% Solvency Margin 1.16 1.62 1.57 1.63 1.64 Reserves/GT Ratio $4.73 $ 4.34 $4.24 $4.19 $4.18 Note: All figures are Group figures including all business lines, not just P&I. All figures $ 000 33

THE STANDARD CLUB 23% Managers Charles Taylor & Co (Bermuda) Gross Owned 132,000,000 Chartered 27,000,000 Free reserves 2018 461,500,000 2017 430,500,000 2016 390,100,000 2015 380,300,000 2014 368,500,000 Standard & Poor s Rating A 2% 12% 5% 1% by Vessel Type 30% 32% New Chairman Cesare D Amico reports that the Club continues to be in very good shape, referring to a better-than-breakeven result and an underlying combined ratio of 98% for the 2017/18 policy year. Some may find this a little confusing as he is referring to P&I only for the policy year, whereas the actual combined ratio for the financial year was 107%, or 104% before the $11m return of premium in 2017, and including the Club s Syndicate results. The underwriting loss was $25m but an investment return of 6.4% ($52m including a revaluation of the Club s property) helped produce an overall surplus for the year of $31m, so pushing free reserves up to $461m. For a second year running, the Club made a 5% return of premium to members. Premium was down $4m on 2016/17 at $334m, while net incurred claims rose by $31m to $232m. The claims pattern for the 2017 policy year continues to be benign, but D Amico states that we cannot expect this low claims environment to continue, citing the increased focus on environmental impact, the ever expanding world fleet and a somewhat more encouraging macro-economic outlook as potential reasons for an escalation in claims. Owned tonnage grew by 6m to 132m GT during the year, and chartered tonnage also grew by 3m to 27m GT, with eleven new members joining the Club at the 2018 renewal. The Club s Lloyds Syndicate has now been in operation for three years, and D Amico acknowledges that these first years have been more challenging than we would have liked In other words, the Syndicate is losing money (see Diversification under World Cup Results). The Syndicate is regarded as a key part of the Club s preparations for the future, as the Board believes that through growth and diversification, it can keep working to drive down the cost of mutual insurance and provide for a more stable underwriting result. The Club has been recruiting new staff for the Syndicate and has moved into additional, non-marine areas in an effort to improve profitability. It could do with a rapid improvement in results based on more disciplined underwriting, which prevented better progress in the Cup. Tankers Cargo/Container Bulkers Passenger & Ferries Offshore Other 20% 6% Europe Asia USA 6% 3% by Area 26% Rest of World 39% Canada UK Year 2018 2017 2016 2015 2014 Calls/Premium 334,300 338,800 354,300 354,000 336,100 Reinsurance Cost 80,800 77,000 90,100 92,000 82,900 Net Claims (incurred) 232,300 200,800 206,900 233,800 230,900 Operating Expenses 45,700 43,500 39,600 28,600 26,500 Net Underwriting Result (24,500) 17,500 17,700 (400) (4,200) Gross Outstanding Claims 967,900 971,100 976,000 1,000,400 986,900 Total Assets 1,538,400 1,477,100 1,426,400 1,449,600 1,395,800 Average Expense Ratio 12.50% 12.40% 12.20% 11.40% 10.90% Solvency Margin 1.59 1.52 1.46 1.45 1.41 Reserves/GT Ratio $3.50 $3.42 $3.36 $3.40 $3.41 All figures $ 000 34

The P&I Report 2018 Steamship Mutual Underwriting Association Limited 18% Managers Steamship P&I Management LLP Gross Owned 85,100,000 Chartered 73,500,000 Free reserves 2018 515,968,000 2017 510,290,000 2016 440,321,000 2015 376,187,000 2014 301,199,000 Standard & Poor s Rating A 12% 5% Bulkers Tankers Container 3% by Vessel Type 24% Cruise/Ferry 38% General Cargo Other After three successive excellent years which saw a dearth of claims and free reserves rise by over $200m, the Club suffered a blip in 2017/18 although it is hardly cause for concern. Net incurred claims for the financial year rose by $73m to $241m, while on a policy year basis net claims were 23% higher than 2016/17. The combined ratio was 112.8% but this is net of the $25m return on the 2015 year, without which the loss ratio was 102%. As Chairman Armand Pohan reports, the result is more a reflection of what is happening on the premium side, with two years of returns, no general increase for four years and the continued effect of churn. The Club still managed a surplus of over $5m, thanks to an investment return of 3.5% ($38m) and free reserves have risen to $516m, which equates to a very healthy $6.06 per entered GT, the best in the International Group except for Shipowners Club whose rate is distorted by its concentration on small vessels. Attritional claims (under $250,000) in 2017 rose by 28% on 2016 but are similar to prior years, indicating 2016 was something of an anomaly. Larger claims rose by 21% and included three claims on the Pool compared to no more than one in earlier years. Owned tonnage remained flat at 85m GT, with additions offset mainly by the Club s decision to terminate the entry of its three Iranian fleets totalling 3.2m GT. This venture back into Iran proved a costly exercise with the Club covering the tragic loss of the tanker SANCHI and her crew in January 2018 a Pool claim which might stretch into the Excess Loss contract. Chartered tonnage grew by nearly 7m to over 73m GT. Overall, the Club remains in a very strong position. We are, though, concerned that the Chairman has laid down some markers for a general increase next year If claims continue at the level seen in 2017/18, consideration will have to be given to premium adjustments..we must be prepared for a sudden upturn in claims levels and a downturn in financial markets. History suggests that it is only a matter of time before we have to face such challenges. Now hang on a minute Mr Pohan. You have amassed over $500m in free reserves over the last three years with an average combined ratio of 84.7% before the returns of premium to members for 2014 and 2015. While we can accept and have indeed seen a downturn in the financial markets in 2018, we do question whether you can look to history to predict an increase in claims given the change in nature of world tonnage, particularly in the container trade, and continued focus on improved safety and technology. We would suggest that the Club s finances are already prepared and can comfortably manage any change in market conditions. A decent performance in the Cup, but not good enough to match the major teams. 16% 35% 3% Far East Europe 5% by Area North America Latin America Middle East/India 41% Year 2018 2017 2016 2015 2014 Calls/Premium 295,318 305,642 350,329 365,341 345,731 Reinsurance Cost 52,089 56,033 64,830 69,002 61,169 Net Claims (incurred) 241,369 168,455 167,930 187,614 232,450 Operating Expenses 40,570 39,219 41,397 45,421 42,823 Net Underwriting Result (38,710) 41,935 76,172 63,304 9,289 Gross Outstanding Claims 830,826 765,386 908,028 1,024,708 1,205,156 Total Assets 1,378,037 1,301,995 1,372,979 1,445,909 1,533,031 Average Expense Ratio 12.20% 12.10% 12.10% 11.8% 11.3% Solvency Margin 1.66 1.70 1.51 1.41 1.27 Reserves/GT Ratio $6.06 $6.03 $5.66 $5.06 $4.38 All figures $ 000 35

The Swedish Club Managers Self-Managed Gross Owned 51,100,000 Chartered 23,200,000 Free reserves* 2018 213,472,000 2017 194,880,000 2016 183,074,000 2015 186,342,000 2014 167,952,000 Standard & Poor s Rating BBB+ * All classes of business M.D. Lars Rhodin reckons the Club has emerged from 2017 prepared and in the right position to take advantage of a stabilising market. Across all lines of business, the combined ratio was 104.6% resulting in an underwriting deficit of $9m, while an investment return of 7.7% ($28m) resulted in an overall surplus of $18m, pushing free reserves up to $213m. Premium income was down nearly $14m to $153m and net claims incurred reduced by nearly $5m to $98m. The Club saw good growth in P&I tonnage during 2017, with owned GT rising by over 4m to 51.1m GT and chartered tonnage up by 3m to over 23m GT. The P&I combined ratio was 102% (2016: 99%) and FDD was 58% (2016: 55%). P&I income was down $9m at $95m after a 4% return to members for the 2017 year, equivalent to $3.4m. P&I net incurred claims remained stable at $60m. Following the precedent set in 2017 for giving a return on the current year rather than past policy years, the Club has already announced a 5% return for the 2018 year. Interestingly, the Club believes that both premium and claims in 2018 will remain at very similar levels to 2017. Two years of solid growth in tonnage and free reserves, plus returns of premium, indicate good progress for a Club which we have always felt only lacked a suitable and sustainable market share. A few more players would have helped their World Cup efforts. 4% 5% by Vessel Type 37% 39% 20% Container Tankers Bulkers Other 48% Europe Asia 8% by Area Middle East 44% Year 2018 2017 2016 2015 2014 Calls/Premium 95,362 104,113 109,958 106,006 99,646 Reinsurance Cost 27,390 25,096 26,755 27,139 32,035 Net Claims (incurred) 60,562 60,726 60,482 59,689 60,154 Operating Expenses 15,303 14,854 14,523 15,209 13,825 Net Underwriting Result (7,893) 3,436 8,198 3,969 (6,368) Gross Outstanding Claims* 258,123 259,819 237,936 272,959 318,933 Total Assets* 533,582 516,710 510,744 537,017 547,368 Average Expense Ratio 13.40% 13.3% 13.30% 13% 12.10% Solvency Margin* 2.07 1.99 2.15 1.97 1.72 Reserves/GT Ratio* $4.18 $4.16 $4.19 $4.49 $4.53 Note: items marked * are Group figures and include all business lines, not just P&I. All figures $ 000 36