Rfib 2012 p&i Report, Dec. 2011 Edition-1

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P&I Report 2012RFIB Group Limited

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RFIB 2012 P&I Report, December 2011 edition 2 /60

About Us In 1980 RFIB set up business in the heart of the City of London, personal computers were launched, Jimmy Carter authorised legislation giving $1.5 billion in loans to bail out Chrysler Corporation, and Borg won his fifth consecutive Wimbledon. The world has changed a lot since then and so has RFIB. But one thing has remained constant – our commitment to build business through personal relationships, listening to our clients and building a deeper understanding of their requirements. The right people. The right environment It all starts with creating a positive and constructive work environment. Everything from the office layout to our management processes facilitates open communication and an entrepreneurial spirit that encourages the search for industry leading strategies and a determination to do better for all our clients. Today, the future of RFIB is in the hands of the people who work here. The vast majority of our staff have a share in the business with independent investor, FF&P Private Equity (http://www.ffandppe.com) holding a significant minority interest. International reach With offices in seven major international centres, and strong relationships in many more, we have the breadth and depth to handle business wherever it may take us. Focused on the future, we are highly motivated, in possession of considerable knowhow and ready to talk to you.

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Introduction Welcome to RFIB’s first report on the P&I market. The mutual clubs which form part of the International Group (IG) provide insurance “at cost” for their members and levels of cover which would not be sustainable without the unique IG structure. There are a number of insurers outside the IG which provide valuable competition to the Group clubs. This report aims to identify the strengths and weaknesses of these insurers so that its readers can make informed decisions. P&I is a long-tail insurance with claims often taking 4 or 5 years to settle or, in some countries with very slow court processes, even longer. Therefore decisions made by shipowners, about which insurer they favour, should be taken with a long term view. Consequently, RFIB has not made comparisons between one policy year and its preceding year but rather taking a much longer perspective. The historical call performance and total rating progression figures shown for the IG clubs go back to 2001 and the head-to-head comparisons are over five or six years. In preparing this report, RFIB has received help from many individuals in clubs, insurance companies and underwriting agents. RFIB is grateful for their assistance in providing the information which has been requested. RFIB is also grateful to Standard & Poors for allowing the inclusion of quotes from its analysis of the clubs. RFIB hopes that the readers of this report will find it informative, interesting and a useful point of reference.

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Contents Why shipowners should use a broker for P&I insurance 6 Market Outlook 9 The International Group, the Pool and its reinsurances 10 The International Group market 13 Mutual Market American 14 Britannia 16 Gard 18 Japan 20 London 22 North of England 24 Shipowners 26 Skuld 28 Standard 30 Steamship Mutual 32

Swedish Club 34 UK 36 West of England 38

Head to head Analysis of changes between 2006 & 2011 of GT, Premium & Average Premium per GT 41 Analysis of changes in number of vessels 2006/2007 to 2010/2011 42 Total rating progression 43 Analysis of changes in free reserves & free reserves per GT 2006/2007 to 2010/2011 44 Analysis of changes in net combined ratio 2006/2007 to 2010/2011 45 Analysis of changes in average expense ratio 2006/2007 to 2010/2011 46 Vessel Type (By GT) – comparison of each club 2010/2011 47 Geographical Distribution of Management (By GT) comparison of each club 2010/2011 48 Analysis of changes in investment return 2006/2007 to 2010/2011 49 Investment portfolio – comparison of each club 2010/11 50 The non IG market The P&I market outside the International Group 53 British Marine 54 British European & Overseas 54 Charterama 54 The Charterers 55 China Shipowners 55 East of England 55 Hellenic Mutual 55 Hydor 55 Ingosstrakh 55 Islamic 56 Korea Shipowners 56 Navigators 56 Norwegian Hull Club 56 Osprey 57 RaetsMarine 57 RSA 57 South of England 58 Zeller 58


Why shipowners should use a broker for protection and indemnity insurance Over the last 20 years, an increasing number of shipowners have used insurance brokers to access the Protection and Indemnity market, which include the clubs which have signed the International Group Agreement. Now the P&I insurance for over 75% of the world’s ocean-going fleets are handled by insurance brokers. This article explains why the role of a P&I insurance broker is important to shipowners and why that insurance broker should be RFIB.

• The cost of P&I insurance has grown considerably over the last two decades. Taking into account the general increases which clubs have announced, P&I premiums in some clubs have increased over 9 times during the last 20 years. Consequently, some owners are now paying P&I premiums which are similar in amount to their hull premiums. The higher premium level deserves more attention to be paid.

• The nature of the International Group Agreement is to constrict competition. When an owner wishes to move from one club to another club, for the first year of entry, the “new” club is only able to offer the same terms (calls, deductibles, coverage etc.) as the “old” club has quoted. The new club is not able offer any financial inducement to the owner to move. Furthermore, there may be a financial penalty to the shipowner by paying release calls or having to provide security for any calls which may become due in the future. Consequently, it is of great importance that a shipowner chooses carefully the correct club (or for larger owners, clubs) for his company, as regularly changing P&I clubs can be very and unnecessarily costly.

• Long-term strategic decisions have to be made to ensure a shipowner is entered into a club with which he is happy. Considerations which have to be taken into account when choosing a P&I club include:-

(i) Financial strength of the club – measured by the size of its free reserves. (ii) The level of premium – measured by the average premium per ton. (iii) The level of general increase called by the club over recent years. (iv) The record of the club in making unbudgeted supplementary calls. In general, most owners do not like paying

unbudgeted calls. However some clubs make such calls on an almost regular basis. (v) The knowledge and experience of the club in the types of vessels owned and/or the areas in which the vessels

trade – for example, some clubs specialise in large vessels, whilst others only cover small vessels; some clubs do not cover vessels regularly trading to the USA; others do not like cruise ships.

(vi) Claims handling – some clubs offer a very active claims service, whereas other clubs are happy to delegate authority to the shipowner to negotiate settlements with claimants.

(vii) Average Expense Ratio – this ratio is a calculation which shows the annual cost of operating the P&I business as a percentage of the premium income plus investment income.

• Whereas, a shipowner may have experience of negotiating renewal terms and discussing problems with its P&I club

and for his particular fleet, a P&I broker negotiates renewals for many clients with many clubs and can use the experience gained on one renewal for the benefit of other clients. Furthermore, issues or problems addressed for one client can be used proactively to warn other clients that they may face similar issues and to advise clients how problems can be avoided.

WHY RFIB?

• RFIB is an expert in P&I insurance. It has a team of brokers who have close relationships with the IG market. These relationships are used for the benefit of RFIB’s clients and have been built up over many years.

• Whilst some of the factors to be considered in choosing a P&I club require objective analysis, but others require subjective consideration. Whilst the final decision of the choice of club(s) will always remain with the client, it is RFIB’s expertise and analysis from its day-to-day operations in the P&I market which gives its client’s confidence that it is making the correct decision.


RFIB does not seek to interfere in the relationship between the shipowner (as a member of its club) and the management of the club. RFIB sees the relationship between shipowner, club and broker as being a tripartite relationship, as is shown in the following diagram:-

SHIPOWNER

AGENT/BROKER CLUB

and NOT as being a block between the member and its club as shown in this diagram:-

SHIPOWNER AGENT/BROKER CLUB

RFIB is happy to play whatever role is required by its clients on the handling of claims. Some clients like to discuss claims matters directly with their clubs whereas others prefer to use RFIB on all claims related matters. It is the client who chooses. RFIB is extremely well placed to offer shipowners a tailor-made service to handle P&I insurance, utilising expertise gained from many years to the benefit of its clients.


We go into the finest detail....

.... to build a greater knowledge


Market outlook

At times it is necessary to look back to form a view of what will happen in the future. There are a number of ongoing issues which affect shipowners and their P&I insurers. So this article is aimed to give a view of what may occur in the next 12 months. Piracy The IG clubs have largely managed to avoid involvement in the payment of ransoms to pirates to assist in the release of vessels, their cargo and crew. They have argued that this is more a general average exposure which the clubs do not cover. However, following the arrest of some pirates by naval vessels working under EU NAVFOR and the deaths of some pirates, some members of crew have been detained and ransomed separately from their ship. If this practice continues, it is likely that the clubs will have to respond by contributing to ransom amounts paid for the safe release of the seafarers. The clubs have been actively involved in advising their members on issues of contracts with companies providing armed guards and the IG is looking to come up with some form of accreditation for security companies. Trade sanctions The list of countries which have had trade sanctions imposed has increased in the last year. It looks likely that this will only increase further during the next 12 months. P&I clubs and legal firms have been warning shipowners to take these issues very seriously, as often the legislation is obscure and difficult to interpret and apply and the penalties for breaching sanctions are draconian. EU Commission investigation The results of the EU’s investigation into the IG should be revealed later this year or early next. It focuses on three areas; quotations, release calls and the IG reinsurance arrangements. Both quotations and release calls have been investigated previously. As RFIB understands, the team making the investigation is not very familiar with the IG structure. Its request for information to the clubs was a very significant burden to them within a short period around the 20th February renewal period. RFIB understands that the Commission’s findings are more likely to result in changes to the current release call system and how

they are quoted than any other aspect under investigation. Solvency II implementation Solvency II is a fundamental review of capital adequacy for the European insurance industry. It aims to establish a revised set of EU- wide capital requirements and risk management standards. Its implantation now looks to be delayed until to 2014. All clubs are working towards implementation and report good progress. IG Secretariat The work of the International Group’s Secretariat, headed by Andrew Bardot, is largely unseen except by the clubs which it serves. However, it gets through an amazing about of work – there are more than 20 subcommittees on various subjects – and this can be evidenced by a visit to its website at www.igpandi.org . The Churn The very substantial increase in tonnage in recent years has resulted in large numbers of new vessels entering clubs at very competitive premiums, replacing older vessels with much higher premiums. This is called the “churn”. It is not a new characteristic of the market, but the number of new vessels has had a substantial impact on those clubs whose entered GT has increased substantially. Unless records improve substantially, which is unlikely in an environment where courts are imposing ever increasing judgements against shipowners and their insurers, those clubs will have to try and increase the premiums of those vessels cheaply entered, or face the risk of underwriting deficits in the future. See the table headed Change in GT and premium 2006 to 2011. Investment income The volatility in the investment markets, where some of the major indices are experiencing highs and lows of over 4% per day, provides all insurers with an opportunity and a danger. The attitude of most insurers to investment risk is generally cautious and, in the past, a few clubs have suffered by being too adventurous, leading to their members paying unbudgeted calls. Sovereign debt was considered to be a cautious investment, but some of the banks who have taken a 50% loss on their Greek debt may now think otherwise.

The volatility is of particular concern to those clubs who are in a weaker position to their peer group, as the possibility exists to lose more money than might be reasonably expected from underwriting in a bad year. For the financially stronger clubs, it provides an opportunity to create more distance from their weaker competitors, but they need to be cautious as their members will not be pleased if there are substantial losses. So, in summary, while members will be most interested in their individual renewal terms, they will need to pay attention to what their clubs are doing with their investments. The 2012 Renewal As will be seen elsewhere in this report, the clubs have considerably increased their free reserves during the last two policy years – up by 58% from USD2.4bn at 20.02.09 to USD3.8bn at 20.02.11. Even so, some have a way to go to eradicate their underwriting deficits. All clubs announced P&I increases of between 0% and 5%. However, the announcement by 9 clubs of a 5% general increase is a surprise to the extent that so many clubs are looking for this size of increase. But, there are some dark clouds on the P&I horizon. The majority of the clubs reported an increase in frequency and quantum of claims during 2011. Further, investment income will be much reduced. So, notwithstanding a very difficult market for their shipowner members, the clubs deemed it prudent to call for a modest increase now, rather than build up problems to be addressed in the future. There are reports that the managers of some clubs were looking for a larger increase than those agreed by their boards, with the shipowner directors reducing the requested level because of the dire freight market. The other surprise was the announcement by the Japan club that it might need an unbudgeted additional call of up to 30% for the 2010/11 policy year. However, it does highlight that whilst there are recognisable trends in the IG, individual clubs will experience spikes (and dips) in claims which are not experienced to the same extent as the other clubs.

http://www.igpandi.org/�


The International Group, the Pool and its reinsurances The thirteen separate and independent principal P&I clubs are members of the International Group (IG). The IG members pool claims together – they share in each others claims in excess of an agreed retention – and they collectively reinsure in the international commercial insurance market to amounts in excess of USD3 billion. The IG members work together on common industry or market issues, on matters of concern to clubs and their members. There are over twenty sub-committees and working groups which address issues such as accounting standards, bills of lading, relationships with the EU, maritime security, occupational diseases, pilotage, reinsurance and ships’ standards. The structure of the club’s retention, pooling and reinsurances for 2011/12 is set out in the accompanying table. The clients have limits of liability of USD1bn for oil pollution, USD2bn for passenger liability and a combined limit of USD3bn for passenger s and seamen. Retention For the 2010/11 policy year, the retention by individual clubs was increased from USD7m to USD8m and it remained at this level for 2011/12. The level of retention has increased from USD5m in 1995/96 where it remained until 2005/06. There had been vocal debate between the clubs as to the “correct” level of the retention with a number of clubs, generally larger, wanting to increase it to USD10m. A high retention is likely to disadvantage smaller clubs who protect their exposures within the retention by reinsurance. The Pool In the same way that the retention has increased, there has been greater appetite by the IG to increase the amount of the Pool. For 2011/12, it is structured between USD8m and USD60m by the Lower Pool (USD22m excess of USD8m) and the Upper Pool (USD30m excess of USD30m).

The risk taken by the Upper Pool was increased by USD10m for 2011/12 compared to the previous year. The Lower Pool operates in a manner whereby each club’s share of the Pool is apportioned by reference to its premium, entered tonnage and historical claims record on the Pool. The Upper Pool is reinsured by Hydra Insurance Company Ltd., which is a segregated accounts company incorporated under the laws of Bermuda in which each club is an account owner. Reinsurance The IG accepted a USD30m premium reduction offered by the reinsurer for accepting the additional USD10m of risk on a per occurrence basis being borne by the Upper Pool. Layer 1 is 25% reinsured by Hydra, maintaining the IG’s pressure on the commercial market by changing the structures of the layers as market conditions make this advantageous. Layer 2 takes the cover up to USD1.06bn which is the limit of the oil pollution cover. Layer 3 increases the limit to a total of USD2.06bn which is the sub-limit for passenger risks at USD2.06bn. Layers 1, 2 and 3 are subject to unlimited reinstatements if the limits are reached. However, Layer 4, up to USD3.06bn is the collective overspill layer and is only subject to one reinstatement. Claims in excess of USD3.06bn, are not protected and clubs would have to raise additional funds from their members with the exception of an aggregate sub-limit of USD3.06bn for passenger and crew risks. The clubs’ commitment to the Pool and the IG’s reinsurance programme remain fundamental as it gives comprehensive protection to large catastrophic losses. The IG’s excess of loss contract is considered the largest marine reinsurance contract in the world, and

the collective ability of the clubs to purchase this protection is an indispensible feature of the IG system. Most clubs pass on any increase or reduction in reinsurance cost to their members. At the 2011/12 renewal, the clubs negotiated a reduction for their members, which is shown in the accompanying table.

RFIB 2012 P&I Report, December 2011 edition 11 / 60

Pollution only Non-pollution

Overspill

General Excess Loss ContractLevel 4

US$ 1bn US$ 3.06bnCollective overspill

One reinstatement

Layer 3US$ 1bn US$ 2.06bn

Layer 2US$ 500m U US$ 500m US$ 1.06bn

Layer 125% Reinsured to Hydra US$ 500m m US$ 500m US$ 560m

25% 75% 75% 25%

Upper PoolReinsured to Hydra US$ 30m US$ 60m

Lower PoolUS$ 22m US$ 30m

Club RetentionUS$ 8m US$ 8m

LAYERS OF INTERNATIONAL GROUP PROGRAMME 2011/12


2011/12 ETC RATE (USD PER

GT)%AGE

CHANGE

Tanker - dirty 0.7554 0.7038 -0.0516 -6.8%Tanker - clean 0.3335 0.3055 -0.0280 -8.4%

Dry 0.3867 0.3709 -0.0158 -4.1%

Passenger 1.5654 1.4780 -0.0874 -5.6%

Clean to Dirty Tanker rate per quarter 0.0753 0.0711 -0.0042 -5.6%

US OIL POLLUTION SURCHARGE 2011/12

NON SBT SBT

2010 (USD)

2011 (USD)

%age Change

2010 (USD)

2011 (USD)

%age Change

(A)Tankers of more than 1,000 GT - per ton per voyage 0.078 0.068 -12.8% 0.0647 0.0566 -12.5%LOOP/Lightening - per ton per voyage 0.0386 0.034 -11.9% 0.0323 0.0283 -12.4%

(B)Tankers of 1,000 GT or less:-

either per voyage 78.00 68.00 -12.8% 65.00 57.00 -12.3%or per annum 1,560.00 1,360.00 -12.8% 1,300.00 1,140.00 -12.3%

(C)Parcel tankers carrying less than 5,000 metric tons of persistent oil as cargo - per voyage 234.00 204.00 -12.8% 194.00 170.00 -12.4%

(D)Parcel tankers carrying 5,000 - 9,999 metric tons of persistent oil as cargo - per voyage 586.00 510.00 -13.0% 486.00 425.00 -12.6%

2010/11 ETC RATE (USD PER

GT)

CHANGE IN ETC RATE (USD PER

GT)

INTERNATIONAL GROUP EXCESS REINSURANCE RATES 2011/12


The International Group market

The vast majority of the world’s tonnage is covered by the clubs which are members of the International Group. It is for this reason and the complications of the how the IG market is structured, that this report devotes so much space to the 13 clubs. We include a page of text on each club in which we have attempted to provide similar information about each club. Where we have failed, it may well be due to a reluctance of clubs to provide all of the information which has been sought. For example, not all clubs were as open as some about how successful they were at achieving their target increase at the 20.2.2011 renewal. In general, we have aimed to provide background information about the each club and highlights of what has happened within the club in the last 12 months. Reinsurance is an important area for clubs, especially within the club’s individual retention of USD8m each occurrence. Clubs can be reticent about providing such information as they may consider it to be commercially sensitive. But where possible, we have provided available information. Clubs try not to rely on investment income but rather produce a technical result which is in balance. However, if the need for more income results in a higher percentage of available funds being invested in equities; those clubs seem to attract concerned comments from rating agencies. Indeed two clubs were down-graded following the collapse of the financial market in 2008 but did not both receive a corresponding up-grade when the equity market surprisingly rebounded later. The rating agencies have an increasing influence on the clubs and S&P is at the forefront of providing inter-active ratings for clubs. There can be some cynicism in the market that paying for an inter-active rating results in an up-grading compared to a

rating solely based on publicly available information. The agencies would, no doubt, counter by arguing that the more that they know about a club, the more confident they can be about the rating. So we give quotes from what S&P has written about each club. This is followed by RFIB’s comments about each club, which is our perspective on where we see each club is going. Finally, in order to lighten what can be a heavy subject, we have given suggestions where members may celebrate, near the main underwriting office, a good renewal negotiation or drown their sorrows if the negotiation did not give the result which the member was looking for!! Alongside the narrative, we have included statistical information about the clubs. This is divided into various sections:- • Financial year information for the

last five years, which is self explanatory

• The entered tonnage at 20th February for 2011 and each of preceding four years

• Investment portfolio at 20th February 2011

• Types of vessel by GT at 20th February 2011

• Geographical distribution of management by GT at 20th February 2011

• The historical call performance since 2001 and the total rating progression

There is a more direct comparison between the clubs in the subsequent section of this report using some of the information shown on the individual pages for each club. An explanation is given on those pages of why each comparison has some relevance. That said there are more aspects to choosing a club or remaining in a club than just using statistics. That is evidenced by the number of owners

who continue to support their club even though it is clear that it is in some difficulty, for example, in estimating its deferred calls, charging larger than average general increases etc. The knowledge that a club has in types of vessel operated by the member, the experience that a member has in a particular geographical region and the personal relationships between the member’s office and that of the club are very important in deciding whether a membership will continue not. However, the head-to-head comparisons can provide valuable information for members to congratulate clubs which are doing well and to question clubs which are doing less well about what they are doing to improve. All figures are in USD unless otherwise shown.


American Club www.american-club.com Background: The American Steamship Owners Mutual P&I Association was founded in 1917, and is managed by the Shipowners Claims Bureau Inc (SCB), whose headquarters are in New York, and whose CEO is Joseph E. M. Hughes. The club also has offices in London, Piraeus and Shanghai. SCB is owned by Eagle Ocean Management LLC. Europe remains the largest region by membership at 50%. An increase in entry of Asian members rose to 33%, North America stands at 13%, and the rest of the world 4%. Dry bulk sector, at 59% of the total, remains the largest constituency of the club’s entry of tonnage. 23% of the total comprises tankers, whereas general cargo, passenger, container, and RoRo vessels account for 16%. The tug, barge and small craft sector stands at 2%. The club’s accounting year is the calendar year, unlike most other clubs which account to 20th February. The American club is the security provider for Eagle Ocean Marine’s fixed-premium P&I facility, which offers full P&I and FD&D cover for policy limits up to USD25m and USD2m respectively. The facility is operated by Eagle Ocean Agencies, an affiliated company of Shipowners Claims Bureau, Inc, with offices in London and New York. Highlights of the year: For the 2011/12 renewal, the club announced a 2% general increase. The club experienced a small decline in tonnage, which in turn was offset by targeted increase in rates and uplift in deductibles. The club decided to close the 2007 and the 2008 policy years without further calls. The club announced a robust P&I underwriting result of a loss ratio of 57% for the 2010 year. On a combined basis, taking in to account FD&D, the loss ratio improved to 54% (2010: 60%).

Free reserves (total members’ equity) grew substantially during 2010, to over USD63m, and the club reported that this trend continued in the first quarter of 2011. The amount of incurred claims for the club’s own account was about 34% lower as of April 20, 2011 by comparison with the 2009 year at the same stage of development, 2009 at that time itself being the best of the previous five years. The club has what it called an ‘encouraging’ claims experience during 2010, with the total of claims for the club’s own account totalling over USD38m (a USD17m reduction from the previous year). 98% of all claims fell within the attritional layer, and the club did not report any claims to the Pool, exceeding the USD8m pooling threshold. The club estimates to have opened about 1,300 claims files by the time policy year 2010 is closed, mirroring the figure of 2009. The club reported an average expense ratio of 16.5%, an increase of 1.2% from last year (15.3%). A new strategic plan was introduced during the year - Partners in Progress - as a means of guiding the club’s development to club centennial in 2017. Reinsurance: The club now retains USD8m per claim (as apposed to USD7m in previous years) in line with the IG’s requirements for the new policy year. The club covers its new higher level of retention with Partner Re taken a 50% order with syndicates at Lloyd’s taking a further 35%, and Torus UK the balance of 15%. The club reported that its reinsurance costs conformed to expectations. Investment: A substantial proportion of the club’s investment portfolio is in fixed income securities at 62%. Equities stand at 32% and the remainder in cash and cash equivalents at 6%. The club reported a steady growth of invested funds, which at approximately USD240m, had returned to the level prior to the 2007/08 crash.

The overall investment return declined from 12.4% to 7.7%. The club reported that in the first quarter of 2011, the club experienced a return of 2.4% overall for the period to 31st March, 2011. S&P comments: (Rating as of 15.11.11) S&P has raised the rating of the American club from BB to BB+ with a stable outlook. “The upgrade reflects the American Club’s improved underwriting performance over the past couple of years, improvement in risk-based capital adequacy, and a modest improvement in its competitive position.” “The stable outlook reflects Standard & Poor’s expectation that American Club will continue to improve its underwriting performance with a GAAP combined ratio excluding any unbudgeted calls of about 100% over the next few two years. Additionally, we expect the club to grow its surplus over the next two years.” “Standard & Poors doesn’t expect to raise the rating on American Club within the next two years unless there is a significant improvement in its risk-based capital adequacy as per Standard & Poor’s capital model and the club continues to meet all our expectations with regard to underwriting performance and its competitive position.” RFIB comments: Slowly the club is working to a more sustainable position. But it is important that the disciplined approach referred to by S&P is maintained. Celebrate your renewal: Delmonico’s, 56 Beaver Street, New York NY 10004+2450 Drown your sorrows: Liquid Assets at the Millennium Hilton Hotel 55 Church Street, New York, New York, 10007


62

32

6

Investment Portfolio Split at 20.2.11 (%)

Fixed income securities Equities

Cash and cash equivalents

5923

162

Vessel Type (By GT) (%)Bulk carriers

Tankers

General cargo / container / passenger / RoRo

Tugs/barges/small craft

50

33

134

Geographical Distribution of Management (By GT)

(%)

Europe

Asia

North America

Rest of the world

American Steamship Owners Mutual Protection & indemnity Association Ltd

2010/11 2009/10 2008/09 2007/08 2006/07

Financial year information (millions if not %)

Earned calls and premium 105.3 103.4 131.6 134.6 152.2 Net investment income 9.4 5.4 -12.1 7.1 5.9 Investment return (%) 7.7% 12.4% 8.5% 5.4% 6.6% Reinsurance premiums 9.4 12.3 10.5 13.9 12.0 Net claims paid 74.7 94.6 96.5 101.5 81.9 Net est. liability for o/s claims 249.9 283.2 316.2 290.4 282.3 Total assets 343.1 361.3 382.1 347.9 336.1 Free reserves 63.6 48.3 35.7 34.0 31.6 Fund (balance available for o/s claims) 207.9 251.0 291.8 260.2 250.2 Average Expense Ratio (AER) - five years 16.5% 15.3% 15.2% 13.0% 12.8% Net combined ratio 98.7% 107.6% 84.0% 106.5% 97.0%

Entered tonnage 20.2.11

Owners P&I – GT (m) 15.4 15.3 13.2 13.3 14.1 Owners P&I - number of vessels 1,280 1,325 1,285 1,800 1,943 Charterers P&I – GT (m) 1.0 1.2 0.2 0.5 4.9 Total Owners and charterers P&I 16.4 16.5 13.4 13.8 19.0

P&I Historical Call Performance and Total Rating Progression General

Increase (%) Original Est. Deferred Call

(%)

Current Position on

Def. Call Release Call Total Rating

Progression Status of year

2001 10.0% 25% 60% 0% 1.41 Closed 2002 12.5% 40% 70% 0% 1.68 Closed 2003 30.0% 20% 56% 0% 2.01 Closed 2004 17.5% 0% 0% 0% 1.51 Closed 2005 10.0% 0% 20% 0% 2.00 Closed 2006 10.0% 0% 35% 0% 2.47 Closed 2007 10.0% 0% 30% 0% 2.62 Closed 2008 20.0% 0% 25% 0% 3.02 Closed 2009 7.5% 20% 20% 10% 3.12 Open 2010 0.0% 25% 25% 25% 3.25 Open 2011 2.0% 25% 25% 25% 3.31 Open 2012 5.0% 25% 25% 20% 3.48 Open


Britannia www.britanniapandi.com Background: Britannia is the oldest P&I club, being founded in 1855. It is managed by Tindall Riley (Britannia) Ltd., a company that is now owned by the management and staff and of which Grantley Berkeley is the chairman. The club’s headquarters are in London and in 2011 the club moved across the River Thames into the City of London. The club has a policy of not owning overseas offices. However, it has exclusive relationships with correspondents in Japan, Korea, Taiwan, Hong Kong, Indonesia, Singapore and Spain. Nearly half of the membership is from the Asia Pacific region and European members represent 40%. Highlights of the year: The club reported a surplus on the technical account of over USD18m, and with a net loss ratio of 90%. Investment income produced a surplus of USD59.6m and the free reserves of the club increased by USD52.8m to USD275m. Total free reserves, including funds held by the related reinsurance vehicle, Boudicca, now total USD454m. The committee announced a general increase of 5% for the 2011/12 policy year. Britannia has always been known as a club with a large membership in the Asia Pacific region, which still represents 49% of the membership by tonnage. Europe stands at 40%, of which half of that figure is in Scandinavia. The club continues to develop in Greece, a market it earlier had tended to avoid. Tonnage distribution by vessel type has altered slightly from 2010 with crude oil tankers now representing 25% (28% last year). Percentage of bulk carriers (including OBOs) has increased from 17% to 31%. Containerships represent 24% of the fleet and non crude tankers 15%. The tonnage of the club increased by just over 1 million GT during 2010/11. At 20.02.2011, the total fleet tonnage for P&I of 139 million GT comprised of 103 million GT of owned tonnage and 36 million of chartered tonnage. The entered tonnage is one of youngest in the IG.

For the 2010/2011 policy year, Britannia notified a single claim to the IG Pool. The club reported 12 claims over USD1m which is a reduction on previous years. However the total number of claims, which had previously reduced has now increased to a total of 6,870 for 2010/11. Further, the total retained claims have increased by 7.1% and stands at USD128.4m. Claims in all now total USD201.8m, down by USD18.5m from the previous year. The average expense ratio of the club 8.09% for 2011, down from 8.16% for the previous year. Reinsurance: The club reinsures with Boudicca Insurance Company Limited. Boudicca was formed in 1997 and is based in Bermuda. Whilst not owned by the club, it was set up as a dedicated reinsurer to only write business emanating from Britannia. Under the terms of its reinsurance, its assets are only available to be of benefit to the club. Boudicca provides a limited quota share cover together with aggregate excess of loss cover for policy year deficits that, in the absence of this reinsurance, would have become a charge on the general reserve of the club. Investment: The club enjoyed an investment return of almost USD60 million at 7.8%. The club reduced its exposure to equities from 22% to 18% in the early part of the year, and increased its allocation to corporate bonds and inflation-protected government bonds, standing at 20% and 14% respectively. Government bonds stand at 32% and cash at 16%. The club benefited from equities, as the strongest performing sector, of some USD25.9 million. S&P comments: (rating as of 28.1.11) Britannia is one of few clubs which does not pay rating agencies and so S&P’s rating is based on publicly available information (pi). S&P has rated the club Api (Strong). “The rating reflects very strong competitive position, very strong financial flexibility, strong free reserves and good operating performance. These strengths are offset by the club’s moderately high

exposure to equity markets and concentration on an insurance class where claims size and frequency are unpredictable”. “BSS’s competitive position is very strong in a market which retains high barriers to entry. It writes predominantly P&I business with a small amount of freight, demurrage and defence (FD&D). BSS ranked third within the IG by total P&I tonnage and free reserves. Total P&I tonnage increase 6% to 135 million gross tons (gt) at the 2008/2009 year end mainly due to new tonnage from existing members. The overall age of the tonnage remains low compared with the world fleet, with 62% of vessels being built in the last 10 years, compared with 51% of the world fleet. BSS announced a general increase of 5% (2009 12.5%) for the 2010 policy year, which is in line with many of its peers.” RFIB comments: Britannia continues to do its own thing, irrespective of what the rest of the market is doing. It does what it believes to be the correct thing. Most of the time, it does very well. It has an excellent supplementary call record over many decades. It was clever in protecting the value of its equity portfolio in 2008. Whilst it may have required lower general increases in the mid “noughties” resulting in the larger than expected general increase in 2008 plus the increase in the budgeted supplementary from 30% to 40%, it took decisive action to address the problem and moved on. It has, arguably, one of, if not the best quality membership, which includes Maersk, BP, Hyundai, Mitsui OSK Lines, Yang Ming, MISC, Frontline, BW and Exxon. Therefore, a case can be made that the club requires a lower level of free reserves than others. Celebrate your renewal: Swithins: 21 Swithins Lane, London EC4N 8AD One of the City’s best but not well-known fish restaurants. Drown your sorrows: 6 Martin Lane, London EC4R 0DP El Vinos (Old Wine Shades): opened in the 1600’s and Charles Dickens drank here!


32

2018

16

14


Government Bonds

Corporate Bonds

Equities

Cash

Inflation linked Bonds

31

25

24

15 4

1

Vessel Type (By GT) (%)

Bulk carrier/OBO

Tankers (crude)

Containers

Tankers (others)

General cargo

Others

49

21

19

7 3

1


(%)Asia

Europe ex Scandinavia

Scandinavia

Americas

Middle East

Australasia

The Britannia Steam Ship Insurance Association Ltd

2010/11 2009/10 2008/09 2007/08 2006/07

Financial year information consolidated with Boudicca unless shown (millions if not %)

Earned calls and premium 298.5 289.6 275.9 244.1 81.1 Net investment income 74.4 94.1 -44.4 47.1 66.0 Investment return (%) (club only) 7.8% 10.2% -2.7% 5.4% 10.3% Reinsurance premiums 52.7 52.1 49.5 45.0 39.1 Net claims paid 150.5 185.3 171.4 193.0 154.8 Net est. liability for o/s claims 786.8 723.2 701.8 681.2 621.3 Total assets 1,419.4 1,298.7 1,236.3 1,256.3 1,224.4 Free reserves/surplus 454.1 375.9 276.5 311.3 301.6 Fund (balance available for o/s claims) 1,240.9 1,099.1 978.3 992.6 922.8 Average Expense Ratio (AER) - five years (club only) 8.1% 8.2% 8.4% 7.9% 7.7% Net combined ratio (club only) 90.1% 106.9% 97.5% 109.8% 107.5%


Owners P&I – GT (m) 103.0 98.0 92.8 92.3 86.8 Owners P&I - number of vessels 2.897 2890 2,824 2,946 2,823 Charterers P&I – GT (m) 36.0 39.9 39.9 36.0 43.8 Total GT ‘000,000 139.0 137.9 132.7 128.3 130.6



(%)

Current Position on



2001 10.0% 25% 25% 0% 1.10 closed 2002 15.0% 40% 40% 0% 1.42 closed 2003 15.0% 40% 40% 0% 1.63 closed 2004 8.5% 40% 30% 0% 1.64 closed 2005 7.5% 40% 30% 0% 1.76 closed 2006 5.0% 30% 30% 0% 1.85 closed 2007 5.0% 30% 30% 0% 1.95 closed 2008 15.0% 40% 40% 5% 2.41 closed 2009 12.5% 40% 32.5% 10% 2.57 open 2010 5.0% 40% 40% 15% 2.85 open 2011 5.0% 40% 40% 20% 2.99 open 2012 5.0% 40% 40% 20% 3.14 open


Gard www.gard.no Background: Gard was founded in 1907, and is the biggest of the P&I clubs. The club is managed by its own staff, of which Claes Isacson is the CEO. Mr. Isacson is also the current chairman of the International Group of P&I clubs. The club has offices in Athens, Bergen, Bermuda, Gothenburg, Helsinki, Hong Kong, London, New York, Oslo, and Tokyo. The club’s head office is located in Arendal on the south coast of Norway. Not only is Gard the largest P&I club, it is also a very significant insurer in the maritime and energy sectors. It calls itself the second largest marine insurer. It covers hull and hull related insurances for shipowners as well as many different type of liability risks for shipowners and charterers. It is a major player in the international upstream offshore oil and gas industry as well as an underwriter for builders’ risks for shipyards. The membership of Gard is very much focused in Europe with 18% in Norway, 16% in Germany, 11% in Greece with a further 23% in the rest of Europe. The Asia-Pacific region only represents 21% but in a club of 144.6m of owned GT, this still represents over 30m GT. With effect from 20.2.10, Gard transferred the bulk of its P&I business from Gard Norway to Gard Bermuda. Hence from 20.2.10, Gard is only publishing Group figures for net investment income, total assets, free reserves and for its fund (balance available for outstanding claims). Highlights of the year: Gard has not required a general increase for the past two years. The P&I renewal was completed successfully; with expectations being met in terms of tonnage and premiums, but the overall P&I performance was slightly behind plan. In May 2011 the club announced a reduction in the deferred call for the 2010 policy year from 25% to 15% of the advance call, returning USD28m to the mutual members of the club. This in turn reduced the free reserves from USD818m to USD790m (USD638m last year). The move means that shipowners with mutual P&I cover from Gard will have received premium discounts in four of the past six years.

The club made a surplus after tax of USD175m. Gross written premium decreased by 2%, and the club’s total assets now stand at USD2.4bn. Gard has introduced a new product which is aimed at replacing lost income if the vessel is out of operation for reasons other than physical damage to the ship – Charterers Loss of Use Cover. It is designed to ease the charterer’s concerns around having to pay significant amounts of hire during long lasting detentions, delays and arrests. In the 2010 policy year, more claims above USD10m than expected were reported, and the club experienced an overall claims levels rising, driven by the increase in cargo values and deteriorating exchange movements. Gard reported three claims to the Pool for the 2010 policy year, being the first cases to be submitted to the pool since 2007. The club has implemented new claims processes from 20th February 2011 – each with a process owner who is responsible for the claims performance irrespective of the location of the handlers. The Average expense ratio for the club was 12.0% (2010: 11.8%). Reinsurance: Gard does not purchase any reinsurance within its retention of USD8,000,000 any one occurrence. P&I fixed premium entries covering risks falling outside Pool etc are reinsured by Gard P&I (Bermuda) in the commercial reinsurance market. The reinsurance capacity limit is USD1bn excess of a USD20m retention. Gard Marine & Energy has entered into reinsurance arrangements in the commercial reinsurance market. The overall reinsurance capacity limit has been USD130m for Energy and USD100m for Marine excess of a USD20m retention. Investment: A major part of the Gard P&I (Bermuda) Ltd. Investment portfolio has been invested through Gard’s Common Contractual Fund (CCF), which is established in Ireland. Asset allocation is split between US bonds at 55.6%, non US-bonds at

16%, equities at 15.5%, cash at 9.4%, and real estate at 3.5%. The club’s bond portfolio is characterised by short duration, investment grade government and corporate bonds. A 9.3% investment return was reported for the club. S&P comments: (report dated 27.1.11) S&P affirmed the club’s A rating and revised the outlook from “Stable” to “positive”. “The outlook revision reflects our view that Gard’s capitalization has strengthened considerably because of both investment gains and, more importantly, continued strong underwriting performance. The ratings are further supported by our view of Gard’s very strong competitive position and strong underlying operating performance.” “The positive outlook reflects our opinion that the ratings may be raised if Gard maintains its strong financial profile over the rating horizon, in particular if Gard’s management continues to demonstrate its ongoing commitment to manage the potential volatility in earnings and capital.” RFIB comments: It is not surprising that Gard has received a lot of support from existing members and new members as the world tonnage has increased. Owned GT has increased by 68% in the last six years and the “churn” has had some effect. However, Gard’s business model is very attractive when its non-mutual activities provide surpluses to the benefit of its mutual members as is evidenced in reduced deferred P&I calls in four out of the last six years. The next measure of its success will be whether it can keep up its close relationships with its members and customers, whilst continuing to grow. Celebrate your renewal: Blom Restaurant, Langbryggen 9, Arendal Drown your sorrows: Barrique Øl og Vinstue, Teaterplassen 1, 4863 Arendal


55.6

16

15.5

9.4

3.5


US bonds

Non-US bonds

Equities

Cash

Real estate

34

1817

10

64 4 3 4

Vessel Type (by GT)(%) Tanker

Bulk

Container

MOU

Gas carriers

Other dry cargoCar carriers

Passenger & cruiseOthers

23

21

18

16

11

11

Geographical Distribution of Mangement (By GT) (%)

Rest of EuropeAsia

Norway

Germany

Greece

Americas

Assuranceforeningen Gard - gjensidig

2010/11 2009/10 2008/09 2007/08 2006/07


Earned calls and premium 463.1 447.6 460.2 406.1 337.1 Net investment income – Gard Group (excl. tax) 140.2 195.4 -292.8 125.3 133.4 Investment return (%) 9.3% 19.0% -24.9% 8.8% 10.7% Reinsurance premiums 86.3 69.9 66.4 59.1 56.1 Net claims paid 293.7 303.6 279.0 282.8 203.2 Net est. liability for o/s claims (gross claims reserve) 797.0 729.8 698.8 720.8 632.0 Total assets – Gard Group 2,352.1 2,111.0 1,666.8 1,930.7 1,731.2 Free reserves/surplus – Gard Group 790.0 638.0 430.0 581.0 512.0 Fund (balance available for o/s claims) – Gard Group 2,048.6 1,839.1 1,598.2 1,835.7 1,637.8 Average Expense Ratio (AER) - five years 12.0% 11.8% 11.4% 7.9% 7.8% Net combined ratio 100.0% 93.0% 76.0% 118.0% 114.0%


Owners P&I – GT (m) 144.6 132.9 127.1 117.1 102.5 Owners P&I - number of vessels 5,300 5,100 5,100 4,900 4,500 Charterers P&I – GT (m) 51.0 52.0 53.0 53.0 48.0 Total owners and charterers P&I 195.6 184.9 180.1 170.1 150.5


Increase (%)

Original Est. Deferred Call

(%)

Current Position on





Japan www.piclub.or.jp Background: The Japan Ship Owners’ Mutual Protection and Indemnity Association was founded in 1950 and celebrated its 60th year in 2010. The General Director is Kenichi Yonetani, and the club is managed by its own staff employed by the club. The head office is in Tokyo with branch offices in Kobe, Fukuoka and Imabari. The club has a liaison office in London providing claims handling. The accounting year of the club is to 31st March. Highlights of the year: With the announcement of a 10% general increase for mutual entries, the Japan club is the only member of the IG to go higher than 5%. For fixed premium entries they announced a 20% general increase for the 2011 policy year, due to a rise in reinsurance premiums. The club levied a 40% supplementary call for mutual entries for the 2009 policy year. The club also requested a 10% payment in advance from members of the scheduled 40% supplementary calls for the 2010 policy year. This 50% combination enabled the club to achieve an “ordinary surplus” of JPY160m for the 2010 resulting balance. “Ordinary income” for the 2010 financial year was JPY19,910m, representing an increase of JPY1,840m from the previous term. This was due to an increase in net premium written to JPY19,230m The club reported net accumulated free reserves of JPY9,710m, was partly due to an increase in its catastrophe reserve. It was not possible for the members to achieve the sought-after reduction in claims at JPY1,100 m, because of the frequency of significant maritime casualties during the year 2010 with the result that the claims performance was worse than for the year 2005. The club will nonetheless continue its Cost-Saving Plan for 2011, as part of a strategy to improve its financial strength. The target for the 2011 year is a reduction of JPY820m in total costs when compared with the year of 2009. An element of the strategy plan is a target of increasing free reserves up to

JPY20,000m by the 2015 financial year. The club advised that the number of claims is still increasing. However the frequency of claims is slower than before. The club reported a record number of seven pool claims during the year. Additionally, the club reported that the 2011 policy year may turn out to be significantly affected by the Japan earthquake of 11 March, 2011. Reinsurance: Since the Association has participated in the pooling system as a member of the International Group P&I Clubs (IG), claim costs exceeding pool are collectively reinsured by the IG General Excess Loss reinsurance programme for ocean-going vessels. The club purchases other forms of reinsurances through insurance market to achieve and maintain stable risk management. Investments: The figure for the return on investments was 1.40%, which represents an increase of 0.06% when compared with the previous year. Interest and dividends received during the year increased by JPY42 m to JPY460 m The Association's investments, other than liquid deposits, are held in fixed-rate bonds. These include Japanese government bonds and corporate and foreign bonds assigned an "A" rating or higher. Securities represent 74.06% and cash deposits 25.94% of the club’s investment portfolio. S&P comments: (Rating as of 28.01.2011) S&P “has affirmed the insurer financial strength rating of The Japan Ship Owners’ Mutual Protection & Indemnity Association (Japan Club) at BBBpi (Good). The rating reflects the club’s strong competitive position, strong free reserves and reserving, good financial flexibility, good operating performance and a conservative investment strategy. These strengths are offset by concentration on an insurance class where claims size and frequency are unpredictable.” “Japan Club’s competitive position is strong. It is ranked seventh of the International Group (IG) members in

terms of tonnage, and eleventh by free reserves. In contrast to most of the club’s peers, over 80% of Japan club’s business is written directly and not sourced via brokers and intermediaries, this being reflective of the Japanese market.” “The combined ratio remained stable at 100% during the year ending March 2010. Japan club continues to have a very conservative investment strategy and is restricted from investing in equities by its regulations. This ensures that the club is not exposed to the significant volatility and losses sustained by its IG peers in recent years, albeit at the expense of lower investment returns.” RFIB comments: Japan club is clearly focused on its domestic market and shipowners in neighbouring countries. Whilst S&P comments that it is not exposed to the same volatility as other IG clubs, equally it has not capitalised on the benefits of when the equity market has been strong. Hence it is not surprising that its free reserve per GT is the weakest within the IG. A good home for its Japanese members but it is unlikely to seek to expand too far away from its domestic base. Celebrate your renewal: Tapas Molecular Bar 2-1-1 Nihonbashi Muromachi, Chuo-ku, Tokyo, Japan Highly exclusive Michelin stared restaurant – only two sittings of 7 people per night Drown your sorrows: 300 Bar 5-9-11 Ginza, Tokyo, Japan 100 cocktails priced at yen300 each, standing room only!


*Might be increased by up to a further 30%

74.1

25.9


Securities

Cash and Deposits

51.4

17.3

11.5

10.24.9

2.81.9

Vessel Type (By GT) (%)Bulk carriers

Tankers

Car Carriers

Container Ships

LPG , LNG Tankers

General Cargo Ships

Others

64.912

4.63.13

2.62.6 1.4 5.8

Georgraphical Distribution of Management (by GT) (%) Panama

Japan

Hong Kong

Singapore

Liberia

Marshall Islands

Bahamas

Korea

Others

The Japan Ship Owners’ Mutual Protection & Indemnity Association

2010/11 2009/10 2008/09 2007/08 2006/07


Earned calls and premium 280.9 231.0 206.8 231.3 165.0 Net investment income 5.5 4.5 5.3 7.1 5.7 Investment return (%) 1.4% 1.3% 1.8% 2.7% 2.6% Reinsurance premiums 49.7 43.4 38.4 48.4 27.7 Net claims paid 154.8 136.6 128.9 131.4 111.8 Net est. liability for o/s claims 275.1 220.5 189.0 164.7 140.7 Total assets 534.2 446.5 397.1 372.9 297.6 Free reserves 125.6 134.4 124.1 117.4 91.5 Fund (balance available for o/s claims) 400.7 354.8 313.1 282.1 232 Average Expense Ratio (AER) - five years 6.3% 6.6% 6.7% 7.2% 7.6% Net combined ratio 90% 100% 100% 85% 111%





(%)

Current Position on



2001 10.0% 20% 10% 0% 1.01 Closed 2002 0.0% 20% 20% 0% 1.10 Closed 2003 10.0% 30% 10% 0% 1.11 Closed 2004 0.0% 30% 30% 0% 1.31 Closed 2005 0.0% 30% 30% 0% 1.31 Closed 2006 0.0% 30% 60% 0% 1.61 Closed 2007 10.0% 30% 30% 0% 1.44 Closed 2008 20.0% 30% 30% 0% 1.73 Closed 2009 12.5% 40% 40% 5% 2.10 Open 2010 12.5% 40% 40%* 5% 2.36 Open 2011 10.0% 40% 40% 5% 2.59 Open 2012 3.0% 40% 40% 5% 2.67 Open


London Club www.londonpandi.com Background: The London P&I Club was founded in 1866. The club is managed by A Bilbrough & Co Ltd, whose managing director is Ian Gooch. Bilbrough has offices in London, Hong Kong and Piraeus. Europe and particularly the Greek market remains a very important sector of the membership. The Asia Pacific region is an increasing area of focus, reflecting its growing influence in shipping. Highlights of the year: The club announced a general increase of 5% for the 2011/12 policy year The tonnage of the club increased reaching a total of 43.8m GT, of which 38.7m GT is owned vessels and 5.1m GT is chartered. Six members joined the club during 2010/11 from China, Hong Kong, Greece, Korea and Italy. Charterers increased by more than 30% from both existing and new members, markedly from the Middle East and China. The club reported an operating result for the financial year was a surplus of USD3.6m. Free reserve totalled USD 145.1m - the highest level in the club’s history. The combined ratio of the club was 119%. For the 2010/2011 policy year, the club experienced an unusually high frequency of expensive P&I cases. There were 16 claims in excess of USD1m – double the number seen in that band at the same point in any of the previous four years. 9 of these claims were described as navigational. The club continues an active loss prevention and reported its concern of what it described as a “tick box” culture where officers appear on paper to comply with SMS guidance but may not do so in practice. The club is giving an increasing amount of attention on the Solvency II regulations which come into effect from 2014. The Solvency II Steering Committee meets on a regular basis to monitor progress and then reports not only to the managers’ board but also to the Finance and Audit Committee. Moreover, it took the decision to apply for participation in the Internal Model Approval Process (IMAP), the system established by the Financial Services Authority (FSA). This process enables UK insurers to develop their own internal capital models, to determine their minimum regulatory capital requirements. Consequently, the

association completed the FSA’s Pre-Application Qualifying Criteria in the last quarter of the year. Geographically, the primary membership spread has remained relatively stable, with Southern Europe representing 40%, Asia 31%, Northern Europe 25% and 4% distributed in different areas of the world. The club’s composition of the entry of owned ships by type was largely unchanged with bulk carriers representing 53% of the tonnage, tankers 25%, containerships 16%, gas carriers 4% and 2% general cargo. The club has one of the largest average GT figures per vessel in the IG. The average expense ratio of the club is 8.7% for 2011, down from 8.9% for the previous year. The untimely death of Maria Tsakos in October 2010 lost the board one of its younger board members. Reinsurance: The club’s Reinsurance Sub-Committee gives considerable attention to achieving the right balance between risk retention and the insulation of the club’s finances from the full effects of adverse claims experience. It has purchased reinsurance protection within the club retention layer to insulate its finances from the full effects of a year in which the aggregate cost of medium and higher severity P&I claims is particularly unfavourable. For 2011/12, the club has in place an excess of loss policy for claims in the layer USD5m of more than USD3m with an inner aggregate in the layer to reflect the expectation of some claims activity above the USD3m attachment point in all but the most benign of claims years. Investment: The Association’s investment return in the 2010/11 financial year was 7.1%, contributing USD24.8m to the operating result net of associated investment expenses. The asset allocation changed slightly over the course of the 2010/11 financial year. The association’s core fixed income holdings, representing 60% of total funds available for investment at the end of the year. Equities accounted for just fewer than 20% at the end of the year. Liquid assets held in cash account totalled 18%. The association’s asset base available for investment is represented by its Bermuda quota-share reinsurer’s third party managed portfolio and assets held within its Hydra Cell, part of the International

Group captive, which are exclusively invested in short duration US Treasury securities. S&P comments: (rating as of 28.1.11) S&P have rated the club BBBpi (Good). It comments that “the rating reflects a good competitive position in a market that retains high barriers to entry, good financial flexibility and good free reserves. These strengths are offset by a marginal operating performance, the high level of investment risk by non life insurance standards and concentration on an insurance class where claims size and frequency are unpredictable. Competitive position is good, despite the club’s relatively small size”. RFIB comments: The board members of the London club arguably have the most input into the management of club compared to other clubs. It is traditional in its approach and offers its members a committed and hands-on claims service, which generally makes its membership feel very comfortable. Hopefully, it has overcome the difficulties which resulted in the unbudgeted calls a few years ago and its members can look forward to a continuing settled period in the next few years. Celebrate your renewal: Rosemary Lane, 61 Royal Mint Street, London E1 8LG Drown your sorrows: The Dispensary, 19a Leman Street, London E1 8EN – could it be better named?


6020

182

Investment Portfolio Split 20.2.11 (%)

Fixed Income

Equities

Cash

Other

53

25

164 2


Bulk carrier

Tanker

Container

Gas Carriers

General cargo

40

31

25

4


(%)

Southern Europe

Asia

Northern Europe

Americas

The London Steam-Ship Owners’ Mutual Insurance Association Ltd

2010/11 2009/10 2008/09 2007/08 2006/07


Earned Calls and premium 113.2 121.0 149.5 103.6 102.0 Net Investment income 24.8 42.7 -39.1 1.0 39.0 Investment return (%) 6.3% 12.2% -15.2% 0% 13.0% Reinsurance premiums 22.5 20.3 20.9 20.1 18.4 Net claims paid 90.7 94.0 82.7 96.0 91.3 Net estimated liability for o/s claims 264.0 253.6 241.6 225.4 218.6 Total assets 422.3 415.4 369.5 316.4 351.1 Free reserves 145.1 141.4 115.5 80.9 110.9 Fund (balance available for o/s claims) 409.1 395.0 357.1 306.4 329.5 Average expense ratio (AER) – five years 8.7% 8.9% 9.4% 8.5% 8.5% Net combined ratio 119.0% 119.0% 119.0% 146.8% 169.6%


Owners P&I – GT (m) 38.7 37.2 39.1 38.6 35.8 Owners P&I - number of vessels 1,160 1,153 1,143 1,008 1,101 Charterers P&I – GT (m) 5.1 3.4 2.6 2.5 1.2 Total Owners and charterers P&I – GT 43.8 40.6 41.7 41.1 37.0


Increase (%)


(%)

Current Position on



2001 10.0% 40% 40% 0% 1.10 closed 2002 27.5% 40% 40% 0% 1.40 closed 2003 25.0% 40% 40% 0% 1.75 closed 2004 15.0% 40% 40% 0% 2.02 closed 2005 12.5% 40% 40% 0% 2.27 closed 2006 12.5% 40% 89% 0% 3.44 closed 2007 7.5% 40% 89% 0% 3.70 closed 2008 17.5% 40% 75% 0% 4.03 closed 2009 15.0% 40% 40% 20% 3.71 open 2010 5.0% 0% 0% 15% 3.89 open 2011 5.0% 0% 0% 15% 4.09 open 2012 5.0% 0% 0% 15% 4.29 open


North of England www.nepia.com Background: The North of England club was established in 1860 and is based in Newcastle upon Tyne. Additionally, the club also has regional offices in Hong Kong, Piraeus and Singapore. Paul Jennings and Alan Wilson are both joint managing directors of North Insurance Management Ltd., a wholly owned subsidiary responsible of the club’s management and its daily operations. North has been the fastest growing club within the IG and has increased its combined owned and chartered tonnage from 35m GT in 2001 to 150m GT in 2011. Over half the membership is in Europe and, of that, a large part is in Greece. Highlights of the year: The club announced a 3% general increase for the 20.2.11 renewal and advised that it achieved its targets by way of a combination of premium and amended terms. The North of England club’s free reserve reached a record of USD312.4m boosted by 30% due to its underwriting performance and positive investment. Premium income for 2010/2011 increased by 10% to USD314m. At 20th of February 2011 the club has reported a positive underwriting surplus of USD55m, resulting a drop in the combined ratio to 79%. The owned P&I GT has increased by 116% over the last six years and is now is 12.1% of the IG’s tonnage. The club’s directors are committed to increasing its share to a minimum of 12.5% of the world’s owned shipping tonnage. Although there has been a period of growth in total owned entered tonnage, the geographical spread of business and the ships type distribution remains in a similar position. Tankers continue to represent the largest proportion 38% of ships entered with bulk carriers representing 28% and containerships 21%. The membership is 55% in Europe, 24% in the Asia Pacific, 13% in the Middle East and 8% in the Americas. The overall claims position for the policy year to February 2011 showed significant improvement, with retained claims of USD161.9m (7,830 claims) compared to

USD253.5m (7,377 claims) in 2009. The average value of claims was USD20,678, down from USD34,373. In terms of numbers of claims by ship type, bulk carriers (29%), container ships (29%) and tankers (18.7%) represent the three biggest groups. Reinsurance: The club protects claims within its USD8m retention. It continues to review the way in which this protection is arranged has resulted in a change to the programme for the 2011/12 policy year by replacing the previous stop loss programme with an excess loss programme that more efficiently meets the requirement to reduce volatility in a cost effective manner, whilst maintaining the club’s longstanding relationships with their reinsurers. Moreover, North also arranges stop loss protection cover for the FD&D class and the war class is fully reinsured through the pooling and reinsurance arrangements of the Combined Group of War Risk Associations. The club continues to offer a range of non-poolable covers using a reinsurance programme, with limits of up to USD750m, which allows for the continuing development of the offshore liability facility as well as comprehensive covers for charterers and a growing range of additional non-poolable covers. Investment: The club‘s investment portfolios contributed a record surplus and a substantial free reserve level. The club’s portfolio continues to be very conservatively positioned with 78.8% of the fund invested in Government Bonds, predominantly US Government Bonds, and 6.9% in cash. The allocation of the risk budget is to absolute return funds, 12.0%, and a small exposure to corporate bonds, 2.3%. Across all classes of business, investments and cash increased by USD99.2m as a result of net investment of USD45.9m, a return on investment of USD17.3m and a further USD36m of positive cash flow. The balance sheet is very liquid. S&P comments: S&P has rated the club A/Stable. (rating as of 10.12.10) “The ratings on The North of

England Protecting & Indemnity Association Ltd. (NEPIA) reflect the club’s strong competitive position, very strong financial flexibility and strong capitalisation. These positive factors are partly offset by the club’s concentration on a volatile insurance class where unpredictable size and frequency of claims constrains the still-good operating performance”. “”We believe that the club will maintain its strong competitive position by carefully managing the growth in its tonnage – expected to be higher than IG average – to ensure that financial strength and member service are not weakened, not the club’s portfolio quality diluted.” RFIB comments: The success of North cannot be denied. It is now a club with over 150 m GT of owned and chartered vessels. It has not charged an unbudgeted call for many years. It differentiates itself from the other clubs by its location in Newcastle. The amount of travel undertaken by the managers, ensures not only it is not forgotten by owners and brokers alike, but that a good number of visitors find their way to Newcastle, where a warm welcome is always found. The only cloud over the club is a perception in the market that members are attracted by competitive terms but who suffer from large increases in subsequent years. However, RFIB’s total rating progression analysis, found elsewhere in this report, shows that based on the level of general increase and supplementary call record, North is in the middle of the IG clubs in terms of average premium per GT. Therefore, if the perception is correct, it can only be based on individual experience. Celebrate your renewal: Jesmond Dene House, Jesmond Dene, Newcastle-upon-Tyne NE2 2EY Drown your sorrows: Flynn’s Bar, 63 Quayside Byker, Newcastle upon Tyne NE1 3DE


5524

138


(%)Europe

Asia Pacific

Middle East

Americas

38

28

21

4 32 4


Tankers

Bulk carriers Container ships Car carriers

LNG

General

Other ship types

79

127 2


Government bonds Absolute return funds Cash

Corporate bonds

North of England P&I Association Ltd

2010/11 2009/10 2008/09 2007/08 2006/07


Earned Calls and premium 314.2 285.1 255.1 213.0 193.5 Net Investment income 15.4 12.0 -28.4 41.5 60.4 Investment return (%) 2.7% 2.1% -4.2% 7.1% 12.5% Reinsurance premiums 59.7 47.6 44.2 34.5 28.6 Net claims paid 156.0 190.5 142.2 162.1 179.7 Net estimated liability for o/s claims 498.0 466.4 452.4 458.8 443.8 Total assets 1030.2 1,029.0 853.8 855.9 771.5 Free reserves 312.4 240.3 211.1 220.0 190.2 Fund (balance available for o/s claims) 810.4 706.7 663.5 678.8 634.0 Average expense ratio (AER) – five years 11.9% 11.4% 10.8% 9.2% 9.1% Net combined ratio 78.8% 94.8% 88.0% 108.0% 127.9%


Owners P&I – GT (m) 105.0 90.0 75.0 65.0 55.0 Owners P&I - number of vessels 3,665 3184 2,941 2,805 2,551 Charterers P&I – GT (m) 45.0 20.0 20.0 25.0 15.0 Total Owners and Charterers P&I 150.0 110.0 95.0 90.0 70.0

P&I Historical Call Performance and Total Rating Progression – Year beginning 20th February General


(%)

Current Position on





Shipowners www.shipownersclub.com Background: Founded in 1855, Shipowners P&I Club (SOP) has offices in London, Singapore and Vancouver. Known as a club for small vessels, it prefers to be recognised as a club for specialist vessels. Indeed, the largest vessel, which is in the offshore sector, is over 40,000GT. The club has the greatest number of entered vessels in the IG, totalling in excess of 29,000. Nevertheless, it is one of the smallest clubs in GT, having 17.7m. As well as providing vessels for limits of cover under the IG, the club also offers a fixed premium cover with a limit of USD500m which is reinsured outside of the IG. The club provides a number of tailor-made covers aimed at the specialised nature of the entered ships. The manager of the club is Shipowners’ Protection Ltd, which is wholly owned by the association. Charles Hume is the Chief Executive. The membership is widely spread throughout the regions of the world. Highlights of the year: The club reduced the additional calls on all open policy years to zero, as well as those for 2010/11 and 2011/12. No general increase was sought for the 2011/12 renewal. As a result of the sanctions against Iran, the club had to terminate the entry of their small Iranian membership. However, the membership of the club grew by 7% during 2010/11. Overall, the resulting underwriting surplus of USD25.2m represents a combined ratio of 85% (2010: 86.7%) Total premium (gross premiums earned) for the year was over USD196m, an increase of 12.9% or USD23m compared to the previous year. The free reserves increased as a result of a good underwriting result, the good operating performance and the strong investment return. At 20th February 2011, they stood at USD187.9m, an increase of 39% or USD52.9m over last year.

A significant organisational change during the year was the rationalisation of activities between the club’s three branch offices. There have been consequential changes in the London branch. With the migration of Asian business to Singapore, and North American and Canadian business to Vancouver, the London branch focuses on the other areas of the world. Entered tonnage increased by 9.5%, vessel numbers advanced by 8.4%. Overall tonnage increased to 17.7m GT. The membership is widely geographically spread with 42% in Asia Pacific and 21% in Europe. Tonnage distribution by vessel type is 34% barges, 17% offshore, 13% harbour and 12% each for dry cargo and tankers. The wide diversity of vessel type and their geographical distribution provides a nature hedge against the volatility which other IG clubs are more likely to experience. Claims in the 2010/11 policy year showed an overall improvement over the previous year. The total incurred value of claims divided by the tonnage entered in the club, showed a fall in cost per ton of 30% when compared to the previous year at the same stage of development – a 13% decrease in the number of claims reported. The improvement is a reflection of fewer claims overall and, significantly fewer high value claims. The average expense ratio for the club is considerably higher than other IG clubs in view of the large number of entered ships relative to the premium. For the five years ended 20th February 2011, the ratio was 19%. Reinsurance: The club arranges fundamental reinsurance protection, with International reinsurance markets, above USD500,000 up to the pool retention of USD8m each claim. It also retains only a small portion of claims described as non-poolable (such as the contractual risk or claims arising from specialist operations) which is important to the club’s mutual membership who, by sharing risks, do not undertake such specialist operations. The SOPs’ fundamental P&I reinsurance programme is structured on a layered basis. It retains a significant part of the risk through the

application of annual aggregate deductibles, traditionally associated with an excess of loss reinsurance structure. Investment: The club’s invested assets managed by Berenberg together with cash resources have increased in value by USD70.6m (investments USD25.5m and liquid funds increase USD45.1m) to USD448.3m. At year end, asset mix for invested and club managed funds stood at 75% fixed income assets or cash and 25% equities. Investments gave the club a return of 6.8% on capital or USD27.6m. S&P comments: (rating as of 28.1.11) S&P has rated the club BBBpi (Good). “The rating reflects the club’s good competitive position, good financial flexibility, good free reserves and good operating performance. These strengths were offset by a high level of investment risk and concentration on an insurance class where claims size and frequency are unpredictable.” “The club retains a good competitive position within this niche market although it is experiencing increased competition from fixed premium and local market P&I providers.” RFIB comments: Shipowners’ is the market leader in the mutual market for its chosen sector. Other mutual clubs are now competing with it, as is the fixed premium market. But the high service levels and extensive contractual liability cover offered means that the others are still playing catch-up. The club was unlucky to lose its A rating with S&P during the financial crisis due to what the rating agency said was a more risky investment strategy. The club is confident that the A rating will be regained shortly. Celebrate your renewal: Caravaggio, 107-112 Leadenhall Street, London EC3A 4DP Drown your sorrows: The Wine Library, 43 Trinity Square, London EC3N 4DJ


75

25


Fixed income assets or cash

Equities

34

1713

12

125 5 2


Barges

Offshore

Harbour

Dry cargo

Tanker

Passenger

Fishing

Yacht

42

21

9

95

51 8


(%) South East Asia & Far East Europe

Central & South America Middle East & India

Canada & USA

Australia, New Zealand & South Pacific Africa

Rest of the world

The Shipowners Mutual P&I Association (Luxembourg)

2010/11 2009/10 2008/09 2007/08 2006/07


Earned Calls and premium 200.3 181.7 169.5 146.5 130.6 Net Investment income 27.6 41.6 -60.8 24.7 34.0 Investment return (%) 6.8% 12.5% -15.0% 6.8% 11.1% Reinsurance premiums 23.0 24.2 18.9 21.5 17.9 Net claims paid 96.9 101.7 107.7 83.8 61.0 Net estimated liability for o/s claims 242.8 232.6 216.5 239.1 196.0 Total assets 552.3 479.0 457.6 494.5 418.6 Free reserves 187.9 135.3 95.6 123.7 129.7 Fund (balance available for o/s claims) 430.7 367.9 312.1 362.8 325.7 Average expense ratio (AER) – five years 19% 19% 19% 17% 17% Net combined ratio 85% 101.5% 77.7% 123.9% 127.0%


Owners P&I – GT (m) 17.7 16.6 15.9 15.3 13.9 Owners P&I - number of vessels 29,000 28,200 28,400 28,600 26,700 Total Owners and Charterers P&I 17.7 16.6 15.9 15.3 13.9



(%)

Current Position on





Skuld www.skuld.com

Background: Founded in 1897 in Oslo, Skuld’s head office is in Oslo. It also has offices in Aberdeen, Bergen, Copenhagen, Hamburg, Hong Kong, London, Moscow, New York and Piraeus. The president & CEO is Douglas Jacobsohn. The club still has a significant membership in Scandinavia. However, it has expanded in a number of regions in recent years, such as Western Europe, Russia, Singapore, China including Hong Kong and the United States. In November 2010 the club launched a marine and energy syndicate (number 1897) at Lloyd’s. The club provides a comprehensive insurance package in which Skuld P&I work together and coordinates with Skuld 1897 at Lloyd’s and Skuld Offshore. Highlights of the year: In September 2010, Skuld announced that it would no longer make a “general increase” but the rating of members would be judged individually and on their merits. The club has increased the entry for owned P&I by 100% over the last six years. Skuld made a record USD65m surplus to lift its free reserve to USD267m during the last year. Moreover, the club’s final technical result ended with a surplus of USD31m, an increase of USD20m compared to the last year, equating to a combined ratio of 88.8%. The club has always had a significant amount of charterer’s liability insurance and by the end of the policy year; the total entered tonnage grew to 120m GT of which nearly half is chartered tonnage. The owned tonnage of the club is well spread geographically, in which Europe, including Scandinavia, remains the largest market with 39.4m followed by Far East with 20.1m GT The club’s composition of the entry of owned ships by tonnage type is diversified; tankers represent 30.2m GT, bulk carriers 16.9m GT, containerships 6.6m GT and general cargo 6.3m GT. Free reserves rose to USD266m from USD202m in the previous year.

The club experienced a high number of large claims in the first quarter of 2010/11, but this did not continue in the subsequent three quarters. This turned the technical result from negative to positive by the end of the year. Positive adjustments on claims from earlier policy years, especially policy year 2009, have also had a positive impact on the technical result. Skuld has had one Pool claim in 2010. The opening of Skuld 1897 syndicate, which is partnership with two minority partners, highlights the desire of the club to widen its product range. This was foreshadowed by its re-entry into the offshore field. The syndicate is now offering hull and hull related cover, cargo, energy and ports & terminals insurances. The club’s strategy to expand by developing new products beyond P&I is aimed at achieving a multiple income platform and to build a solid capital base. Danish Defence Club (DDC) was managed by many of the Skuld staff in Copenhagen and to some extent it competed with Skuld’s own FDD cover. In November 2010, it was announced that Skuld would take over DDC. The club announced in June 2011 that it would be measuring its success by premium volume and profitability rather than by tonnage.

Reinsurance: The club’s buys an excess of loss policy of USD3m excess of USD5m within its USD8m retention. A separate protection covers the higher limits offered by the club for non-poolable, charterers' combined, and offshore risks. Investment: The club has continued with a moderate risk profile on investments in order to protect the club from unhealthy volatility. Reducing investment risk has been identified by the club as the quickest and easiest way to reduce overall risk exposure. Consequently, the club achieved a 5.8% investment return, contributing an income of USD37m. The club applies an Enterprise Risk Management based approach to its investment policy. The club’s fixed income forms 74% of the total investment shares, equities represent 15%, cash is 8%, alternative investments 2%, and 1% in commodities.

S&P comments: (rating at 21.6.2011) S&P has rated the club A- but improved the outlook from stable to positive. In its view, Skuld “continues to outperform its peer group in terms of its underwriting performance”. However, S&P says that it has a “lower level of reserving relative to its peers” which it attributes to “Skuld’s policy of settling claims with the minimum of delay”. It states that the average settlement duration is 2.5 years which lower than the IG average. RFIB comments: Skuld has continued to produce excellent technical results, which must be the envy of many other clubs. Skuld has now made a surplus for eight consecutive years. Skuld’s claims department is highly motivated to settle claims quickly but in a cost effective way. Its service allows for swift and proactive decision-making to help its members who suffer major casualties. It has an aversion to open claims files collecting dust!! The formation of Skuld 1897 syndicate gives the club a quick route to diversification. It is a brave step, but if it can build its business through its contacts with the club’s members, it may have found a route to profitability which other Lloyds’ syndicates may admire. However, Skuld is increasingly looking like a business rather than a mutual.

Celebrate your renewal: Theatercafeen, Hotel Continental, Stortingsgaten 24-26 Oslo N-0117 Drown your sorrows: Bar 1, Stranden 1B, Aker Brygge. Allegedly has over 440 different types of cognac and 120 whiskies!!


# In September 2010, Skuld announced that it would no longer make a “general increase” but the rating of members would be judged individually and on their merits

74

15

8 2

1


Fixed Income Equities

Cash

Alternative investments Commodities

45

28

9

112 5

Vessel Type (GT) (%)

Tankers

Bulk carriers

Containerships

General Cargo

Passenger

Others

36

31

12

116 4

Geographical Distribution of Management (%)

Europe

Far East

Norway

Rest of Scandinavia Americas

Others

Assuranceforeningen SKULD (Gjensidig)

2010/11 2009/10 2008/09 2007/08 2006/07


Earned Calls and premium 272.4 255.4 212.2 192.7 174.1 Net Investment income 37.0 52.1 -73.1 8.7 33.7 Investment return (%) 5.8% 12.4% -14.9% 4.5% 8.0% Reinsurance premiums 32.3 26.5 23.4 20.0 19.0 Net claims paid 149.7 127.6 141.0 123.1 109.8 Net estimated liability for o/s claims 367.5 333.2 273.2 280.9 260.0 Total assets 671.1 567.3 441.5 504.9 468.1 Free reserves 266.4 201.5 144.0 203.5 191.4 Fund (balance available for o/s claims) 633.9 534.7 417.1 484.4 451.4 Average expense ratio (AER) – five years 12.1% 12.2% 12.7% 10.4% 10.9% Net combined ratio 88.8% 95.8% 93.2% 96.5% 95.7%


Owners P&I – GT (m) 62.6 55.0 45.2 41.3 34.8 Owners P&I - number of vessels 3,778 3,854 3,292 3,077 2,804 Charterers P&I premium volume in USD 52.6 48.2 49.8 52.3 46.9



(%)

Current Position on





Standard Bermuda www.standard-club.com Background: Founded in 1885, the club is managed by Charles Taylor Co. (Bermuda) who delegates day-to-day administration to Charles Taylor & Co. Ltd. in London. The main offices of the managers outside of Bermuda are in London, Tokyo, Singapore, Piraeus and New York. Charles Taylor is a subsidiary of Charles Taylor Consulting PLC which is listed on the London Stock Exchange. The group includes a number of insurance related businesses including Richards Hogg Lindley which is the largest marine average adjuster. The chief executive of Charles Taylor & Co is Alistair Groom who is also a director of Charles Taylor Consulting PLC. There have been a number of different mutuals within the Standard “family” including Standard Bermuda, Standard Europe, Standard London, Standard War Risks and Standard Asia. The businesses are now being streamlined to reduce the overall regulatory capital requirement, the regulatory burden and cost. All insurance businesses will be put into Standard Europe, except Standard Asia, whilst Standard Bermuda will become a holding company. The proposed changes should be completed by the end of 2011. The membership of the club is 52% European with strong representation in Greece, Italy, Germany and UK. 20% of the tonnage is from the Asia Pacific region. Compared to the world tonnage, Standard is overweight in US tonnage, which represents 13%, with an additional 7% in Canada. The club has increased its tonnage by 99% between 2006 and 2011. The tonnage distribution by vessel type is 30% tankers, whereas containerships and general cargo vessels make up 26%. Dry bulk stands at 21% and offshore at 14%. The last 9% is passenger, ferry and other. Highlights of the year: The general increase was set at 3.5%, as claims inflation still remains an issue. The managers advised that the renewal that it achieved a little over 2%. The club produced a combined ratio of 91% during the financial year (improved from 99% in 2010). The underwriting result was USD18m, and represents a surplus for the third successive financial year. Investment income contributed USD56m, creating a surplus of USD74m for the year (2010: USD67m). Free reserves increased from USD243m to USD317m, and are within the strategic range set by the board.

During the year, entered tonnage increased by approximately 12% from 110m GT to 123m GT, of which 38m GT was Charterer’s business. Standard experienced an overall increase in both paid and estimated claims with total estimated claims liabilities reaching USD453m. The club reported three Pool claims in 2010/11 including the largest claim being MSC CHITRA which grounded off Mumbai following a collision. The club is now in debit to the Pool and, with its increase in tonnage, it now faces increased contributions to the Pool. Over the last 12 months the club has implemented a Solvency II plan, the biggest issue at hand for the club, by introducing a more formal system of corporate governance. A newly-formed Audit and Risk Committee will evaluate, control and identify risk. The Member Risk Review programme introduced in 2008 is still a major tool in ensuring that shipowners entered in the club have a safety management system of a standard acceptable to the club. The average expense ratio of the club was 13.3% (2010: 13.3%) Reinsurance: The club’s philosophy is not to rely on extensive reinsurance but to rely on its reserves to even out underwriting results. However, it does reinsure against larger claims within its retention, principally with Tokio Marine and Nichido Fire Insurance Co. Investment: The club’s investment portfolio asset allocation changed during the year to reflect a more conservative strategy in view of the volatility of the investment markets. Standard holds 25% of assets in equities and 25% in corporate bonds. 36 % are sovereign bonds, 8% in cash, and alternatives make up 5%. The club has reduced its holding in gold from 5% to 1%, commenting on the move by stating that it is comfortable taking a profit rather than “hanging in there”. The overall investment return was 9.9% for 2010/2011 (2010: 18%) S&P comments: (report dated 17.1210) S&P has rated the club A/Stable. “The ratings on Standard Steamship Owners’ P&I Association (Bermuda) Ltd (SB of “the club”) are based on its very strong competitive position, very strong financial flexibility (defined as the balance between capital requirements and sources) and strong capitalization. Offsetting these strengths is SB’s

investment strategy, which remains aggressive”. “The stable outlook reflects our expectation that the club will maintain its very strong competitive position and financial flexibility. We expect that further reserve releases from prior years will contribute again to this result.” “We see less risk of immediate downward pressure on the ratings than in 2009 and before, because the investment risk tolerance has been reduced, although investment losses remain the likeliest cause of a shock. The club enjoys a high rating for a traditional P&I club and we do not expect to see upside in the rating in the medium term.” RFIB comments: Standard is a high quality club which has nearly doubled in size over the last six years. Inevitably, it has suffered from the “churn” but has still managed to provide a surplus of the third consecutive year. It has a strong presence in the markets in which it operates and is now expanding in the Middle East. A club which is in the top division but does how far will it seek to move further up that division? Celebrate your renewal: The River Restaurant, The Savoy Hotel, The Strand, London WC2R 0ET Drown your sorrows: El Vinos, 47 Fleet Street, London EC4Y 1BJ


36

25

25

85

1


Sovereign BondsCorporate Bonds Equities

Cash

Alternatives

Gold

30

26

21

147


Tanker

Container and General Cargo Dry Bulk

Offshore

Passenger and Ferry

13

11

9

97

23

20

8

Geographical Distribution of Management (By GT) (%)

USA

Greece

Italy

Germany

Canada

Rest of Europe

Asia Pacific

Rest of world

Standard Steamship Owners’ P&I Association Ltd

2010/11 2009/10 2008/09 2007/08 2006/07


Earned Calls and premium 266.3 250.3 205.1 168.9 152.4 Net Investment income 56.2 65.8 -83.9 24.0 61.9 Investment return (%) 9.9% 18% -17.4% 8.6% 12.1% Reinsurance premiums 64.1 48.1 31.2 36.5 32.0 Net claims paid 140.5 148.2 125.0 158.9 122.3 Estimated liability for o/s claims 452.9 427.6 391.6 402.1 426.4 Total assets 1,002.5 890.7 712.9 814.8 804.0 Free reserves/surplus 316.6 242.6 175.4 225.9 217.2 Fund (balance available for o/s claims) 769.5 670.2 567.1 628.0 643.5 Average expense ratio (AER) – five years 13.3% 13.3% 13.6% 10.6% 10.5% Net combined ratio 91.0% 99.0% 76.0% 115.0% 134.0%





(%)

Current Position on



2001 7.5% 25% 25% Closed 1.08 Closed 2002 25.0% 0% 0% Closed 1.35 Closed 2003 25.0% 0% 0% Closed 1.69 Closed 2004 20.0% 0% 0% Closed 2.03 Closed 2005 12.5% 0% 0% Closed 2.28 Closed 2006 5.0% 0% 0% Closed 2.39 Closed 2007 5.0% 0% 0% Closed 2.51 Closed 2008 15.0% 0% 0% Closed 2.89 Closed 2009 15.0% 0% 0% 5% 3.32 Open 2010 3.0% 0% 0% 10% 3.42 Open 2011 3.5% 0% 0% 15% 3.54 Open 2012 5.0% 0% 0% 15% 3.72 Open


Steamship Mutual www.simsl.com Background: The two associations Steamship London (established in 1909) and Steamship Bermuda (underwritten risks since 1975) make up the Steamship Mutual, which is managed by Steamship Insurance Management Services Limited. Members are also automatically members of the Steamship Mutual Trust. The CEO is Gary Rynsard. The clubs have a regional and syndicate structure. The regional offices in London, Hong Kong and Rio provide most of the day to day services required by members, as well as an office in Bermuda. Nearly 70% of the membership of the club is split between the Far East at 35.7% and Europe at 32.5%. North America makes up 14.8%, Latin America 9.3% and a 7.7% membership in the Middle East & Indian Subcontinent. Gross tonnage by vessel type is 33.8% bulk carriers, 24.7% tankers, 18.4% container ships, and 13.8% cruise and ferry. General cargo and others make up the remaining 9.3%. Highlights of the year: The club decided not to charge a general increase at the renewal. The overall level of premium for renewing owned business fell by just under 0.7%, and was within the targets set by the Board. With a combined ratio of 92.1%, the underwriting performance showed a surplus of USD21m. The combined free reserves as at 20th February 2011 stood at USD303.3m, an increase of USD51.75m. The gross premium totalled USD316m (2010: USD305.4m) Steamship Mutual, being the club most seriously hit by the recent sanctions within the P&I industry against Iran, decided that renewal terms should not be offered to the club’s remaining Iranian members. Despite this departure of business, tonnage maintained and overall tonnage increased from 83m GT to 92m GT during the year to 20th of February 2011. Owned entered tonnage increased from 52.8m GT to 57.8m GT.

Attritional claims increased by over 8% in overall cost. The value of large claims decreased, and the club only experienced one pool claim in 2010, just in excess of the retention level. Net paid claims during the financial year amounted to USD174.2m, a 3.9% decrease from the previous year (2010: USD181.23m) Net outstanding claims rose by USD31.79m to USD534.56m, a 6.3% decrease from 2010. Gross claims arising in the 2010/11 policy year, are projected to be USD242.92m, a decrease of 5.2% over 2009/10 (USD256.11m). The club had one Pool claim in 2010/11. The club operates an abatement layer in its retention of USD8m each claim. This is split into two sections. 80% of claims arising in the first layer, from USD1.8m to US$5m, will be borne by the membership as a whole, and the remaining 20% will form part of the member’s individual record. Claims arising within the second layer, from USD5m to USD8m, will be abated 100% and will not be taken into account in the member’s record. The average expense ratio of the club was 12%. Reinsurance: The club’s approach over recent years has been to protect the retention from volatility with reinsurance. Consequently it is an opportunistic buyer of reinsurance and hence the level of risk that it retains can change from year to year. Investment: The club’s investment portfolio was altered during the year, as a decrease in government and corporate bonds made way for an increased allocation to cash and deposits. 51% of the club’s assets are held in government bonds, 12.5% in corporate bonds, whereas cash and deposits represent 25.6% of the portfolio. Alternative investments stand at 7.8%, equities at 2.3% and property at a modest 0.8%. The combined gain on investment amounts to USD32.9m (3.8%), and the overall total of cash and investment rose by USD103.17m (14.3%) to USD824.17m.

The overall return on investments was higher than expected, boosted by unrealised gains in the matching portfolio of government bonds. The club’s portfolio remained defensively positioned and consequently risk was well below budget. S&P comments: (report dated 12.1.11) S&P has upgraded the club’s rating to A-/Stable. “The ratings also reflect Steamship’s strong capitalization and strong competitive position, which is supported by the high barriers to entry to the protection and indemnity (P&I) insurance sector. These positive factors are partly offset by the club’s concentration on a volatile insurance class where the unpredictable size and frequency of claims constrain the improving operating performance”. “The outlook reflects our expectation that Steamship’s capitalization and competitive position will remain strong. We expect the club to maintain its underwriting discipline to minimize volatile operating performance by achieving its targeted three-year average combined ratio of below 100%.” “Upside potential for the rating is regarded as unlikely over the rating horizon, although we do not exclude this possibility over the long term should the club establish a longer track record of underwriting discipline and maintaining strong capitalization.” RFIB comments: Steamship has weathered the financial storms of the last decade and is in good shape. It has received an uplift from S&P and whilst it has grown by 48% in the owned tonnage in the last six years, its premium has kept pace with the increase in tonnage. Consequently, it has not been affected badly by the “churn”. Its loss of its Iranian business, caused by the imposition of sanctions, preventing it being unable to offer renewal, was unfortunate but now worse. Celebrate your renewal: Catch, 40 Liverpool Street, London EC2M 7QN Drown your sorrows: Grapeshots, 2-3 Artillery Passage, London E1 7LJ


51

25.6

12.5

7.8

2.3 0.8


Government bonds

Cash and deposits

Corporate bonds

Alternative investments

Equities

Property

33.8

24.7

18.4

13.85.6

3.7


Bulk carrier

Tanker

Container

Cruise and ferry

General cargo

Other

35.7

32.5

14.8

9.37.7

Geographical Distribution of Management (By GT) (%)

Far East

Europe

North America

Latin America

Middle East & Indian Subcontinent

The Steamship Mutual Underwriting Association (Bermuda) Ltd

2010/11 2009/10 2008/09 2007/08 2006/07


Earned Calls and premium 316.1 305.4 300.4 258.5 227.1 Net Investment income 32.9 45.1 -97.1 26.7 54.1 Investment return (%) 4.4% 7.9% -16.3% 4.0% 9.2% Reinsurance premiums 48.5 43.9 41.7 39.5 30.3 Net claims paid 174.2 181.2 186.8 215.3 164.4 Estimated liability for o/s claims 534.6 502.8 481.1 473.9 505.6 Total assets 1,051.9 1,016.7 960.4 912.8 862.0 Free reserves 303.3 251.6 187.7 185.8 158.1 Fund (balance available for o/s claims) 837.9 754.3 668.8 659.7 663.8 Average expense ratio (AER) – five years 12.0% 11.8% 11.6% 10.2% 12.8% Net combined ratio 92.1% 91.9% 89.9% 97.9% 126.0%




Increase (%)


(%)

Current Position on



2001 10.0% 0% 40% 0% 1.54 Closed 2002 25.0% 0% 0% 0% 1.38 Closed 2003 25.0% 0% 0% 0% 1.72 Closed 2004 20.0% 0% 0% 0% 2.06 Closed 2005 12.5% 0% 0% 0% 2.32 Closed 2006 5.0% 0% 12.5% 0% 2.74 Closed 2007 9.0% 0% 14% 0% 3.03 Closed 2008 15.0% 0% 20% 0% 3.66 Closed 2009 17.5% 0% 0% 5% 3.59 Open 2010 5.0% 0% 0% 15% 3.77 Open 2011 0.0% 0% 0% 20% 3.77 Open 2012 5.0% 0% 0% 20% 3.96 Open


The Swedish Club www.swedishclub.com Background: Founded in 1872, The Swedish Club (TSC) has its headquarters in Gothenburg and has offices in Oslo, Piraeus, Hong Kong and Tokyo. Originally founded as a hull insurer, the club has been insuring P&I risks for over 100 years. The Oslo office is newly established and underwrites physical loss risks for mobile offshore units and FPSOs, The Swedish club’s Managing Director is Lars Rhodin. The Swedish Club Academy AB, of which the club’s ownership is 50%, develops the club’s Maritime Resource Management programme. Nearly 2/3rds of the membership of the club is drawn from Europe with another 1/3rd from Asia. Unlike most clubs which account to 20th February, The Swedish Club accounting year commences on 1st January. Highlights of the year: A general increase of 2.5% was announced for the 2011/2012 policy year, and the club reported that the outcome of renewals was in line with expectations. Membership in 2011 has substantially increased, with 12 new members as of April 2011. The USD29.5m operating surplus of the club was made up by USD17.7m from underwriting and USD11.8m in investment income. The net combined ratio for the club improved in 2010 to 87% (2009: 94%). From this result, free reserves at 1st January 2011, stood at a record level of USD151.2m. TSC has a substantial entry from Greece and Germany as well as a significant membership in the Asia Pacific region. Containerships/ro-ros make up 40% on the entry with bulk carriers and tankers contributing 23% each. An increase from 43.1m GT to a total of 48.7m GT was reported in May 2011. The total entered tonnage was split between 31.8m owner’s P&I. and 16.9m charterer’s

P&I. The growth of tonnage has been a continuing trend for the club, and as of 1 July 2011, the total had reached 49.2m GT. The club cannot be accused of lack of activity. It has acquired a customised risk-based internal capital model (ICM) which it states will "go far beyond the basic requirement for compliance with Solvency II”. The club has reorganised its internal structure by merging the two teams in Gothenburg into one. TSC has been free of Pool claims since 2007. During 2010, it reported that it experienced fewer large claims, but more small claims than expected. The club had an average expense ratio (AER) of 11.6%. Reinsurance: The club’s current reinsurance programme was introduced at the start of the 2010/11 policy year. USD2 million each claim is retained by the club. Whilst 25% of the reinsurance excess of USD2m is placed on a more conventional basis, 75% is placed with the club retaining up to USD8m per claim up to annual aggregate limit of USD30m after which the reinsurance takes effect. If the claims are unexpectedly large, as in a poor claims year, the reinsurance responds when claims in this layer exceeds USD30m. The net benefit is a considerable reduction in reinsurance cost. Investment: Throughout the year, TSC’s portfolio increased in size from USD239m to USD297.5m (24.5%), as of 1 June 2011. This increase can be attributed to a combination of new assets purchased and the value of existing assets rising. Minor changes to the club’s investments strategy were implemented during 2010, causing the equity portfolio to increase by 40%, from USD44m to USD61m. The club’s portfolio generated an overall investment return of 5%. The portfolio can be considered “traditional” in character with no exposure to hedge funds, commodity

funds or private equity funds. At the year-end, the club had USD237m invested in fixed income products – the majority being in US government bonds or treasuries. 86% of the TSC’s holdings are in AA or AAA- rated bonds. The investment portfolio is made up of 70% bonds (USD) and 9% bonds (EUR). Equities stand at 21%. S&P comments: (rating as of 5.8.11) S&P improved the rating of TSC from BBB/Stable to BBB/Positive. “The ratings reflect our view of the club’s strong capitalization, good competitive position and good financial flexibility (defined as the ability to source capital relative to needs). These positive factors are partially offset by: the club’s historically marginal, albeit improving, operating performance; and its concentration on a sector of the insurance market in which claims size and frequency are unpredictable.” RFIB comments: TSC is much changed and improved under its reshaped management team. It has grown its P&I tonnage sensibly to the extent that it is almost no longer a small P&I club and it joining those of a medium size. However, the club offers hull and related insurances which makes it a much bigger mutual. The future of TSC is interesting as it has a good spread of business in the different classes of marine insurance. This is something the rating agencies appreciate, as is evidenced by the uplift in rating by S&P. Other P&I clubs may follow the club’s focus on diversification. That said, the warm cosy atmosphere of the club is more suited to the smaller to medium sized owners, rather than the big corporate companies. Celebrate your renewal: Kock & Vin: Viktoriagatan 12 411 25 Gothenburg After being rewarded International Master Class, it consolidates its reputation as Gothenburg’s best restaurant. Drown your sorrows: Palace: Sodra Hamgatan 2, Gothenburg Watch Gothenburg pass by!!


70

21

9


Bonds USD

Equities

Bonds EUR

40

23

23

9 41


Container/RoRo

Bulk Carrier

Tanker

General Cargo

Passenger

Other

33

30

29

6 2

Geographical Distribution of Management (By GT) (%)GT per market excluding chaterer's P&I,

per 1 May 2011Asia

Southern Europe

Northern Europe excl. Sweden Sweden

Middle East

The Swedish Club (Sveriges Anfartygs Assurans Forening)

2010/11 2009/10 2008/09 2007/08 2006/07


Earned Calls and premium 160.1 150.0 192.4 135.5 120.2 Net Investment income 13.5 9.1 -25.7 21.9 23.2 Investment return (%) 5% 5% -11.0% 10% 9% Reinsurance premiums 33.4 45.8 55.8 44.5 38.2 Net claims paid 62.5 71.1 91.7 79.8 78.8 Estimated liability for o/s claims 155.5 134.7 125.0 142.1 123.3 Total assets 425.1 372.0 439.8 429.4 426.8 Free reserves 151.2 121.7 106.8 99.7 102.0 Fund (balance available for o/s claims) 297.5 237.4 185.3 219.8 209.8 Average expense ratio (AER) – five years 11.6% 11.4% 10.9% 9.2% 9.1% Net combined ratio 87% 94% 76% 127% 115%


Owners P&I – GT (m) 30.9 25.9 24.5 25.1 22.2 Owners P&I - number of vessels 994 891 884 910 803 Charterers P&I – GT (m) 16.1 13.4 13.9 14.0 2.8 Total GT ‘000,000 47.0 39.3 38.4 39.1 25.0


Increase (%)


(%)

Current Position on





UK Club www.ukpandi.com Background: The United Kingdom Mutual Steam Ship Assurance Association (Bermuda) Limited (UK club) was founded in 1869. The club is managed by Thomas Miller, whose chairman is Hugo Wynn-Williams. The manager’s network includes a head office in London and regional offices in San Francisco and New Jersey (USA), Piraeus (Greece), Hong Kong, Singapore, Tokyo (Japan) as well as representative offices in Beijing and Shanghai (China). The club has a substantial membership in Europe and in the Asia Pacific region. Unlike any other club, the UK club does not cover FDD risks which are offered by UK Defence Club, which is another mutual managed by Thomas Miller. A number of other mutual’s including the Through Transport Club, International Transport Intermediaries Club, Hellenic War Club and UK War Risks Club are also managed by Thomas Miller. Highlights of the year: The club’s board agreed a general increase of 5 per cent for 2011. The UK club increased its capital and free reserves from USD409 m last year to USD478m, inclusive of the USD100m perpetual subordinated loan. Additionally, the club reported to have USD1.6 billion in total assets. 65% of the owned fleet is less than 10 years old and a third of the total is less than five years. The improved underwriting discipline and prudent claims reserving undertaken by the club generated a combined ratio of 98%. The UK club’s owned tonnage totalled approximately 105m GT and a further 80m GT of chartered tonnage was entered during the year. The club’s composition of the entry of owned ships by type is well diversified, in which bulk carriers represent 33% of the tonnage, tankers 29%, containerships 15%, gas carriers 12%, passenger ships 3% and car carrier / Ro-Ros 2%. In terms of claims, the decline in the volume of world trade in 2009 and 2010 has had a beneficial impact on the number of claims reported to the club. The reported claims in the 2009 policy year were 25 per cent lower than the claims reported for the 2007 policy year. However, the rise in the average value of claims reported last year has continued without any reduction and

has almost doubled from USD17,800 in 2000 to USD29,100 in 2010. The 2010 year is not showing increase in claims at this early stage. Additionally, the club has set a conservative claims reserve for the year to reflect the relative uncertainty of the outcome. Reinsurance: The International P&I Reinsurance Company Ltd (IPIR) is a wholly owned subsidiary of the Association whic h is responsible of reinsuring 90% of the retained protection and indemnity risks of the association. The policies put in place for the 2010 policy year were successfully renewed for the 2011 policy year. This new programme was designed to protect the club against materially adverse aggregation of claims at lower levels both within the club retention and at Pool level. The reinsurance of the charterers’ programme was also successfully concluded on favourable terms. This reinsurance programme safeguards the club against a significant uplift in claims within the club’s own $8m retention under the Group pooling arrangements. It also gives an additional protection against claims at the Pool level and furthermore protects the club against a single very large loss. Investment: The club’s investment return was 6.2% generating approximately USD70m investment. The club’s portfolio was diversified globally and positions in the UK, Europe, Japan and emerging markets were added. There were no significant changes to the club’s portfolio weightings during the year. The club’s investment strategy was to reduce the level of cash due to its low return. This was done with the selective purchases of corporate bonds and an increased equity weighting, mostly by way of exchange traded funds. Fixed Interest forms 54% of the club total investment portfolio, cash 21%, equities 17% and 8% as absolute return funds. Within the portfolio, the fixed interest and absolute return fund elements performed well against their respective benchmarks, with equities lagging slightly. S&P comments: (rating as of 10.12.10) S&P has rated the club A-/Stable. “The ratings on Bermuda based insurer The United Kingdom Mutual Steamship Assurance Association (Bermuda) Ltd.

reflect the club’s strong capitalisation. Partially offsetting these strengths are the club’s marginal operating performance and its high level of investment risk compared with insurance industry norms.” S&P continues “While the club has limited the negative effect of its recent unbudgeted calls, we believe that these calls have curtailed its opportunities from growth”. It said that “....some of the club’s peers which have not made such calls have increased their owned tonnage substantially recently.” However, it “...views the club’s underwriting performance as marginal, but we also acknowledge that it has been taking corrective actions over the last 18 months. Nonetheless, the full effect of these actions still remains to be seen over the rating horizon.” RFIB comments: For many years, UK club was the largest P&I by a long way. It is now the third largest but is regrouping and will no doubt rebuild. It is working hard to improve its underwriting results and achieved a net combined ratio of 98% in 2010/11. Its claims service remains well respected and it is due to its close relationship with its members, that it has suffered less in terms of size of membership in comparison to its peer group. Celebrate your renewal: Caravaggio, 107-112 Leadenhall Street, London EC3A 4DP Drown your sorrows: Corney & Barrow wine bar, 37 Jewry Street, London EC3N 2EX .


54

21

17

8


Fixed Interest

Cash

Equities

Absolute return Funds

33

29

15

1232 6


Bulk Carrier

Tanker

Container

Gas Carrier

Passenger

Car Carrier / RoRo Other

46

36

126

Geographical Distribution of Management (%)

Europe, Middle East & Africa

Asia - Pacific

America

Other

The UK Mutual Steam Ship Assurance Association Ltd

2010/11 2009/10 2008/09 2007/08 2006/07


Earned Calls and premium 364.8 447.2 420.4 386.0 358.4 Net Investment income 69.5 78.7 -56.2 64.3 76.9 Investment return (%) 6.2% 8.2% -6.0% 6.5% 9.0% Reinsurance premiums 70.2 75.9 78.4 74.1 78.3 Net claims paid 239.4 329.7 308.8 304.9 266.3 Estimated liability for o/s claims 808.7 797.7 807.5 763.2 706.7 Total assets 1,600.0 1,562.1 1,404.8 1,137.4 1,199.6 Free reserves (inc subordinated loan) 478.0 409.3 333.5 228.9 262.5 Fund (balance available for o/s claims) 1,287.0 1,207.0 1,140.9 992.1 969.3 Average expense ratio (AER) – five years 9.2% 9.4% 10.0% 9.5% 9.3% Net combined ratio 98.0% 98.0% 86.0% 131.0% 109.0%


Owners P&I – GT (m) 105.0 105.0 103.0 110.0 107.0 Owners P&I - number of vessels 3,300 3,416 3,320 3,610 3,635 Charterers P&I – GT (m) 80.0 70.0 48.0 51.0 56.0 Total Owners and charterers P&I - GT (m) 185.0 175.0 151.0 161.0 163.0


Increase (%)


(%)

Current Position on



2001 7.5% 0% 0% 0% 1.08 closed 2002 20.0% 0% 0% 0% 1.29 closed 2003 25.0% 0% 0% 0% 1.61 closed 2004 17.5% 0% 0% 0% 1.89 closed 2005 12.5% 0% 0% 0% 2.13 closed 2006 12.5% 0% 20% 0% 2.88 closed 2007 7.5% 0% 25% 0% 3.22 closed 2008 17.5% 0% 20% 0% 3.63 closed 2009 12.5% 0% 0% 5% 3.41 open 2010 5.0% 0% 0% 7.5% 3.58 open 2011 5.0% 0% 0% 12.5% 3.76 open 2012 3.0% 0% 0% 15% 3.87 open


West of England www.westpandi.com Background: The West of England club (WOE) was formed in 1870. It is managed by a management company, West of England Insurance Services (Luxembourg) S.A., which is wholly owned by the association. Luxembourg is the headquarters of both the club and the management company. The club’s main office is in London and it also has offices in Piraeus and Hong Kong. Peter Spendlove is managing director of the managers. The club has a substantial membership in Europe and Asia Pacific region. It is also a leading club in the Middle East. The club, unlike its peers, does a not charge general increase on the whole of a member’s advance call. Rather it deducts the IG excess of loss reinsurance rate per vessel, adds the increase and then includes the appropriate reinsurance rate for the renewal year. Whilst more complex than the other clubs, it is a fairer calculation. Highlights of the year: The club’s board announced a 5% increase for 2011 and the managers advised that the renewing mutual tonnage paid on average significantly more than the 5%. The overall result for the 2010 financial year was positive. However, the club continued to rely on investment income to achieve an increase in free reserve. The club reported an increase in free reserves of 8% from USD169.1m last year to USD183m. Additionally, the club’s total assets have increased to nearly USD981m and investment fund at its highest figure of USD618m. The technical result for 2010 included an underwriting deficit of USD36.6m. However, it was more than offset by a positive non-technical result including revaluation and exchange gains of USD50.2 m. The club’s mutual tonnage has decreased to 53.4m due to the club’s decision not to renew members with high risk exposure and a persistently adverse claims exposure. However, this decision has strengthened the club’s risk profile and capital position.

The club’s owned tonnage is spread geographically between the three continents in which Europe (with a significant Greek membership) represent 45%, Asia 39.4% (with good market share in China and Vietnam), Middle East/Africa 7.7%, and 7.9% for Americas. The bulk carriers constitute 36% of the club’s total entered tonnage, tankers & OBOs (inc LPG/LNG) 24%, container vessels 18%, general cargo and reefers 16%, ferries and passenger liners 3%. The club’s claim experience for 2010 has been positive when compared with the very high cost years in 2006 and 2007. Claims numbers remain low and the frequency of larger claims is down. WOE reported that two claims for the year are estimated to exceed the club’s retention of $8 million and hence are Pool claims. The Average Expense Ratio figure for the period ended 20 February 2011 is 13.7% Reinsurance: The club’s own retention is protected by a new excess of loss reinsurance programme for 2011 led by Partner Re. This reinsurance programme consists of two separate contracts, the first being an excess of loss cover responding for individual claims above USD3m and the other an aggregate protection for all claims which individually exceed USD250, 000. WOE continues to maintain a comprehensive reinsurance programme for liabilities and losses which are outside the scope of the Group Pool and Excess Loss reinsurance programme. The reinsurance for charterers’ risks remains in place for 2011 on the same basis as for 2010. The FDD (class 2) reinsurance with Swiss Re for claims in excess of USD 1 million was also renewed. Investment: The club’s investment portfolio returned a healthy 8.7% or approximately USD48m excluding property. The club investment portfolio strategy remains unchanged, a diversified asset portfolio in which fixed income represents 65%, funds 20%, and 15% for cash. The absolute return and cash & short term asset classes outperformed their benchmarks by large margins with returns of 14.6% and 2.2% respectively. The fixed

income and equities asset classes, with returns of 6.3% and 22.0%, performed broadly in line with their benchmarks. S&P & A.M. Bests comments: S&P only provides a pi (public information rating for WOE, who has an interactive rating with A.M. Best) S&P (rating as of 28.1.11) has rated the club BBBpi (Good). “The rating reflects the club’s ability to make unbudgeted supplementary calls and impose significant premium increases at renewal. These strengths are offset by a marginal operating performance, high investment risk and concentration on an insurance class where claims size and frequency are unpredictable.” S&P says in its report that West of England’s operating performance “…… remains the weakest result within the IG when averaged over the last five years.” A.M. Best (report dated 21.12.10) rates WOE A- (Excellent) but has reduced the outlook from stable to negative. “The negative outlook reflects WOE’s weak underwriting performance and A.M. Best’s expectation that risk-adjusted capitalisation will remain excellent in 2011, but at a lower level than previously anticipated.” RFIB comments: West of England is on the road to recovery. Having had to make unbudgeted calls in each year from 2004 to 2008, the club now appears to have got its accuracy in estimating total calls back under control. It has instituted a more resilient claims reserving policy. It was robust at last renewal and did not renew a number of fleets totalling about 5m GT with a combined loss ratio in excess 140%. The retained members have a combined loss ratio of between 80% and 90%. It may not be an obvious club in which to enter new tonnage and it still has some work to get to its previous position in the market. But it is on its way back. Celebrate your renewal: Le Pont de la Tour, 36d Shad Thames, London SE1 2YE Drown your sorrows: The Draft House Tower Bridge, 206-208 Tower Bridge Road, London SE1 2UP - it has a huge selection of beers and lagers!


# = the club does not charge increases on the full advance call rate on only after deducting the excess reinsurance rate.

6520

15


Fixed income

Equity

Cash

36

24.4

17.8

16.1

3.32.4


Bulk cargo carriers

Tankers & OBOs (inc LPG/LNG)

Container vessels

General cargo and reefers

Ferries and passenger liners

Specialist vessels & misc

45

39.4

7.97.7

Geographical Distribtion of Management (By GT) (%)

Europe

Asia

Americas

Middle East / Africa

The West of England P&I Association Limited

2010/11 2009/10 2008/09 2007/08 2006/07


Earned Calls and premium 243.2 239.6 408.5 241.0 326.1 Net Investment income 49.5 62.3 -80.9 30.2 50.4 Investment return (%) 8.7% 14.1% -13.8% 5.4% 12.0% Reinsurance premiums 39.8 45.6 45.0 46.2 48.6 Net claims paid 150.0 196.5 205.4 255.6 191.6 Net Estimated liability for o/s claims 510.8 456.3 438.4 411.8 454.1 Total assets 981.2 928.0 919.2 923.9 846.9 Free reserves 182.7 169.1 160.8 173.6 204.7 Fund (balance available for o/s claims) 693.5 625.4 599.1 585.4 658.7 Average expense ratio (AER) – five years 13.7% 13.8% 13.8% 12.5% 12.4% Net combined ratio 118.0% 128.7% 77.5% 130.8% 96.4%


Owners P&I – GT (m) 49.0 53.4 50.7 53.7 53.8 Owners P&I - number of vessels 3,091 3,392 3,474 3,967 3,950 Charterers P&I – GT (m) *20.0 20.4 17.0 19.1 18.7 Total GT ‘000,000 69.0 73.8 67.7 72.8 72.5 *estimated


Increase (%)


(%)

Current Position on


Progression# Status of year



Head to Head


CLUB 2006 2011

%AGE CHANGE 2006 TO

2011GT FIGURES (millions)

American 15.7 15.7 0%Britannia 82.9 103.8 25%Gard 80.3 135.1 68%Japan 65.6 89.7 37%London 33.0 38.0 15%North of England 50.4 108.8 116%Skuld 33.0 66.0 100%Shipowners 10.1 13.4 33%Steamship Mutual 39.3 58.3 48%Standard 42.6 84.9 99%Swedish 19.6 31.4 60%United Kingdom 99.9 104.7 5%West of England 61.1 48.5 -21%

TOTAL 633.5 898.2 42%

PREMIUM FIGURES (USD millions) DECLARED TO THE INTERNATIONAL GROUP

American 99.4 85.4 -14%Britannia 181.1 204.3 13%Gard 236.9 297.7 26%Japan 97.5 207.8 113%London 72.6 80.6 11%North of England 130.8 231.8 77%Skuld 109.1 179.5 65%Shipowners 75.9 110.1 45%Steamship Mutual 134.9 187.2 39%Standard 120.0 177.5 48%Swedish 39.6 68.8 74%United Kingdom 245.0 262.7 7%West of England 186.0 152.6 -18%

TOTAL 1,729.0 2,246.04 30%

COMPARISON BETWEEN AVERAGE PREMIUM PER GT IN 2006 AND 2011

CLUB

AVERAGE PREMIUM

PER GT 2006

AVERAGE PREMIUM

PER GT 2011%AGE

CHANGE

LOWEST USD PER TON AT

20.2.06

LOWEST USD PER TON AT

20.2.11

American 6.35 5.44 -14.4% 12 12Britannia 2.18 1.97 -9.8% 3= 1Gard 2.95 2.20 -25.3% 8 6Japan 1.49 2.32 55.8% 1 7London 2.20 2.12 -3.6% 3= 3North of England 2.60 2.13 -18.0% 6 4Skuld 3.30 2.72 -17.6% 10 9Shipowners 7.53 8.20 8.9% 13 13Steamship Mutual 3.43 3.21 -6.5% 11 11Standard 2.81 2.09 -25.7% 7 2Swedish 2.02 2.19 8.3% 2 5United Kingdom 2.45 2.51 2.3% 5 8West of England 3.04 3.14 3.3% 9 10

TOTAL 2.73 2.50 -8.4%

CONSIDERATIONS FOR VIEWING THESE STATISTICS:-1. These statistics show the change in GT and premium for the six years between 2006 and 2011.

ANALYSIS OF CHANGES BETWEEN 2006 AND 2011 OF GT, PREMIUM AND AVERAGE PREMIUM PER GT BASED ON FIGURES DECLARED TO THE

INTERNATIONAL GROUP

2. Any significant divergence between the percentage increase in GT compared to the premium, highlights those clubs which have been more affected by the "churn".3. The "churn" occurs when older ships which pay higher premiums leave a club and are replaced by new or newer ships which pay considerably less premium.4. Therefore it wil be seen that Standard, Gard, North and Skuld have been most affected by the churn. Conversely, Japan has seen its premium increase substantially compared the GT increase.5. Japan, which has the most competitive average premium per GT in 2006, had now risen in the rankings to 7th. Britannia has improved from 3= to 1st with Standard 2nd and London, which probably has the largest average GT in the IG maintaining 3rd.6. Shipowners, which mainly insures vessels with small GT not surprisingly has the highest average premium per GT


Key Contacts

CLUB 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011

%AGE CHANGE 2006/2007 TO

2010/2011

American 1,943 1,800 1,285 1,325 1,280 -34%Britannia 2,823 2,946 2,824 2,890 2,827 0%Gard 4,500 4,900 5,100 5,100 5,300 18%Japan 6,216 6,247 6,186 5,928 5,364 -14%London 1,101 1,008 1,143 1,153 1,160 5%North of England 2,551 2,805 2,941 3,184 3,665 44%Skuld 2,804 3,077 3,292 3,854 3,778 35%Shipowners 26,700 28,600 28,400 28,200 29,000 9%Steamship Mutual 8,243 8,909 8,646 7,780 9,035 10%Standard 3,186 3,805 4,305 4,630 4,934 55%Swedish 803 910 884 891 994 24%United Kingdom 3,635 3,610 3,320 3,416 3,300 -9%West of England 3,950 3,967 3,474 3,392 3,091 -22%

TOTAL 68,455 72,584 71,800 71,743 73,728 8%

CONSIDERATIONS FOR VIEWING THESE STATISTICS:-

ANALYSIS OF CHANGES IN NUMBER OF VESSELS 2006/2007 TO 2010/2011

1. It is noticeable that although the tonnage in the IG increased by 42% over the period, the number of vessels only rose by 8%. This highlights that it is the size of ships which have increased rather a large additional number.2. The increase in number of vessels mirrors those clubs who had a substantial GT increase - namely, Standard, North and Skuld.


-

- the owner paid the announced general increase each year

- the announced deferred calls are included

CLUB

LEVEL OF RATING FOR

2012

RANKING FOR LEVEL OF RATING FOR 2012

(LOWEST = BEST)

TOTAL COST FOR PERIOD 2001 TO

2012

RANKING FOR TOTAL COST FOR PERIOD 2001 TO 2012 (LOWEST =

BEST)

AMERICAN 3.48 7 29.86 6BRITANNIA 3.14 5 25.30 4GARD 2.68 3 23.04 3JAPAN 2.67 2 20.35 2LONDON 4.29 12 35.69 12NORTH 3.29 6 25.90 5SHIPOWNERS 1.61 1 15.08 1SKULD 3.09 4 30.21 7=STANDARD 3.72 9 30.21 7=STEAMSHIP 3.96 11 33.53 11THE SWEDISH CLUB 3.67 8 31.48 9UK CLUB 3.87 10 32.35 10WEST OF ENGLAND 4.46 13 36.86 13


TOTAL RATING PROGRESSION

3. Those clubs which charged large general increases at the beginning of the period will be more affected as such increases are carried forward year by year.4. The total rating for clubs which called unbudgeted supplementary or deferred calls will increase for that year but it will not impact on subsequent years. 5. Therefore, for clubs which need additional funds, it is better for owners if their clubs make unbudgeted supplementary or deferred calls instead of making a general increase or a larger general increase. However, the managers of such clubs have the psychological disadvantage of making a call which is unbudgeted and hence unpopular with members

the purpose of this schedule is to demonstrate how the cost of P&I in each club has increased since 2001 on the basis that:

1. These statistics do not take into account the individual circumstances of each fleet - in particular, size of the entry and its record.2. However, they do give a general view of trends occurring in each club over a period of eleven years in comparison to the other clubs.

an ETC of USD1.00 per GT was paid before negotiations commenced for the 2001 renewal


Comparison of free reserves

CLUB 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011

American 31.6 34.0 35.7 48.3 63.6Britannia 301.5 311.3 276.5 375.9 454.1Gard 512.0 581.0 430.0 638.0 790.0 Japan 91.5 117.4 124.1 134.4 125.6London 110.9 80.9 115.5 141.4 145.1North of England 190.2 220.0 211.1 240.3 312.4Skuld 191.4 203.5 144.0 201.5 266.4Shipowners 129.7 123.7 95.6 135.3 187.9Steamship Mutual 158.1 185.8 187.7 251.6 303.3Standard 217.2 225.9 175.4 242.6 316.6Swedish 102.0 99.7 106.8 121.7 151.2United Kingdom 262.5 228.9 333.5 409.3 478.0West of England 204.7 173.6 160.8 169.1 182.7

TOTAL 2,503.2 2,585.7 2,396.6 3,109.4 3,776.9

COMPARISON BETWEEN FREE RESERVE PER GT 2006/2007 TO 2010/2011%AGE CHANGE 2006 TO 2011

HIGHEST USD PER TON AT

20.2.11

American 1.33 1.54 1.75 2.22 3.05 130% 7Britannia 2.39 2.45 1.93 2.80 3.38 41% 6Gard 4.38 4.35 2.69 4.06 4.85 11% 2Japan 0.27 0.43 0.43 0.52 0.40 47% 13London 2.11 1.11 1.97 2.87 2.82 33% 9North of England 2.34 2.27 1.76 1.65 1.87 -20% 12Skuld 4.13 3.73 1.84 2.52 3.04 -26% 8Shipowners 9.62 6.82 6.05 9.74 13.01 35% 1Steamship Mutual 2.69 3.03 2.92 3.71 4.20 56% 3Standard 4.03 3.23 1.73 2.53 2.73 -32% 11Swedish 3.58 2.90 3.32 3.63 3.81 6% 4United Kingdom 1.41 1.08 2.20 3.02 3.57 153% 5West of England 2.76 2.26 2.19 2.22 2.76 0% 10

AVERAGE 3.16 2.71 2.37 3.19 3.81 21%


1. Free reserves per GT are an important measure of a club's performance2. However it must be remembered that claims often take some time to materialise in the books of a club, as it can take up to three years or more for claims, especially large claims, to be settled. 3. Hence for clubs with a growing GT, it should not be a major problem in the short term if the free reserves per GT reduce as long as they get back to their previous levels, when the increase in tonnage begins to flatten out.

ANALYSIS OF CHANGES IN FREE RESERVES AND FREE RESERVES PER GT 2006/2007 TO 2010/2011


CLUB 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011

%AGE CHANGE

2006/2007 TO 2010/2011

American 97.0% 106.5% 84.0% 107.6% 98.7% 2%Britannia 107.5% 109.8% 97.5% 106.9% 90.1% -16%Gard 111.0% 109.0% 78.0% 92.0% 94.0% -15%Japan 111.0% 85.0% 100.0% 100.0% 90.0% -19%London 169.6% 146.8% 119.0% 119.0% 119.0% -30%North of England 127.9% 108.0% 88.0% 94.8% 78.8% -38%Skuld 95.7% 96.5% 93.2% 95.8% 88.8% -7%Shipowners 127.0% 123.9% 77.7% 101.5% 85.0% -33%Steamship Mutual 126.0% 97.9% 89.9% 91.9% 92.1% -27%Standard 134.0% 115.0% 76.0% 99.0% 91.0% -32%Swedish 115.0% 127.0% 76.0% 94.0% 87.0% -24%United Kingdom 109.0% 131.0% 86.0% 98.0% 98.0% -10%West of England 96.4% 130.8% 77.5% 128.7% 118.0% 22%

AVERAGE 117.5% 114.4% 87.9% 102.2% 94.7% -19%


ANALYSIS OF CHANGES IN NET COMBINED RATIO 2006/2007 TO 2010/2011

1. There has been a considerable improvement in the IG over the last five years.2. Most clubs have made considerable progress with 7 clubs achieving a net combined loss ratio of less than 100% over the last three years.3. Skuld is the only club to maintain a loss ratio below 100% during each of the last five years


CLUB 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011

%AGE CHANGE

2006/2007 TO 2010/2011

American 12.8% 13.0% 15.2% 15.3% 16.5% 29%Britannia 7.7% 7.9% 8.4% 8.2% 8.1% 5%Gard 7.8% 7.9% 11.4% 11.8% 12.0% 54%Japan 7.6% 7.2% 6.7% 6.6% 6.3% -17%London 8.5% 8.5% 9.4% 8.9% 8.7% 2%North of England 9.1% 9.2% 10.8% 11.4% 11.9% 31%Skuld 10.9% 10.4% 12.7% 12.2% 12.1% 11%Shipowners 17.0% 17.0% 19.0% 19.0% 19.0% 12%Steamship Mutual 12.8% 10.2% 11.6% 11.8% 12.0% -6%Standard 10.5% 10.6% 13.6% 13.3% 13.3% 27%Swedish 9.1% 9.2% 10.9% 11.4% 11.6% 27%United Kingdom 9.27% 9.40% 9.96% 9.50% 9.3% 0%West of England 12.4% 12.5% 13.8% 13.8% 13.7% 10%

AVERAGE 10.4% 10.2% 11.8% 11.8% 11.9% 14.2%


1. It is noteable that only a minority of clubs have managed to keep their expenses down whereas others have not.2. The clubs which have had a significant increase in GT and number of vessels have generally seen their average expense ratio increase, although this should not be an excuse. The obvious exception is Steamship Mutual whose GT increased by 48% and number of vessels by 10% and yet the AER dropped by 6%3. Conversely, Gard's AER has increased by 54% over the period. However, compared to its performance in other areas, especially reserves per GT and average cost per GT, perhaps its members will overlook the increase in cost.

ANALYSIS OF CHANGES IN AVERAGE EXPENSE RATIO 2006/2007 TO 2010/2011


VESSEL TYPE (By GT) – COMPARISON OF EACH CLUB 2010/11

5923

162

AmericanBulk carriers

Tankers

General cargo / container / passenger / RoRo

31

25

24

15 4

1

Britannia

Bulk carrier/OBO

Tankers (crude)

Containers

Tankers (others)

General cargo

Others

34

1817

10

64 4 3 4

GardTanker

Bulk

Container

MOU

Gas carriers

Other dry cargoCar carriers

Passenger & cruiseOthers

51.4

17.3

11.5

10.24.9

2.81.9

JapanBulk carriers

Tankers

Car Carriers

Container Ships

LPG , LNG Tankers

General Cargo Ships

Others

53

25

164 2

London

Bulk carrier

Tanker

Container

Gas Carriers

General cargo

38

28

21

4 32 4

North of EnglandTankers

Bulk carriers

Container ships Car carriers

LNG

General

Other ship types

34

1713

12

125 5 2

Shipowners

Barges

Offshore

Harbour

Dry cargo

Tanker

Passenger

Fishing

Yacht

45

28

9

112 5

Skuld

Tankers

Bulk carriers

Containerships

General Cargo

Passenger

Others

33.8

24.7

18.4

13.85.6

3.7

Steamship Mutual

Bulk carrier

Tanker

Container

Cruise and ferry General cargo

Other

40

23

23

9 41

The Swedish Club

Container/RoRo

Bulk Carrier

Tanker

General Cargo

Passenger

Other

33

29

15

1232 6

UK Club

Bulk Carrier

Tanker

Container

Gas Carrier

Passenger

Car Carrier / RoRo Other

36

24.4

17.8

16.1

3.32.4

West of England

Bulk cargo carriers

Tankers & OBOs (inc LPG/LNG)

Container vessels

General cargo and reefers

Ferries and passenger liners

Specialist vessels & misc

30

26

21

147

Standard

Tanker

Container and General Cargo Dry Bulk

Offshore

Passenger and Ferry

Consideration for viewing this chart: - Is the club or prospective club experienced in the type(s) of vessel that the shipowner operates?


GEOGRAPHICAL DISTRIBUTION OF MANAGEMENT (By GT) – COMPARISON OF EACH CLUB 2010/11

40

31

25

4

London

Southern Europe

Asia

Northern Europe

Americas

45

39.4

7.97.7

West of England

Europe

Asia

Americas

Middle East / Africa

49

21

19

7 3

1

Britannia

Asia

Europe ex Scandinavia

Scandinavia

Americas

Middle East

Australasia

64.912

4.63.13

2.62.6 1.4 5.8

Japan Panama

Japan

Hong Kong

Singapore

Liberia

Marshall Islands

Bahamas

Korea

Others

46

36

126

UK Club

Europe, Middle East & Africa

Asia - Pacific

America

Other

36

31

12

116 4

Skuld

Europe

Far East

Norway

Rest of Scandinavia Americas

Others

35.7

32.5

14.8

9.37.7

Steamship Mutual

Far East

Europe

North America

Latin America

Middle East & Indian Subcontinent

33

30

29

6 2

The Swedish Club

Asia

Southern Europe

Northern Europe excl. Sweden Sweden

Middle East

13

11

9

97

23

20

8

Standard

USA

Greece

Italy

Germany

Canada

Rest of Europe

Asia Pacific

Rest of world

42

21

9

95

51 8

Shipowners

South East Asia & Far East Europe

Central & South America Middle East & India

Canada & USA

Australia, New Zealand & South Pacific Africa

Rest of the world

5524

138

North of England

Europe

Asia Pacific

Middle East

Americas

50

33

134

American

Europe

Asia

North America

Rest of the world

23

21

18

16

11

11

Gard

Rest of EuropeAsia

Norway

Germany

Greece

Americas

Consideration for viewing this chart: - Is the club or prospective club experienced in looking after owners from the region in which the shipowner is based or, if not, is the shipowner happy to assist the club in gaining that experience?


CLUB 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011

American 6.6% 5.4% 8.5% 12.4% 7.7%Britannia 10.3% 5.4% -2.7% 10.2% 7.8%Gard 10.7% 8.8% -24.9% 19.0% 9.3%Japan 2.6% 2.7% 1.8% 1.3% 1.4%London 13.0% 0.0% -15.2% 12.2% 6.3%North of England 12.5% 7.1% -4.2% 2.1% 2.7%Skuld 8.0% 4.5% -14.9% 12.4% 5.8%Shipowners 11.1% 6.8% -15.0% 12.5% 6.8%Steamship Mutual 9.2% 4.0% -16.3% 7.9% 4.4%Standard 12.1% 8.6% -17.4% 18.0% 9.9%Swedish 9.0% 10.0% -11.0% 5.0% 5.0%United Kingdom 9.0% 6.5% -6.0% 8.2% 6.2%West of England 12.0% 5.4% -13.8% 14.1% 8.7%

AVERAGE 9.7% 5.8% -10.1% 10.4% 6.3%

CONSIDERATIONS FOR VIEWING THESE STATISTICS:-1. Of note is the effect of the financial crash in 2008 and how those clubs who stayed in equities received the benefit of the market upturn in 20092. American, Britannia and Standard have performed considerably better than average of over the five years period.

ANALYSIS OF CHANGES IN INVESTMENT RETURN 2006/2007 TO 2010/2011


INVESTMENT PORTFOLIO – COMPARISON OF EACH CLUB 2010/11

62

32

6

American

Fixed income securities Equities

Cash and cash equivalents

32

2018

16

14

Britannia

Government Bonds

Corporate Bonds

Equities

Cash

Inflation linked Bonds

55.6

16

15.5

9.4

3.5

Gard

US bonds

Non-US bonds

Equities

Cash

Real estate

74.1

25.9

Japan

Securities

Cash and Deposits

6020

182

London

Fixed Income

Equities

Cash

Other79

127 2

North of England

Government bonds

Absolute return funds

Cash

Corporate bonds

75

25

Shipowners

Fixed income assets or cash

Equities

74

15

8 2

1

Skuld

Fixed Income Equities

Cash

Alternative investments Commodities

51

25.6

12.5

7.8

2.3 0.8

Steamship Mutual

Government bonds

Cash and deposits

Corporate bonds

Alternative investments

Equities

Property

70

21

9

The Swedish Club

Bonds USD

Equities

Bonds EUR 54

21

17

8

UK Club

Fixed Interest

Cash

Equities

Absolute return Funds

6520

15

West of England

Fixed income

Equity

Cash

36

25

25

85

1

Standard

Sovereign BondsCorporate Bonds Equities

Cash

Alternatives

Gold


Look below the surface and you discover.....

......a natural agility to move at speed in the right direction.


NON IG


The P&I market outside the International Group This section of the report details a number of the P&I providers outside of the IG who offer cover for shipowners or charterers. Most of this market concentrates on vessels of less than 10,000 GT, for which the number of vessels is larger than those which are covered within the IG. There is considerable competition between British Marine, Eagle Ocean Marine, Hydor, Navigators, Osprey and RaetsMarine as well the members of the IG. A new entrant to the market is now expected into the market, which is reported to be backed by RSA. Lodestar is expected to be a fixed premium/fixed limit P&I provider, for which RSA will provide the first USD100m of cover with USD400m excess of the USD100m being provided in the commercial market. A number of the new team will be coming from British Marine but no date has been advised yet for the start of Lodestar’s operations. British Marine, part of the QBE Group, Navigators and RSA underwrite on their own behalf whereas Eagle Ocean Marine, Hydor, Osprey and RaetsMarine are provided security by quality insurers. All of these insurers offer cover on a fixed premium for a fixed limit of liability, with some being vociferous about the perils of unbudgeted additional calls which could be made in the mutual market. China Shipowners (CPI), Hellenic Mutual, Ingosstrakh, Islamic P&I, Korean Shipowners and the pools arranged by the Zeller Group are focused on national or regional vessels. Of these insurers, China has a current GT of 27.8m and is looking to join the IG. Over recent years, there has been some reluctance to admit the club by the IG because its membership is limited to Chinese members. However, as it is reinsured by a number of IG clubs, it seems that its membership of the IG is a question of timing rather than anything else. Charterers club, which is managed by Michael Else & Co., and the Norwegian Hull Club offer charterers liability insurance and a high level of service to complement their competitiveness. Space does not allow us to go into the same level of detail as the IG clubs and indeed not every P&I provider outside the IG has been included. However, these insurers play an important role and each insurer brings its own individual business model to the marketplace.


British Marine Background British Marine Luxembourg (BML) was founded in 1876 and has offices located in Luxembourg, London and Hessle. It is now owned by the QBE Insurance Group in 2005, and, as of April 2010, its portfolio is now completely written as British Marine as a trading name of QBE Insurance (Europe) Ltd. Consequently, British Marine no longer publishes a separate annual report and accounts. BML specialises in both H&M and P&I insurance for small ships worldwide, traditionally less than 10.000 GT. Originally formed as a mutual club, it was demutualised in 2000 becoming a fully capitalised insurance company, but it still operates in the mutual tradition. In addition to P&I and H&M it also offers charterers liability and FD&D cover. Head of British Marine is Tim Harris. Profile As the biggest of the fixed-premium P&I insurers, BML provides insurance to a fleet in excess of 10,000 ships aggregating about 13.5m GT. Small to medium sized merchant ships account for more than 90% of the tonnage insured with the balance being made up by fishing vessels and super yachts. P&I cover is provided up to a limit of USD500m, which can be increased to USD1bn in special circumstances. As of 2010, the insurance company reported a premium income of USD125m, twice the size of the next-largest fixed-premium P&I provider. At the 20th February renewal 2011, British Marine reported a strong renewal, characterised by the most aggressive underwriting seen in the last 10 years. The company have highlighted

• A 93% retention ratio on its renewing portfolio

• A 1% increase in rating on that same renewing portfolio

• A 10% increase in premium generated at the 20th February renewal from 35 new shipowner clients

• Continued support from within its client base as

26 owners increased their fleet share

General cargo stands at 29%, with bulkers, tugs/utility and unitised vessels at 10% each. Smooth water at 14%, tanker and fishing vessels both at 7%, yachts at 2%, and miscellaneous making up the remaining percentage. Over half the company’s geographical spread by GT is located in Europe (Southern 21%, Northern 28%, Eastern 9%). Far East stands at 20%, Middle East at 10%, Indian sub continent at 4%, Latin and North America at 7%, with Africa at a modest 1%. 2011 is the eleventh successive year without a general increase. QBE Marine, Energy and Aviation Division writes business through Syndicate 1036, which is a direct marine and energy syndicate operating within the Lloyd’s insurance market. British Marine integrated with Syndicate 1036 from January 2010. Standard and Poor’s rated the QBE Insurance Group Ltd. (as at July 7 2011) A+ with a Stable outlook. All core operating subsidiaries, including British Marine, were rated A+/Stable ‘reflect the group’s well-diversified business platform and robust underwriting and reserving practices’. “‘The group’s capitalization remains in line with the rating, especially given strong reserving and reinsurance protection.” RFIB comments BML continues to be the foremost P&I insurer in the fixed premium market. Whilst it suffered from staff defections during 2011, it is making credible appointments to fill the gaps, including Andrew Hearne who joins from Britannia P&I club and will be P&I portfolio manager. The fixed premium market is becoming more crowded and in a world where there is a greater concentration on branding, one wonders when QBE will decide it can carry out this business under its own brand, rather than BML’s. British European and Overseas Background The BE&O P&I has been in business for three years and is managed by the insurance company DGS Marine Management Services, registered in Liechtenstein. The managing

director is David G. Skinner and offices are located in the UK, Denmark and Cyprus. Recently, the DGS Group also opened a new office in Germany. The BE&O P&I Facility is registered in the Bahamas. Profile It calls itself a “fixed premium facility” and offers a limit of USD500m, with options up to USD1bn. Originally centred on trade in the Baltic and northern Europe areas, it now offers a worldwide cover. The Europe, the Eastern Mediterranean, the Middle East and Africa are important areas. It specialises in small to medium sized tonnage. Tonnage distribution by vessel type; tugs 27%, barges 21%, general cargo vessels 15%, bulkers and tankers both at 6%, Ro-Ro 4%, container vessels 3%, and others 18%. The facility has a portfolio of 556 vessels, an increase of about 50% on 2010. Even though tonnage increased by 92%, the overall figure stands at a modest 2.9m GT (2010: 1.05m GT), with 0.8m GT representing chartered business. A general increase of 5% was set for the 2011 renewal. Net premium reportedly totalled USD19.8m, with gross reinsurance costs of just under USD3.8m. Premiums and calls stood at USD19.8m with total assets reaching USD43.4m as of 20th February 2011. Charterama Background Based in Rotterdam, Charterama was established in 2009 and offers a fixed-premium Charterers Liability Insurance and Defence cover exclusively for charterers. Charterama is a fully independent provider of Charterers Liability. The senior underwriters are Lucien Lesius and Evert Margery. Profile Charterama offers a limit of cover up to USD100m The insurance provider is backed by A rated Carrier REAAL, AA- rated reinsurer Munich Re and Lloyd’s. Charterama is the exclusive underwriting agent for REAAL for Charterers Liability, FD&D and Cargo Owners legal liability.


The Charterers Club Background Established in 1986, The Charterers P&I Club is celebrating its 25th anniversary, and is a club exclusively for charterers. It has been operating on a fixed premium basis nearly half that time, and was demutualised in 1999. The manager and underwriting agent of the club is Michael Else and Company Ltd with its Managing Director being Christopher Else. Michael Else and Company also manages Transmarine, which covers marine trade disruption and consequential loss insurances with Great Lakes Reinsurance (UK) PLC. The club has an office in London and a representative office in Madrid as well as service centre in Dubai. The club opened a new Shanghai office last year, which conducts claims handling, and marks what the club calls ‘a critical point in the club’s next evolutionary phase’. Profile The club offers a cover of up to USD50m, with the ability to increase up to USD300m. Bulkers stand at 75% of the distribution of vessels, with liner vessels at 17%, tankers at 5% and other at 3%. The club reported a strong growth in Asian markets, especially China, with the majority of their business derived from outside the more traditional markets of Europe and the Americas. The club has a strong representation in Asia which stands at 37%. European business stands at 30%, the Middle East and India at 10%, and Australasia at 9%. America and Africa stand at 7% each. As an insurance agency it is backed by the strength of its security provider. The underlying security in respect of policies issued by the club is Great Lakes Reinsurance (UK) PLC, a wholly owned subsidiary of Munich Re, and hence subject to the same ratings which are AA- by Standard and Poor’s. China Shipowners Background China Shipowners Mutual Assurance Association (CPI) was founded in 1984 and is an independent P&I club with headquarters in Beijing. Representative offices are located in major ports of China’s mainland, such as Shanghai and Dalian, as

well as a service company set up in 1994 in Hong Kong. Profile The membership of the club is no longer limited to the mainland of P.R. China, but includes members based in Hong Kong, Singapore and other Far East Asian areas. The club reported 1,043 entered ships at 20.2.11 with total GT of 27.8m The coverage provided by the club is identical to what is offered by an IG club, both in respect to scope and limits. It has close ties with some IG clubs through a co-insurance agreement and CPI aspires to join the International Group. East of England Background The East of England P&I Association Limited (registered in the Seychelles) focuses on P&I and hull & machinery insurance. The manager of the association is The East of England Management Ltd., with offices in London and Cyprus. Profile The association prefers vessels up to 25,000 GT, and it claims to have particular expertise of African, East Mediterranean and Black Sea operations. Insurance is provided to commercial ships, with particular attention to small tonnage operations and a limit offered of USD26m. The association has primary quota share reinsurance up to USD1m, whereas the main layer up to USD25m is placed at Lloyd’s. The limit can be extended up to USD50m or above if necessary. Hellenic Mutual Background The Hellenic Mutual Protection Indemnity & War Risks Association was formed in 2007 to provide P&I, FD&D, hull and war risks cover for Greek shipowners, but did not commence trading until late 2009. Nick Velliades is the chairman of the association, and also heads Aigaion Insurance Company S. A., which manages the club. Profile The association offers cover to passenger ships, ferries and dry cargo ships up to 25,000 GT, owned and operated by Greek shipowners. It says that it will be able to offer P&I cover with a limit of up to USD1bn. The client

currently insures 95 Greek ships totalling approx 600,000 GT. Hydor Background Hydor is a fixed-premium P&I facility located in Oslo. It was established by Johan Gjernes in 2010 and is backed by Brit Syndicate 2987. Hydor also offers charterer's P&I, FDD, hull & machinery, energy, cargo and related insurance products from Brit. Claims and legal services are outsourced to C Solutions Limited. The company is 100% owned by its employees, and is a Lloyd’s coverholder. Profile Hydor offers a basic limit of USD25m for both owners and charterers P&I, with the maximum limit being USD500m. For hull and machinery, the capacity is USD2.5m. The company’s portfolio is split between 34% hull and 66% P&I/FD&D. The main target group is vessels below 10,000 GT and Hydor provides cover on a world wide basis. Types of vessels are made up of 24% passenger vessels, 22% tankers, 21% general cargo and 12% bulkers. Offshore vessels stand at 7%, RoRo at 6%, chemical tanker at 5%, and container the remaining 3%. The overall tonnage stands at 1.67m GT with 203 vessels. Ingosstrakh Background Ingosstrakh Insurance Company has operated in the domestic and international markets since 1947. It provides P&I insurance both to Russian and foreign owners, managers, operators, and charterers based on traditional international market conditions. The company has over 35 years of experience as a P&I insurer. CEO of Ingosstrakh is Alexander V. Grigoriev, and the company has a wide regional network including 87 branches. The company’s P&I department – Shipowners’ Liability Insurance Department, is located in Moscow. Profile Offering a limit of up to USD500m for P&I insurance, Ingosstrakh is supported by reinsurers including:


Allianz, Hannover Re, Lloyd’s syndicates, Munich Re, Partner Re, Swiss Re, and QBE amongst others. In 2010 Ingosstrakh issued 754 P&I policies. Ingosstrakh reported that it had signed two major ship owner’s liability insurance contracts with Federal State Unitary Enterprise Sakhalin Basin Emergency Department (SakhBASU). The contracts had limits of USD10m and USD30m respectively. Standard and Poor’s ratings on Ingosstrakh (03.08.2011) is BBB- with a Stable outlook. Islamic Background Islamic P&I club is a mutual organization with an office in Dubai and branch offices in Jakarta, Indonesia and London. The club is managed under the direct control of its managers and was established in 2001 by the decision of 60 shipping companies under the umbrella of the Organization of the Islamic Conference. The club’s chief executive is Javad Mosadeghi. Profile The club offers full P&I and FD&D cover up to the limit of USD500m, for vessels up to 10,000 GT. Korea Shipowners Background The Korea Shipowners Mutual Protection and Indemnity Association (KPI) was established in 26th January 2000 with the purpose of providing P&I insurance to Korean shipowners, and celebrated its 10th anniversary last year. The club is located in Seoul, with B.S. Park as the Executive Managing Director. Korea P&I writes insurance contracts on mutual terms. Profile The club reported that the tonnage insured reached 10m GT for an insured fleet of 872 vessels, owned by 212 members. The club is targeting 20m GT and a premium of USD100m by 2020. Korea P&I provides a cover of up to USD300m, and reported a premium income set to be USD30m for 2011.

Navigators Background Navigators P&I began underwriting risks in 2004 and relies on the security from the New York-based Navigators Group, Inc. This group is an international specialty insurance holding company with insurance company operations, underwriting management companies, and operations at Lloyd’s of London, where it owns and operates Syndicate 1221. The head underwriter in its P&I department is Simon Collins. The company’s product line is ocean marine insurance, and the London office of Navigators offers fixed-cost P&I cover to vessels in coastal, short-sea and restricted ocean trades. The company provides cover for worldwide trading but excluding the USA. Profile It offers a limit of USD50m, with a minimum premium of USD5,000 and seeks only to insure vessels up to 10.000 GT. Navigators obtains its business through selected London and international specialist P&I brokers. Navigators has a strong presence in the European and Scandinavian market, with general cargo vessels being the largest group in their portfolio Standard and Poor’s rated the Navigators Group Inc, (Rating as of 12.07.2011) A with a negative outlook. S&P revised its outlook on its insurance units to negative from stable. “The counterparty credit rating on Navigators Group Inc. and the insurer financial strength ratings on its core subsidiaries, reflect the group’s strong competitive position in the marine insurance market and its strong capitalization supported by good earnings. The ratings also reflect strong financial flexibility supported by low leverage, contributions from its subsidiary, Lloyd’s Syndicate 1221, and significant liquidity on the parent company’s balance sheet. Slightly offsetting these positive factors are volatile earnings performance, a business model that relies heavily on reinsurance capacity, and a historically aggressive organic growth strategy into new products and regions.” Norwegian Hull Club Background Norwegian Hull Club (NHC) is a mutual marine insurance company and ranks amongst the largest pure

marine underwriters, owned by its members. With roots dating back as far as 1837, Bergen Hull Club (1936) and Unitas (1951) amalgamated in 2001 to form Norwegian Hull Club. The club’s head office is located in Bergen, and it has branch offices in Oslo and Kristiansand. CEO is John H. Wiik. Profile NHC underwrites marine insurance for shipowners mainly concentrating on hull, loss of hire and war risks insuring total of 14,000 ships. However, since 2008 it also offers P&I, damage to hull and defence (FDD) for time and voyage charterers as well as NVOCCs in its PIDEF department. It does not offer P&I cover for owners. Currently the club insures 1,300 ships for these risks totalling 5.8m GT for 129 clients. The limit for the charterer’s liability cover is USD500m. As per 31.12.2010 the club’s free reserves stood at USD203m, with a gross written premium at USD190m. The club decided to pay a dividend for 2010 corresponding to 5% of earned, mutual premium to its mutual members following good underwriting results and free reserves in excess of capital targets. The geographical spread of the PIDEF department is Asia (including India and Australia) 44%, with 45% in Europe, 4% in Scandinavia and 7% others. The club also offers cover for offshore energy risks, yachts and has a wholly owned subsidiary, Marine Benefits AS, which provides employment benefit solutions. Standard and Poor’s ratings on NHC as of May 27 2011 stood at A- with a Stable outlook. “The ratings on Norway-based marine mutual insurer Norwegian Hull Club (NHC) reflect the club’s strong capitalization and strong competitive position. These positive factors are offset by the club’s concentration on a volatile insurance class, and by its high investment risk tolerance.” “The stable outlook reflects Standard & Poor’s view that the club will maintain its strong competitive position and strong capitalization.”


RFIB comments NHC had a fine year in 2010 which contributed to its being able to return money to its mutual members. The club has experienced staff in PIDEF which fully understands the needs of its chartering clients and offers corresponding high levels of service. Osprey Background Osprey Underwriting Agency Ltd was established as a fixed premium P&I insurer in 1991 for vessels up to 10,000 GT. The agency provides cover on a worldwide basis, and the service is backed by an extensive worldwide network of correspondents. In addition to P&I, Osprey also offers hull and machinery, maritime employers’ liability, marine general liability insurance Guy Pierpoint is the Director of Underwriting. Profile Osprey offers Lloyds security – Lloyds is rated as A+ stable by Standard and Poor’s - and has around 2,400 vessels on its books that bring in around $40 m of premium. Tugs and barges represent 49% of the agency’s composition of owned ships, fishing vessels 27%, craft 14%, miscellaneous 4%, passenger 3%, dry cargo 2, and dredgers 1%. The USA still forms the biggest market for the agency which represents 73% of its book, Europe 12%, Asia 5%, South America 4%, Caribbean 4%, and the Middle East 1%. Limits of cover up to USD100m any one accident or occurrence are provided. RaetsMarine Background Established in Rotterdam in 1993, it considers itself a niche specialist ‘retail’ P&I and marine insurance provider which underwrites on behalf of insurance carriers. Managing Director of RaetsMarine is Folkert A. J. Strengholt, the head office is located in Rotterdam, along with branch offices in Paris, London and Singapore.

Profile RaetsMarine insures more than 1,000 charterers declaring more than 25,000 ships per annum representing 250m GT. RaetsMarine currently insures 4,500 vessels for shipowners P&I, equating approximately 6m GT. It is also covering 4,000 inland craft at about 3.5m GT. The agency writes fishing vessels, tugs and other specialised craft, but the preferred tonnage is dry cargo ships. Special craft vessels stand at 42% of the shipowners P&I, with a 15% and 14% representation of general cargo ships and fishing vessels respectively. Barge ships stand at 13%. RaetsMarine reported an anticipated premium income of USD103m as at 10th August 2011. This is divided between the P&I operations at USD80m and Marine at USD23m. The 20th of February 2011 renewal review, considered a success by the agency, in summary: 15% increase on premium volume coming from new clients; 96% retention ratio on existing clients; 0.8% increase in rating from existing clients. RaetsMarine targets cargo carrying vessels up to 10,000 GT or a fleet of vessels with an average GT of 10,000. Vessels insured with RaetsMarine are not allowed to perform voyages to and from the USA, as well as Trans Atlantic or Trans Pacific voyages. There are however no restrictions on age and singletons will be quoted. The agency writes risks with a limit of up to USD500m for shipowners, charterers and inland craft P&I, and a limit of USD2m for FD&D. The majority of the vessels in RaetsMarine’s portfolio have a limit of liability of USD10m, which it considers a more than comfortable limit. The vast majority of owners P&I is located in Europe with 56% of the geographical distribution. Asia-Pacific stands at 24%, Central-South America at 9%, and Middle-East India at 7%. The remaining percentages are fairly evenly divided between Africa, North America and Russia & CIS. RaetsMarine offers 100% cover which is underwritten by Amlin Corporate Insurance up to USD50m. USD450m in excess of USD50m is co-insured in the Lloyd’s market with Amlin as the leading underwriter. About 15% of

RaetsMarine’s clients have a limit exceeding USD50m, so these clients have the first USD50m from Amlin and everything in excess (up to USD500m) with Lloyd’s of London. Standard and Poor’s rated the Dutch non-life insurer Amlin Corporate Insurance N. V. A- with a Stable outlook (rating as at 2 February 2011). “ACI’s stand-alone creditworthiness is underpinned by its strong capitalization and its still-good, albeit weakening, competitive position in corporate risks in its main line of business. Offsetting these factors are: the underperformance of the Belgian marine book, which continues to weigh on earnings; the weakened short-term competitive position due to significant cuts in the core marine book; and some execution risks related to the restructuring of ACI following the change in ownership.’ RFIB comments RaetsMarine has taken a strong position in the fixed premium market with a raised profile following its opposition to the current IGA. Whether this is being used as a marketing ploy or not, RaetsMarine continues to be competitive and is a strong presence in its chosen market. RSA Background RSA has a heritage dating back almost 300 years, but the current company structure was created in 1996 following the merger of Royal Insurance and Sun Alliance. In 2008 the group changed its name to RSA. It is a major insurer in all classes of cover including marine insurances. Highlights of the year RSA is a new entrant into the fixed premium P&I market and has partnered with Osprey Underwriting Agency Limited. It is now offering P&I insurance for coastal and brown water vessels up to 10,000 GT from its offices in Spain and Dubai. RFIB expects that RSA’s commitment to P&I to increase in the near future. Osprey is a quota share reinsurer of RSA, and RSA is using Osprey’s expertise to help launch its new product which has a limit of USD100m. RSA is rated A with a Stable outlook by Standard & Poor’s.


South of England Background The South of England Protection and Indemnity Association (Bermuda) Limited (SEPIA) is a Bermuda based mutual club which commenced underwriting on 20th February 2004. It was managed by The South of England Management AG based in Lichtenstein and Zurich. The club’s claims handling and marketing was contracted to the manager’s UK correspondents, Southern Seas Management (UK) Ltd. However, the Supreme Court of Bermuda handed down a winding-up Order in November 2011, following which the club has ceased to trade. Joint Provisional Liquidators (JPLs) have been appointed who have tendered notice of cancellation of all insurances. The JPLs have advised that the previous managers are not authorised to act on behalf of the club and that all correspondence should be directed towards them via the helpline (+1 441 294 2678, email: [email protected]). The JPLs have a website at www.kpmg.bm/sepia Profile The club mainly covers vessels between 7,500 and 25,000 GT trading internationally (although it excludes ships trading to the USA and which are US flagged). Vessels over 25,000 GT, older ships or non I.A.C.S classed ships will be considered upon application. The club’s owned tonnage is 4.8m GT, which pays a premium of USD 24.6m. The tonnage distribution by vessel type is 32.4% bulkers, 31.8% general cargo, 18.4% tankers, 5.2% reefers, 3.3% tugs, 8.9% for other type of vessels. The membership of SEPIA is very much focused in East Asia with 28.8% in China, 17.3% in Hong Kong, 6.9% in Taiwan, 6.3% in Nigeria, 4.4% in Greece, 3.6% in Singapore, 3.3% Yemen, 3.0% U.K, 2.5% South Korea, 2.5% Panama, and the remaining 21.4% remaining is spread geographically across the world. The club has suffered a large number of small claims and is also giving a preliminary warning that if claims on the 2010 year continue at

a high level, there could be a call of up to 45%. Calls totalling 110% have been triggered by an accumulated deficit of just over $31m. The owners of the 800 ships in the club are being asked to pay USD31m in order to address an accumulation of attritional claims. The club had insured the 42,000 DWT bulker “KHALIIJA 3” (built 1983), which was involved in a costly collision with the 2,314 TEU containership “MSC CHITRA”. The reinsurance programme is with Swiss Re and Lloyd’s of London. Zeller Background Zeller Associates Management Services (ZAM) is an insurance management unit of the Zeller Associates Group, founded in 1997, which in turn is fully owned by its senior managers in the form of a partnership. ZAM is registered with two sister companies in Germany and Cyprus, and has a representative office in Moscow. ZAM manages the Hanseatic P&I, Octant Charterer’s Liability, Triton River P&I, Hanseatic Defence, Russian P&I Pool and the Arab P&I Pool. The companies’ executives are Capt. Bert Wardetzki in Hamburg and Capt. Richard Chalhoub in Limassol/Beirut. Profile The Hanseatic P&I offers a cover of up to USD50m, but a total of USD500m can be arranged through ZAM by way of an excess policy of up to USD450m through Lloyd’s and company underwriters of London. They offer the classic P&I cover, but for a fixed premium, and insures primarily container-feeder and coastal tonnage. Triton P&I and Octant Charterer’s Liability offer the same cover. The Hanseatic Defence offers FD&D cover for a fixed premium, normally up to a limit of USD1m, and is underwritten by Lampe & Schwartze (Bremen), managed by ZAM. The Russian P&I Pool constitutes 12 insurance companies offering a standard cover of up to USD500m, and war cover of up to USD50m on a fixed premium basis. It offers insurance protection to general cargo and container vessels and

bulk carriers up to 35,000 GT. Up to 6,000 GT for reefer vessels and tankers, not exceeding 20 years of age, and fishing vessels as well as all types of auxiliary vessels.

http://www.kpmg.bm/sepia�


Disclaimer - The information contained in this report is not intended as advice for any individual or specific situation and should not be relied upon as such. We do not accept any responsibility should the information be inaccurate or incomplete. If you require further assistance, please contact RFIB. © Copyright RFIB Group Limited 2011. All rights reserved.

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Rfib 2012 p&i Report, Dec. 2011 Edition-1