2012 Seltmann Global Marine Insurance Report 180912 · 2012: strong total loss impact (on uw2011)...
Transcript of 2012 Seltmann Global Marine Insurance Report 180912 · 2012: strong total loss impact (on uw2011)...
2012 Global Marine Insurance Report
Astrid Seltmann
Vice chairman IUMI Facts and Figures CommitteeAnalyst/Actuary @ Cefor, The Nordic Association of Marine Insurers1
Global Marine Insurance Report 2012
• Global Marine Insurance – Overview
• Cargo – market & results
• Hull – market & results(with some words on major losses...)
• Offshore Energy – market & results____________________________________________________________
• Underlying Data – for download (Premium by country, Loss ratio triangulations)
Global Marine Insurance Report 2012
• Global Marine Insurance – Overview
• Cargo – market & results
• Hull – market & results(with some words on major losses...)
• Offshore Energy market/results
New this year (1):
• Latin America – fully covered via ALSUM(Latin American Marine Underwriters Association)
• Middle East – improved data via GAIF (General Arab Insurance Federation)
• Asia – data of non‐IUMI countries included (research from official sources)
New this year (2):
Further premium increase due to:
• UK/Lloyds – Gross premiums (previously net)
• UK/IUA – 2011 premiums reflect market better(more realistic market coverage, based on recent income study)
Global Premiums: «complete» world income (?) (some estimates & parts of central Africa missing)
__________________________________________________________________
• Offshore Energy Loss ratios – include liability
Marine Premium 2011 – by region
Check download for marine premiums by country.
New countries
New countries
Total: 31.9 USD billion Actual increase 2010 to 2011: +7%
New countries
Marine Premium 2011 – by line of business
Total: 31.9 USD billion
P&I Clubs International GroupGross Calls (premium) 2011 – Operational location
Source: International Group of P&I Clubs
stableup 8%up 9%up 6%
up 4%
Global Marine Insurance Report 2012
• Global Marine Insurance – Overview
• Cargo – market & results
• Hull – market & results(with some words on major losses...)
• Offshore Energy market/results
Cargo Premium 2011 – by region
Total: 17.2 USD billionActual increase 2010 to 2011: +9%
Cargo Premium 2011 – by markets
Total: 17.2 USD billion
**
** includes proportionaland facultative reinsurance
0%
50%
100%
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350%
400%1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
World Trade Values
World Export Volume
Global Cargo Premium
Cargo Premium World Trade Volume & Trade Values
Index of evolution, 1995 = 100%
Source: World Trade Values: IMF
Some cycle irregularities due to exchange rates.
After 2009 upswing in trade, but still unstable market conditions.
60%
80%
100%
120%
140%
160%
180%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
EUR
GBP
JPY
NOK
USD Exchange rate indexagainst selected currencies
Index, 2000 = 100%
Source: Norges Bank Exchange Rates Statistics, Exchange rates as of December each year, 2012 as of June 2012
Since Financial crisis less correlation between rates
0%
20%
40%
60%
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100%
120%
140%19
96
1997
1998
1999
2000
2001
2002
2003
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2007
2008
2009
2010
2011
Cargo – Gross* Ultimate Loss Ratio Underwriting years 1996 to 2011
Data from: Belgium, France, Germany, NL, Italy, Spain (no update 2011), UK, USA(2010 Japan tsunami affected mainly Japanese market)
* Technical break even: gross loss ratio does not exceed 100% minus the expense ratio (usually 20%‐30% acquisition cost, capital cost,management expenses)
2011: Starts high at 72%, may end at 74%. No technical profit.
Since 2007: Deterioration of results .
2002 to 2006: Gross loss ratios stayed below 60% ‐technical profit.
..and 2012?
40%
50%
60%
70%
80%
1 2 3 4 5
2004
2005
2006
20072008200920102011
Cargo – Gross reported Loss RatiosUnderwriting years 2004–11, as reported after 1, 2, 3, 4, 5 years
2011:Starts high at new maximum of 72%.
2010:follows 2007/2008 pattern; passed 70%
2007/2008:improved, but still at high levels > 70%
Since 2007:Market changes demand adjustment of claims reserves => Change in typical pattern
Previous loss ratio level
Recent loss ratio level2011
Summing up Cargo
2011 Premium growth reflects upswing in trade Commodity prices rising, stock througput programs expanding (US), but economical environment remains unstable.
Increase in claims reserves – change in pattern2007/2008 improved later, but loss ratios stay high.
2011 Loss ratio starts at new maximum of 72%Impact of Natural catastrophes (Thailand floods), more general average claims, increasing acquisition costs.
Claim cost unlikely to decreaseIncreased accumulation risk, moral hazard, theft frequency, natural catastrophes. Sanctions and piracy still a concern.
• Global Marine Insurance – Overview
• Cargo – market & results
• Hull – market & results(with some words on major losses...)
• Offshore Energy market/results
Global Marine Insurance Report 2012
Hull Premium 2011 – by region
Total: 8.3 USD billionActual increase 2010 to 2011: +1%
**
** includes proportionaland facultative reinsurance
Hull Premium 2011 – by markets
Total: 8.3 USD billion
** Norway, Denmark, Finland, Sweden
50%
75%
100%
125%
150%
175%
200%
225%
250%
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Gross tonnage(> 300 GT)
Average insuredvessel value(Cefor ‐ renewals& newbuilds)
Global MarineHull Premium
No. Ships(> 300 GT)
Hull PremiumWorld Merchant Fleet
Index of evolution, 1995 = 100%
Sources: Insured vessel values: Cefor – Nordic Marine Insurance Statistics as of 30 June 2012; No. Ships & tonnage: ISL Bremen
and 2012?
5.4%7.0%
2.4%
8.3%
5.4%
-14.5%
-9.2%
-3.2%
-7.3%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%20
04
2005
2006
2007
2008
2009
2010
2011
2012
Average annual change in insured values on renewed vessels
Source: Cefor - Nordic Marine Insurance Statistics as of 30 June 2012
Decrease in insured values continues
Change in insured values on renewed vesselsby year of renewal
(= insured value on renewal / insured value previous year)
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140%19
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1997
1998
1999
2000
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2008
2009
2010
2011
Hull – Gross* Ultimate Loss RatioUnderwriting years 1996 to 2011
“Actuarial nonsense”, based on pre‐Costa Concordia data…:Data from: Belgium, Germany, France, Italy, NL, Nordic, Spain (no update 2011) ,UK, USA
* Technical break even: gross loss ratio does not exceed 100% minus the expense ratio (usually 20%‐30% acquisition cost, capital cost,management expenses)
Hull – 2009 to 2011: Some improvement compared to peak years 2006‐2008.
But: Claim cost and loss ratios stay at high levels, some increase since 2009.
2011:Similar to 2010.
No technical profit.
0%
20%
40%
60%
80%
100%
120%
140%19
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1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012:strong total loss impact (on uw years 2011 & 2012)
Costa Concordia:Carnival Corporation & PLC website: 508+17 MUSD from H&M insurance.(2Q financial report, issued 02.07.2012)
...and more total losses in excess of 30 MUSD did incur 1st half 2012 (partly attaching to uw year 2011).
Hull – Gross Ultimate Loss RatioUnderwriting years 1996 to 2011
… and real life: with total losses 1 Q 2012 – the true picture?Data from: Belgium, Germany, France, Italy, NL, Nordic, Spain (no update 2011) ,UK, USA
40%
50%
60%
70%
80%
90%
1 2 3 4 5
2003
2004
2005
2006
20072008200920102011
Hull – Gross* Reported Loss Ratio Underwriting years 2003‐2011, as reported after 1, 2, 3, 4, 5 years
Previous loss ratio level
Recent loss ratio level
2011
2011:starts at normal level.
2009-2010:Price-driving factors return to ”normal” levels, but no stable environment.2010 strong increase.
2006-2008:Repair cost driven up by changing frame conditions => Change in claims pattern
40%
50%
60%
70%
80%
90%
100%
110%
1 2 3 4 5
2003
2004
2005
2006
20072008200920102011
Hull – Gross* Ultimate Loss Ratios Underwriting years 2003‐2011 – estimated development towards ultimate
2011:Unprecedented total loss impact –loss ratio may reach new heights.
1st half 2012: Increase in no. of losses xs 30 MUSD.Impact on underwriting years 2011 and 1012.
2011 – new heights?
Summing up Hull (1)
Frame conditions – still unstableSteel prices / repair yard capacity / exchange rates / commodity prices / vessel utilization /newbuildings / world trade / Euro crisis...Influence• Income (ship values)• Cost (claim frequency/repair cost).
Repair cost / Claim frequency – StabilizeBut: catching up of trade/higher utilization rates may cause repair cost to rise again
Major claims – strong impact 1st half 2012 Unprecedented costly event Increase in total loss frequency 1st half 2012 Continuing downturn in insured values creates more
constructive total losses
Summing up Hull (2)
Hull technically at loss for 16 consecutive years!
Future Global Hull Market:
Understand dependencies between macroeconomic parameters and repair cost
Models to estimate expected claim cost (=risk premium)
Trade / Fleet development Market discipline / capacity
The impact of major claims
Understand the actually covered exposure
• Global Marine Insurance – Overview
• Cargo – market & results
• Hull – market & results(with some words on major losses...)
• Offshore Energy market/results
Global Marine Insurance Report 2012
Major losses 2012
29« The Economist » June 9th‐15th 2012
Major Hull losses 2012
30
Major claims in % of ship valuesby calendar year of occurence
0.00%
0.05%
0.10%
0.15%
0.20%1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Cost of maximum three claims in % of total insured value
Source: Cefor – Nordic Marine Insurance Statistics as of 30 June 2012Figures reflect 100% of all vessels, not the share written in a specific market.
as of 30 June 2012
0.000%
0.050%
0.100%
0.150%
0.200%
0.250%
0.300%
0.350%
0.400%
0.450%
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,00020
00
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Claim per Sum Insured & Average Sum Insured
Average Sum Insured excluding total losses including total losses
Source: Cefor Nordic Marine Insurance Statistics as of 30 June 2012; Figures reflect 100% of all vessels, not the share written in a specific market
Average insured valueClaim cost in % of total total insured value
32
Watch your Exposure – one Costa Concordia can double the cost relative to the total insured value
Can it get worse...?
Increasing vessel size
Increasing valueaccumulation per vessel
• Global Marine Insurance – Overview
• Cargo – market & results
• Hull – market & results(with some words on major losses...)
• Offshore Energy market/results
Global Marine Insurance Report 2012
Offshore Energy Premium 2011 – by markets
No data: Kazakhstan.
*
* includes proportional andfacultative reinsurance
Total: 4.5 USD billionActual increase 2010 to 2011: 11%
(new)
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2011
2012
Average Day Rates
Global Offshore EnergyPremium
Oil price, Brent Crude
No. Contracted Rigs
Offshore Energy Premium Energy mobiles, Day rates, Oil Price
Index of evolution, 2000 = 100%
Sources: No. Contracted rigs, day rates: RigZone, Oil price: Energy Information Administration (US), 2011 figures as of 31.07.11
0%
50%
100%
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1996
1997
1998
1999
2000
2001
2002
2003
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2005
2006
2007
2008
2009
2010
2011
outstanding
paid 12th year
paid 11th year
paid 10th year
paid 9th year
paid 8th year
paid 7th year
paid 6th year
paid 5th year
paid 4th year
paid 3rd year
paid 2nd year
paid 1st year
2005Katrina & Rita
2004Ivan
2008Ike
Soft market
2009-11 no major hurricane activity, but…
Offshore Energy – Gross Reported Loss Ratiosincluding liability (new!) – Underwriting years 1996 to 2011
As of December 2011:
Summing up Offshore Energy
Volatile business, strong hurricane impact – less in recent years.
Long time lag between accident and claims payment(due to technical complexity of the insured objects)
No regular claims patterns. (Claims reserves set according to knowledge about individual claims).
Recent development: Reduced hurricane impact (2012 Hurricane Isaac:
first Gulf of Mexico hurricane in four years, little impact on results)
Increasing frequency of large single loss events (physical loss and liability)
Events with high liability cost in 2009 and 2010 2011: two losses xs 300 MUSD (Gryphon Alpha, Banff) 2012: one loss xs 300 MUSD (KS Endeavour)
Thank you!
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