MarineCommercialPIReview 1 2012web

www.ajginternational.com

MARINEP&I COMMERCIAL MARKET

REVIEW 2012

1

Welcome from the Executive Director 3

Fixed Premium P&I Insurance Explained 4

Commercial P&I Market Environment 6

Future of the Commercial Market 7

Review of the last 18 Months 8

Non-IG P&I Market Overview 10

Commercial P&I Market Facts & Figures

• British Marine 14

• Eagle Ocean Agencies Inc 15

• Hanseatic Underwriters 16

• Hydor 17

• Ingosstrakh Insurance Co 18

• Lodestar Marine Limited 19

• Navigators Insurance Company 20

• Osprey Underwriting Agency Limited 21

• RaetsMarine BV 22

• Rosgosstrakh Ltd 23

Non International Group P&I Mutual Market Facts & Figures

• Ceylon Ship Owners Mutual P&I Club 26

• China Shipowners Mutual Assurance Association 27

• Hellenic Mutual P&I & War Risks Association 28

• Korea Shipowners Mutual P&I Association 29

Non-IG Charterers Specialist Facilities Facts & Figures

• Charterama BV 32

• Charterers P&I Club 33

• Norwegian Hull Club 34

Industry Statistics 36

Rating Agency Analysis 38

Major Limiting Conventions & Statutes Affecting P&I Risks 40

Contacts 49

CONTENTS

3

MARINE P&I COMMERCIAL MARKET REVIEW 2012

Gallagher London is one of the leading global marine insurance brokers in the P&I industry sector. One of our corebeliefs is transferring all pertinent market information to our clients and business partners.

The P&I market is broad and varied when it comes to its products, service, security, strength and flexibility. Many brokerstend to focus on reviewing the “main-stream” International Group P&I Clubs and we often see many brokers P&I reviewswhich more or less offer the same statistics and analysis without real content. We at AJG strive to offer a valuable andaccurate opinion on market conditions, which sets us apart from our competitors.

The commercial P&I market, also referred to as “the fixed premium market” has been somewhat regarded as secondaryin the broker review process. This is one of the reasons why we have decided to compile our first Commercial P&I MarketReview, in addition to our Annual P&I Review and Mid-Year P&I Review, which will continue to focus on the InternationalGroup Clubs.

Our view at Gallagher London is that the non-IG market is an integral part of the maritime insurance industry, offeringproducts and services, where some of the “blue water” P&I Clubs lack enthusiasm to participate in this risk profile.

With many P&I Clubs protesting about new building rates, as well as the inherent “churn effect”, with the need to increase rates year on year, should this be a market sector they should consider more seriously?

There are a number of P&I facilities, which fall outside of the International Group of P&I Clubs’, that offer covers aimed at specific types of vessel operators. The AJG Commercial P&I Market Review will focus on the leading fixed premium,non-IG Mutual and Charterers Liability facilities, which are generally accessed via London brokers.

We have received tremendous support from the commercial market principals, who agree that long establishedcommercial P&I markets are often missed out from publications.

Gallagher London P&I remains at the forefront as industry leaders, this is something we are extremely proud of and demonstrates our value added service.

Sincerely,

Malcolm Godfrey

Executive Director; Gallagher London

MESSAGE FROM THE EXECUTIVE DIRECTOR MALCOLM GODFREY

WELCOME TO OUR FIRST COMMERCIAL P&I MARKET REVIEW

4

WHAT IS FIXED PREMIUM P&I INSURANCE?

Fixed premium P&I insurance indemnifies ship owners, operators and charterers for third party liabilities arising from a fortuitous event or a marine peril. Third party risks include a carrier’s liability to a cargo owner for damage to cargo, a ship’s liability after a collision, environmental pollution, the ship’s liability to its crew, fines and war risks etc. The term“fixed premium” means exactly that, as the terms and conditions offered by a commercial insurance company do notexpose clients to potential excess calls, unlike IG Group Clubs.

The premiums involved in this market sector are often more competitive, compared to an IG Group Club option, asinsurance packages are specifically tailored to meet the demands of the risk entailed, on a reduced limit of liability basis.

DO IG P&I CLUBS PROVIDE FIXED PREMIUM INSURANCE?

Fixed premium insurance contracts are typically provided by insurance companies or underwriting agents outside of the International Group of P&I Clubs, however some of the IG P&I Clubs do provide “Owners P&I” fixed premium terms for some longstanding fleets, US flagged fleets and Government fleets, which have been approved by theInternational Group.

A number of P&I Clubs, such as American, Gard, SOP and Steamship Mutual also have fixed P&I premium facilities in place for smaller inland craft and U.S. yachts. AJG will focus on these facilities in our “Marine P&I Review 2012” which will be published towards the end of this year.

All of the IG Clubs provide alternative fixed insurance products, such as Charterers’ Liability Insurance and other marinerelated products, which do not fall under the conventional IG Group P&I product or IG reinsurance programme.

WHAT ARE THE DIFFERENCES BETWEEN COMMERCIAL MARKET AND IG GROUP P&I INSURANCE?

• GENERAL INCREASES - The fixed premium market does not adopt the annual general increase philosophy, which isa tradition practiced amongst most of the IG P&I Clubs. Renewals are instead underwritten on the assureds’ individualmerits and loss record, although there may be increases sought on the basis of exposure and operating costs or theoverall performance of the insurers portfolio.

• ANNUAL MANDATORY REQUIREMENTS - Over the last few years we have seen many P&I Clubs’ insert annualmandatory uplifts/ requirements, which are often non-negotiable, such as deductible increases etc. This is a practicewhich the commercial market does not follow.

• SUPPLEMENTARY OR EXCESS CALLS - IG Group Clubs have the power to make excess supplementary calls if there is a need to raise funds, which are non-negotiable. The non-mutual commercial insurance companies do not have this capability.

• RELEASE CALLS - A client has the freedom to change insurer without having to release themselves from futureliabilities to supplementary calls or excess supplementary calls, which is a fundamental part of the IG system.

• COMPETITION - The commercial insurance companies are able to offer independent terms as well as competing with each other to win business. All of the non-IG facilities are free from the constraints of the International GroupAgreement, something which the IG Clubs voluntarily abide by.

FIXED PREMIUM P&I INSURANCE EXPLAINED


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• SECURITY GUARANTEES - IG P&I Clubs have an integral advantage over the commercial insurance market, with the ability to put up an immediate letter of guarantee to secure the release of an arrested vessel, without additional cost.However, fixed premium insurers typically need to contact their reinsurers to obtain security guarantees, which can taketime and may come with additional costs, which would ordinarily be passed onto the assured. It is important to note thatthe ability of each individual insurance company differs, when it comes to issuing letters of security.

• THE “OMNIBUS RULE” - The fixed premium market does not benefit from the IG Club “Omnibus Rule”, which allowsthe individual IG Club board’s to decide whether they can indemnify a Member in difficulty.

• UNDERWRITING FOR PROFIT - IG Group Clubs are focused on “not for profit service”, whereas a commercialinsurance company can be more profit focused, which is an important factor to consider, when handling claims toensure that the claimant is indemnified at an appropriate level. This is where a strong broker like AJG will add value!

• SERVICE PHILOSOPHY - In an IG Group Club, the managers are the “servants” of the Club, the overall control of the Clubs are in the hands of its Members and its ship owner boards, who decide on policy changes, scope of cover, claims payments and premiums calls.

• LIMITS OF LIABILITY - Without access to the International Group Pool, fixed premium coverage will be limited to a specific limit of liability, however clients may still be exposed to catastrophes, which could potentially exceed smallerlimits. Choosing the appropriate level of cover is something that AJG can help you with.

• BLUE CARDS - Some fixed premium insurance companies issue blue cards which are not approved by a number of flag states or port authorities. It is vital to ensure that Bunker Blue Cards and/or CLC Blue Cards are accepted by the shipping authorities prior to trading.

• CERTIFICATES OF FINANCIAL RESPONSIBILITY (COFR) – A requirement under the US OPA 90 (United StatesOil Pollution Act), there is a requirement that any vessel over 300 GT requires a valid COFR and COFR guarantee coverin place. Guarantee coverage is provided by several COFR guarantee companies, which require letters of undertakingby an International Group P&I Club. Most of the fixed premium facilities are not approved by these guaranteecompanies. Therefore it is important to check this prior to trading to U.S. waters.

• DIVIDENDS - Some of the P&I Clubs pass back “dividends”, in the form of premium returns or not calling budgetedsupplementary calls in full to the Membership if the Club has experienced a good underwriting year.

6

There are a number of Commercial Fixed Premium Protection & Indemnity Facilities, Non-IG Mutual Insurers andUnderwriting Agencies, which operate outside of the International Group of P&I Clubs. These P&I facilities currently offer insurance solutions aimed at specific types of vessel operators, within a tonnage range of up to 25,000 gross tons, offering limits up to USD 500 million (higher GT caps and limits are also available depending on the facility). These facilities tend to target ship owners with smaller, short-trade vessels, principally operating in coastal or inland waters.

Some of the key advantages of insuring with a fixed premium insurer are that they can offer certainty of cost and lower,more accessible, limits of liability, with no liabilities for unbudgeted supplementary calls or annual general increases. Not all of the alternative facilities offer fixed premium covers, some are mutual. In addition to this there are exclusivecharterer’s liability specialist insurers, which cater to charterers and traders.

All fixed premium facilities target ship owners, operators, charterers and traders emanating from all geographical areas(subject to EU/US Sanctions), certain facilities however tend to shy away from passenger, cruise and U.S. flagged, trans-Atlantic and trans-Pacific business. Coverage for over-age and non-IACS classed tonnage is also available from the majority of fixed premium facilities.

The fixed premium P&I market has evolved considerably over the last five years, with more new entrants than exits from this market sector. This is perhaps to be expected given the IG Group system’s workings and the competitive nature of the commercial market. In addition, there have also been a number of investors looking to make new inroads into the fixed premium market, which is a particularly attractive headline revenue growth area.

The following table provides a snap shot for the last five years market development:

NON-IG MARKET DEVELOPMENT (LAST FIVE YEARS: 2007 - 2012)

ESTABLISHED MARKET NEW ENTRANT SPECULATIVE MARKET EXIT

British Marine Ceylon P&I Club *Royal Sun Alliance P&I South of England Mutual

(Est. 2011) (2011)

Charterers P&I Club Charterama BV *Tindall Riley Small

(Est. 2009) Ship Fixed Facility

China P&I Club Eagle Ocean Marine

(Est. 2010)

Hanseatic P&I Hellenic Mutual P&I

(Est. 2011)

Ingosstrakh Hydor

(Est. 2009)

Korea P&I Club Lodestar Marine Ltd

(Est. 2012)

Navigators P&I Rosgosstrakh P&I

(Est. 2010)

Norwegian Hull Club

Osprey Agency

Raetsmarine BV

* A rumoured new P&I market facility, which AJG is following closely

THE COMMERCIAL P&I MARKET ENVIRONMENT


7

THE FUTURE OF THE COMMERCIAL MARKET

There are a number of dominant factors driving the future of the commercial P&I market, which we have identified as follows:

• The invariable “Soft” P&I Fixed Premium Market

• Increased competition, as a result of new market entrants

• Speculative new P&I markets

• Minor concerns regarding the reliability of infant P&I facilities

We at Gallagher London see the fixed premium marketsector continuing to remain relatively soft for theforeseeable future. This is mainly due to the abundantsupply of fixed premium capacity, which is now expandingfurther due to the number of new entrants into the market.

We have seen fixed premium and charterer’s liabilityinsurers trying to enforce small increases at renewal, in an attempt to increase premiums to cover inflationaryoperating costs. Typically, these increases usually rangebetween 2.5% to 5%; with a loss record ranging from50% to 100%. There is also an underlying current, wherea hardening reinsurance market may put pressure oninsurers to drive prices upwards. However, with thecommercial market’s competitive nature, most clientsrenew on an expiring basis or less, this is a trend that we see continuing in the short to midterm.

Looking at the commercial markets’ as a whole, we seethe fixed premium and non-IG mutual market continuingto grow with further new entrants. There are variousspeculative rumours which suggest that RSA (Royal SunAlliance) are reviewing their options to enter the P&Imarket. The Royal Sun Alliance Group is expected toprovide the first $100 Million of reinsurance to Lodestar,who have now commenced trading. Furthermore, it is alsosaid that German based insurance consortium HanseaticP&I are in the process of opening a London basedrepresentative office in the coming months.

On the IG Group side, it is rumoured that Tindall Riley, themanagers of the Britannia P&I Club, are in the process ofimplementing a small ship fixed P&I facility. Tindall Riley hadpreviously launched an H&M/ Fixed P&I product named“Marianne” in the late 1990s, which never got off theground to any extent.

Turning to the non-IG mutual insurers, the China P&I Clubhas been attempting to enter into the International Groupleague for many years. At this stage, the China P&I Clubhas not been successful; however with their impressivefree-reserve position and ambition to grow outside ofChina, we may see the first Chinese entrant into the IGgroup system in the not too distant future.

Looking back at the South of England’s exit from themarket in 2011, which was the first mutual club failuresince Ocean Marine Mutual in 2000, there has been sometalk in the market that the Ceylon P&I facility will replicateit, by offering terms for non-IACS classed vessels, up toand exceeding 25,000 GT. At the moment the facility doesoffer coverage for all vessel types and size, however theClub is primarily focused on areas regional to the IndianOcean and South China Sea shipping industry.

As a result of further market entrants, we should see thenon-IG market become even more competitive, with ratescontinuing to fall amongst the more established providers,who will be fighting for position to gain good business.The more recent new facilities will continue to operate at the fringe level of the market, whilst building up theirportfolios and claims service reputation.

With the growing number of international commercialfacilities offering P&I insurance, there are some minorconcerns that the increasing supply of capacity will not besustainable or stable in the long term amongst the non-established insurers. With P&I premiums already fallingand the average claim value increasing annually, some ofthe smaller facilities may be forced to exit the market intheir infant stage, if technical underwriting deficits resultin carriers and reinsurers withdrawing their support.

Consolidation amongst the smaller facilities to command a collective market share could potentially assist to avoid apremature market exit. However, it is not in the commercialmarkets nature to do so, as external pressures andobligations to reinsurers would ultimately hinder this process.


8

FEBRUARY

JUNE

JULY

SEPTEMBER

OCTOBER

NOVEMBER

DECEMBER

The Hellenic Mutual facility commences underwriting P&I risks.

South of England announces excess calls of 20% on the 2007/08 policy year, 45% on the 2008-09policy year and 45% on the 2009-10 policy year. The Club also warned of possible further calls onthe 2010/11 year.

Navigators P&I recruit Damian Mustard from Thomas Miller (UK P&I Club) as an Underwriter in theP&I department.

Eagle Ocean Marine underlying security switched to 100% American Club, reinsured with a numberof Lloyds syndicates.

QBE/ British Marine raise a dispute against Lodestar - At the centre of the case were allegations theLodestar are developing the new project while still working at British Marine. Consequently, QBEaccused their former staff of breaching contractual obligations. The High Court later advised thatLodestar was not to start operation until April/May 2012.

Osprey Underwriting Agency recruit Richard Lovett, from RaetsMarine BV (London), as a P&IUnderwriter.

South of England placed in provisional liquidation at the order of the Bermuda Monetary Authoritywith a final hearing being scheduled in November 2011.

South of England placed in liquidation - The Bermuda Courts have confirmed the appointment of Joint Liquidators at the South of England P&I Club. The decision completes the process which beganwith the Bermuda Monetary Authority petitioning for a winding up order on 7 October and follows the adjournment of the formal proceedings on 18 November.

The liquidation was ordered on the basis that the Club was insolvent, with the BMA believing thatmuch of the $ 31 million excess call ordered in June would prove uncollectible. The Club managerscounter argument that early excess calls were collected, and their attempts to collateralise the debtfailed. It is also understood that questions were raised as to the appropriateness of the Club'scorporate structure and governance.

The liquidators had 6 months to convene meetings of the members and creditors.

RaetsMarine BV (London) recruit David Osborne from the Steamship Mutual as an Owners P&Iunderwriter.

Leading British Marine figure, Robert Johnston, retired from his position as Chairman at the end of the year. Robert was at the helm of British Marine since its demutualisation and played a key role in itsdevelopment. We wish Robert continued health, happiness and success. We suspect that the marketwill see his return in the not too distant future.

REVIEW OF THE LAST 18 MONTHS


2011

9


JANUARY

MARCH

APRIL

MAY

JUNE

JULY

Andrew Hearn joins British Marine from Tindall Riley, manager of the Britannia P&I Club as Portfolio Manager

Charterama BV reinsurers, REAAL Schadeverzekeringen NV, downgraded by S&P from A- to BBB+

RaetsMarine BV (London) recruit Arneaz Nordin from the Charterers P&I Club as an underwriter for Charterers’ Liability

Charterer’s Liability Underwriter, Powan Li, departs from the Norwegian Hull Club.

Tindall Riley recruits Mark Esdale from Charles Taylor Consulting (Standard P&I Club) and Julie Page from Thomas Miller (UK P&I Club). Still no word on the rumoured new small ship fixed premium facility.

British Marine recruits Paul Flowers from the North of England P&I Association to join the claims team

The South of England P&I Association was due to hold its first creditors meeting in May 2012, but the liquidators applied for, and were granted, a 3 month extension to this deadline. The firstmeeting will take place in late September 2012: an initial circular was sent out to interested parties on6 July, and promptly recalled. The statutory solvency statement attached to the circular pointed to anaudited statutory deficit in excess of $ 31.3 million at 31 December 2009.

Osprey Underwriting Agency’s Guy Pierpoint is appointed CEO, as Lev Osman steps down.Furthermore Nick Ballantine has re-joined the Board as Chairman.

German based insurance consortium Hanseatic P&I’s participating insurance companies raised to six as UNIQA Sachversicherung AG, Vienna, became part of Hanseatic P&I and Hanseatic Defence.

2012

10

FACILITY CARRIER ANNUAL PREMIUM/ TONNAGE/VESSEL2011 INCOME #

BRITISH MARINE QBE Insurance (Europe) Ltd US$ 125,000,000 12,600,000 GT

S&P: A+

CEYLON P&I CLUB Mutual Insurance Company US$ 5,400,000 1,178,444 GT

S&P: Unrated

CHARTERERS P&I CLUB Great Lakes/ Munich Re US$ 27,200,000 Approx. 230 + Clients

S&P: AA

CHARTERAMA BV REAAL Schadeverzekeringen US$ 10,000,000 Approx. 250 + Clients

NV

S&P: BBB+

CHINA P&I CLUB Mutual Insurance Company US$ 53,000,000 27,800,000 GT

S&P: Unrated

EAGLE OCEAN MARINE American P&I Club/ US$ 5,000,000 454,211 GT

Lloyds of London

S&P: BB+

HANSEATIC P&I Insurance Consortium – US$ 15,800,000 2,050,000 GT

See Page 16

S&P: Various ”A” rated

HELLENIC P&I MUTUAL Mutual Insurance Company US$ 1,250,000 -

S&P: Unrated

INGOSSTRAKH Ingosstrakh US$16,250,000 1,029 vessels on risk

S&P: BBB

NORWEGIAN HULL Norwegian Hull Club US$ 11,000,000 Approx. 150 charterers clients

CLUB S&P: A

KOREA P&I CLUB Mutual Insurance Company US$ 30,100,000 10,007,000 GT

S&P: Unrated

HYDOR Lloyds Brit Syndicate 2987 US$ 2,000,000 -

S&P: A+

LODESTAR MARINE LTD RSA and Various - -

Lloyds Syndicates

S&P: A

NAVIGATORS P&I Navigators Insurance Company US$ 22,500,000 2,200,000 GT

S&P: A

OSPREY Lloyds of London US$ 34,000,000 Approx. 3,000 vessels

S&P: A+

RAETSMARINE BV Amlin Corporate Insurance BV P&I: US$ 33,500,000 13,000,000 GT

S&P: A CL: US$ 62,000,000

ROSGOSSTRAKH LTD Rosgosstrakh Ltd US$ 3,800,000 1,005,000 GT

Local Rating: Expert Ra A++

NON-IG P&I MARKET OVERVIEW


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LOCATION LIMIT MAX SIZE VESSEL EXCLUSIONS ETC

LONDON, Up to US$ 500 Million; Up to 10,000 GT Avoids passenger risks, dirty tankers,

UNITED KINGDOM USD 1 Billion in some cases Charterers up to 30,000 GT reefers and vessels trading trans-Atlantic

or trans-Pacific. Does not write Turkish

Business.

COLOMBO, Up to USD 500 Million No limit Writes all classes of business, including

SRI LANKA Non-IACS tonnage Excludes Trans-

Pacific/Atlantic

LONDON, Up to US$ 350 Million No Limit Accepts Charterers Liability Risks Only,

UNITED KINGDOM FD&D limited to US$2 Million. Does not

write passenger business.

ROTTERDAM, Up to 100 Million No Limit Accepts Charterers Liability Risks Only,

NETHERLANDS FD&D limited to US$ 2 Million

BEIJING, CHINA IG-Club Limits No Limit -

NEW YORK, U.S.A P&I: Up to US$ 25 Million Up to 12,500 GT Coverage is not available to operators

FD&D: Up to US$ 2 Million based in the USA

HAMBURG, GERMANY Up to US$ 500 Million Up to 40,000 GT -

Max 10,000 GT for tankers

ATHENS, GREECE Up to US$ 500 Million Up to 25,000 GT -

MOSCOW, RUSSIA P&I: Up to US$ 500 Million No Limit Does not write large tankers,

FD&D: US$ 1 Million 90% of vessels are cruise vessel or US based operators.

< 10,000 GT

BERGEN, NORWAY Up to US$ 200 Million No Limit -

SEOUL, KOREA Up to US$ 300 Million Tankers: < 10,000 GT -

Non-Tanker: < 100,000 GT

OSLO, NORWAY Up to US$ 500 Million Up to 10,000 GT -

LONDON, Up to US$ 500 Million Up to 10,000 GT -

UNITED KINGDOM

LONDON, Up to US$ 500 Million Up to 10,000 GT Does not write passenger, private/pleasure

UNITED KINGDOM yachts and US Flagged business.

LONDON, Up to US$ 100 Million Up to 25,000 GT Does not write Tanker (persistent cargo)

UNITED KINGDOM business. US Flagged business limited

to US$ 1 Million.

ROTTERDAM, P&I: Up to US$ 500 Million Up to 25,000 GT -

NETHERLANDS CL: Up to US$ 500 Million No Limit on Charterers

FD&D: Up to US$ 2 Million Liability

MOSCOW, RUSSIA Up to US$ 100 Million Up to 25,000 GT Tankers up to 8,000 GT


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COMMERCIAL P&I MARKETFACTS AND FIGURES

POLICY YEAR INFORMATION IN US$

ANNUAL PREMIUM 5 YEARS

2011 2010 2009 2008 2007

Premium Income $125,000,000 $ 133,500,000 - - -

Claims Incurred - - - - -

Surplus/ Deficit - - - - -

ENTERED TONNAGE 5 YEARS

2011 2010 2009 2008 2007

Annual Gross Tonnage 12,600,000 13,200,000 - - -

OTHER INFORMATION /PRODUCTS/NEWS

• British Marine underwrites in excess of 10,000 vessels, which is backed by S&P 'A+' rated security.

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Reinsurance Carrier: QBE and Lloyds of London S&P Information: A+Limits offered: Up to US$ 500 Million Vessel Cap: Up to 10,000 GT (Charterer’s Liability up to 30,000 GT)Location: London, United Kingdom

Established in 1876, British Marine is a specialist Hull & Machinery, Protection and Indemnity and Legal Expenses insurerfor small to medium sized vessels. At the turn of the 21st Century British Marine was de-mutualised and more recently in2005 the privately held fixed premium insurer was successfully acquired by the QBE Group. With effect from 31st March2010, all of British Marine’s assets and liabilities, including its current and past contracts of insurance and reinsurancewere transferred to QBE Insurance (Europe) Limited. The “British Marine” brand name has now become a trading namefor QBE.

Today British Marine provides fixed cost P&I insurance solutions, as well as H&M and Charterer’s Liability Insuranceproducts, offering P&I limits up to USD 500 million (limits up to USD 1 Billion are also available). The insurer typicallywrites vessels up to 10,000 GT, with 90% of their portfolio consisting of medium size merchant vessels and the balanceof the portfolio being made up of fishing vessels and super yachts.

On the Charterer’s Liability side, limits for P&I are available up to USD 100 million with Charterer’s Damage to Hull beinglimited up to USD 50 million. There is however a guideline tonnage cap of 30,000 GT.

GEOGRAPHIC SPREAD OF BUSINESS TYPE OF ENTERED VESSEL

40% Western Europe

17% Far East

10% Eastern Europe

9% Middle East

9% Americas

5% India

4% Scandinavia

3% Africa

3% Australasia

28% General Cargo

20% Tugs & Barges

17% Bulkers

10% Containers

9% Others

7% Fishing

5% Tankers

3% Yachts

1% Dredgers

BRITISH MARINE www.britishmarine.com


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Eagle Ocean Agencies, Inc. is an affiliated company of The Shipowners Claims Bureau, Inc., who are the managers of theAmerican P&I Club, and Atlantic Marine Associates, Inc., which is a general marine adjusting and claims handling company.In 2010, the Directors of the American P&I Club formed a separate fixed premium facility, namely Eagle Ocean Marine,offering Protection and Indemnity and Freight, Demurrage and Defence insurance solutions.

The facility is primarily focused on operators of smaller ships, below 12,500 gross tons, operating in regional waters, with policy limits being available up to $25 million for P&I and $2 million for FD&D.

P&I coverage is available to operators on a worldwide basis; however coverage is not available to operators based in theU.S.A. or trading exclusively in U.S. waters. At present the facility is more Far East focused, with 60% of their portfolioemanating from this region.

The agency has recently re-structured its insurance and reinsurance arrangements, with American Steamship OwnersMutual Protection and Indemnity Association, Inc. providing the primary security. This in turn will allow Eagle Ocean to put up American Club security guarantees up to its primary limits, as well as providing American Club blue cards.

Reinsurance Carrier: American P&I Club (Quota Share Reinsurance in London and German Markets)S&P Information: BB+ Limits offered: Up to US$ 25 Million Vessel Cap: Up to 12,500 GTLocation: New York, New York, USA



2011 2010 2009 2008 2007

Premium Income $ 5,000,000 $ 500,000 N/A N/A N/A

Claims Incurred $ 1,500,000 $ 0 N/A N/A N/A

Surplus/ Deficit $ 3,500,000 $ 500,000 N/A N/A N/A


2011 2010 2009 2008 200

Annual Gross Tonnage 454,211 50,000 N/A N/A N/A


• Through the American P&I Club network, Eagle Ocean Marine has associated offices in New York, London, Piraeus and Shanghai, combined with a fullnetwork of claims agents Worldwide.


60% Asia Pacific

25% Other

10% Europe

5% Americas

35% Tankers

25% Tug & Barge

20% General Cargo

15% Others

5% Bulkers

EAGLE OCEAN AGENCIES INC www.eagleoceanmarine.com


85% Europe

10% Other

5% Asia Pacific

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Hanseatic P&I is an insurance consortium, which was founded in 2005, by five German Insurance Companies: Allianz, Gothaer,Kravag, Ergo and Sovag. March 2011 saw Sovag leave and Torus Insurance (Europe) AG join. More recently in July 2012 thenumbers of participating insurance companies increased to six as UNIQA Sachversicherung AG, Vienna, also became part ofHanseatic P&I and Hanseatic Defence. The consortium is managed by Zeller Associates Management Services GmbH, Hamburg.

Hanseatic P&I provide ship owner’s liability, charterer’s liability and inland craft P&I cover. In addition FD&D is provided as eitheran additional or separate legal expenses cover under the brand name “Hanseatic Defence”, based on the same consortium ofinsurance companies as its P&I product. The facility offers P&I cover for all types of vessels with a limit up to USD 500 Million.The core risk appetite of Hanseatic P&I is small and medium size general cargo and container vessels, as well as liquid cargoand dry bulk. Additionally Hanseatic has expertise in traditional, offshore and specialist vessels of any type. The underwritingphilosophy at Hanseatic was originally focused on German and Northern European interests and later diversified itsunderwriting criteria to include other geographical areas. At present, Hanseatic P&I core business emanates from all parts of Europe, Russia and Turkey and it is presently looking to expand to select Middle East /North Africa and Asian regions.

Reinsurance Carrier: Allianz Global Corporate & Specialty AG – Swiss Re – Lloyds of LondonS&P Information: ALimits offered: Up to US$ 500 MillionVessel Cap: Up to 40,000 GT (max 10,000 GT for tankers)Location: Hamburg, Germany



2011 2010 2009 2008 2007

Premium Income $ 15,800,000 $ 14,700,000 $ 11,200,000 $ 7,700,000 $ 5,800,000

Claims Incurred $14,700,000 $ 12,900,000 $ 7,200,000 $ 7,900,000 $ 3,900,000

Surplus/ Deficit $ 1,100,000 $ 1,800,000 $ 4,000,000 -$ 200,000 $ 1,900,000


2011 2010 2009 2008 2007

Annual Gross Tonnage 2,050,000 - - - -

OTHER INFORMATION /PRODUCTS/NEWS• Hanseatic’s insurance consortium is made up of: Allianz Global Corporate & Specialty AG (S&P: AA), Ergo Versicherung AG, Gothaer Allgemeine

Versicherung AG (S&P: A-), Kravag-Logistics Versicherungs-AG (S&P: A+), Torus Insurance (Europe) AG (AMB: A-) and UNIQA Sachversicherung AG (S&P: A-).


42% General Cargo

33% Container

14% Other Cargo

6% Bulkers

3% Miscellaneous

1% Passenger

1% Tankers


HANSEATIC P&IHANSEATIC UNDERWRITERS www.hanseatic-pandi.com

17

HYDOR www.hydor.no

Established in 2010, Hydor is an underwriting agent on behalf of the Brit Syndicate 2987 (Lloyd’s of London) offeringfixed premium Owner's Protection & Indemnity, Charterer's P&I, FD&D and other marine related insurance products.Hydor is licensed and regulated by the Financial Supervisory Authority (FSA) of Norway.

Through Lloyd’s of London the Brit Syndicate 2987 holds security ratings from Standard & Poor's A+ (Strong).

The fixed premium facility looks at vessels up to 10,000 GT, providing limits up to USD 500 million for P&I andCharterer’s Liabilities.

Whilst Hydor is an underwriting agent for the Brit Syndicate, the claims service is provided by C Solutions Limited, whichis a legal and claims consultancy staffed by lawyers from the major UK shipping law firms, former P&I Club SeniorManagers, Master Mariners and Engineers. C Solutions have been authorised by Hydor to handle all claims exclusively.

Reinsurance Carrier: Lloyd’s of London [Brit Syndicate 2987]S&P Information: A+ Limits offered: Up to US$ 500 MillionVessel Cap: Up to 10,000 GTLocation: Oslo, Norway



2011 2010 2009 2008 2007

Premium Income $ 2,000,000 - N/A N/A N/A

Claims Incurred $ 100,000 - N/A N/A N/A

Surplus/ Deficit $ 1,900,000 - N/A N/A N/A


2011 2010 2009 2008 2007

Annual Gross Tonnage Not Disclosed

OTHER INFORMATION /PRODUCTS/NEWS• Hydor also provides insurance products for Hull & Machinery, Energy (mainly for Norwegian focused operators) as well as offering Cargo insurance

on a standalone basis and for traders in combination with charterers P&I.• All claims are handled from C Solutions London headquarters (Lloyd's Building) and from dedicated branch offices in Newcastle, Monaco, Greece,

Dubai, India, Hong Kong, Shanghai, Australia and through a commercial and legal network of correspondents around the world.• Hydor’s 2012 Premium Income is estimated around US$ 5 Million.


33% Norway

13% Germany

9% Greece

6% Denmark

6% America

6% Middle East

6% Russia

5% Turkey

4% Greenland

3% France

3% Africa

2% Far East

2% Singapore

2% Cyprus

27% General Cargo

15% Offshore

12% Tanker

11% Other

8% Ferry

7% Bulker

7% RORO

6% Fishing

4% Tug

2% Container

1% Reefer


18

Not Disclosed

Ingosstrakh Insurance Co. is a private federal level Insurance Company, which was founded in 1947, based in Moscow, Russia.

The facility offers P&I, FD&D, H&M, Cargo and other marine related insurance solutions. The insurer has an internationalportfolio, however it holds a leading share of the Russian P&I Market giving particular preference to ship owners fromRussia, CIS and East European Countries.

The facility offers limits up to USD 500 Million for P&I and US$ 1 Million for FD&D. Ingosstrakh covers in excess of1,000 units, handling a large range of vessels from smaller inland and costal craft, to larger ocean going vessels inexcess of 20,000 GT. The facility does not cater to large tankers, cruise vessels or U.S. based business.

The facility has performed consistently well over the last twelve years with an aggregate loss ratio of 85.3%

The company is rated BBB- by Standard & Poor’s and a National Scale rating of ruAA++.

Reinsurance Carrier: Not DisclosedS&P Information: BBB- (Local National Rating ruAA+)Limits offered: US$ 500 Million (US$ 1 Million for FD&D)Vessel Cap: No limit, however 90% of the portfolio is <10,000 GTLocation: Moscow, Russia



2011 2010 2009 2008 2007

Premium Income $ 16,250,000 $ 16,750 000 $ 16,750,000 $ 16,250,000 $ 16,100,000

Claims Incurred $ 12,025,000 $ 8,542,500 $ 18,592,500 $ 17,062,500 $ 17,227,000

Surplus/ Deficit $ 4,225,000 $ 8,207,500 -$1,842,500 -$ 812,500 -$ 1,127,000


2011 2010 2009 2008 2007



• Hull & Machinery - Increase Value - Loss of Hire / Freight • War – Builders Risks – Cargo – Carriers and Liability Rolling Stock


37% Dry Cargo

17% Other

16% Tug & Barge

11% Fishing

9% Tanker

4% Bulkers

2% Container

2% Passenger

2% RORO


INGOSSTRAKH INSURANCE CO www.ingos.ru

19

Reinsurance Carrier: Lloyds of London [RSA and other A rated reinsurers]S&P Information: ALimits offered: Up to US$ 500 MillionVessel Cap: Up to 10,000 GTLocation: London, United Kingdom




2011 2010 2009 2008 2007

Premium Income N/A N/A N/A N/A N/A

Claims Incurred N/A N/A N/A N/A N/A

Surplus/ Deficit N/A N/A N/A N/A N/A


2011 2010 2009 2008 2007

Annual Gross Tonnage N/A N/A N/A N/A N/A


• Lodestar insurance products include; charterers liabilities, specialist operations, salvors liability, ship owners liability (SOL), contractual liability, war risks

(P&I), extended towers liability and FD&D.

N/A N/A


Lodestar Marine Limited (Lodestar) was established in 2012 and will provide fixed premium P&I insurance solutions. Lodestaris a partnership, backed by Tawa Plc, part of Groupe Artémis, a family owned investment company with consolidated assets inexcess of Euro 27 Billion.

Lodestar comprises of a team of experienced underwriters and claims executives plus in-house surveyors, supported byfurther administration staff based in Gloucester, under contract with Pro Insurance Solutions Limited.

The facility will write Fixed Premium P&I risks, with limits up to USD 500 Million in co-operation with RSA and other "A"rated insurers who will provide security. Typical vessels insured by Lodestar will not exceed 10,000 Gross Tons.

A global network of over 250 Correspondents has been established. In the event of a claim, security can be provided byeither a letter of undertaking or bank guarantee. Furthermore, Lodestar is in the process of finalising Flag State approvalfor the issuance of Blue Cards with acceptance already received from a number of Authorities including United Kingdom,Netherlands, Hong Kong and Australia etc.

Lodestar is authorised and regulated by the FSA as an appointed representative of Pro Insurance Solutions Limited.

LODESTAR MARINE LIMITED www.lodestar-marine.com

20


Established in 2004, the Navigators Insurance Group set up a fixed premium P&I facility protecting ship owners, managersand charterers against liabilities arising out of operating their vessels.

Today Navigators P&I, based in London, offers fixed-cost Protection & Indemnity cover to vessels in coastal, short-sea andlimited Ocean trades. The facility offers limits up to USD 500 million and looks to insure vessels up to 10,000 gross tons.

Navigators underwriting profile looks at all types of vessels, excluding passenger vessels and those with U.S. Flag, cover is also available on a worldwide trading basis, excluding U.S. waters.

In addition to Owner’s P&I, Navigators can also offer contractual liabilities as an extension of the main P&I coverage. Charterer’s Liability is also available to vessels below 10,000 GT.

Navigators Insurance Company and Navigators Specialty Insurance Company are both rated ‘A’ (Strong) by Standard & Poor’s.

Reinsurance Carrier: Navigators Insurance CompanyS&P Information: A Limits offered: Up to US$ 500 MillionVessel Cap: Up to 10,000 GTLocation: London, United Kingdom



2011 2010 2009 2008 2007

Premium Income $ 22,500,000 - - - -

Claims Incurred - - - - -

Surplus/ Deficit - - - - -


2011 2010 2009 2008 2007



• Navigators looks at all types of operators and tonnages up to 10,000 GT, however the facility does not cater to passenger, cruise, private/ pleasure

yachts or U.S. Flagged business.


58% Containers/General Cargo

13% Tug & Barge

12% Other

8% Dry Bulk

7% Tankers

2% Offshore

NAVIGATORS INSURANCE COMPANY www.navpandi.com

37% UK/Europe

10% Mexico and Central America

13% South America

24% Asia

9% Middle East

5% Africa

2% Other

21


Established in 1991, Osprey Underwriting Agency is a specialist P&I fixed premium insurance provider. Celebrating their 21st year this year, Osprey is the longest established fixed premium insurer in London.

The Agency provides insurance services to ship owners on a variety of vessel types and operations, with a focused portfolio of tugs, barges and fishing vessels.

The facility caters for vessels of up to 25,000 GT, engaged in the carriage of dry cargoes and up to 10,000 GT for all othervessel types. Osprey cannot provide insurance for tankers carrying persistent oil cargoes. Coverage can be provided on aworldwide basis, which is backed up by an extensive global network of correspondents and Lloyd’s agents.

Osprey is actively looking to expand its non-US book of business with a focus on Asia, whilst maintaining its leading positionas providers of U.S. Primary P&I Insurance.

Reinsurance Carrier: Lloyds of London [Various Syndicates]S&P Information: A+Limits offered: Up to US$ 100 MillionVessel Cap: Up to 25,000 GT (Dry Bulk) and 10,000 GT all other vessel typesLocation: London, United Kingdom



2011 2010 2009 2008 2007

Premium Income $34,000,000 $34,000,000 $31,000,000 $27,000,000 $21,000,000

Claims Incurred Not Disclosed

Surplus/ Deficit Not Disclosed


2011 2010 2009 2008 2007

Annual Gross Tonnage Not Disclosed - - - -


• USA Flagged business is limited to USD 1 Million• H&M can be offered in combination of P&I upon request, up to a value of USD 12.5 Million including IV • Specialist Marine Employer’s Liability and Marine General Liability coverage is also available• Osprey does not write tankers carrying persistent cargoes (i.e. dirty products)


49% Tugs & Barges

25% Fishing

14% Oil Field Services

6% Other

3% Passenger

3% Dry Cargo

OSPREY UNDERWRITING AGENCY LIMITED www.special-risks.co.uk

66% USA

14% Europe

7% Caribbean

5% Asia

4% South America

2% Other

1% Middle East

1% Africa

22


RaetsMarine BV was founded in 1993, initially writing charterers liability insurance only. Today, RaetsMarine BV areunderwriting agents of Amlin Corporate Insurance BV, where they provide P&I, FD&D, Charterers Liability and othermarine related products.

The “Owners P&I” facility targets small to medium sized vessels, up to 25,000 GT, as well as supply vessels, fishing boats,tugs and barges and other specialist units.

For Charterers Liability, RaetsMarine has no restrictions on vessel type, size, age or territory. The facility currently servesover 1,000 charterers, including traders, operators, NVOCC's and others chartering vessels, offering limits up to US$ 500Million (for both owned and chartered business).

RaetsMarine BV is backed by Amlin Corporate Insurance BV which is A- rated by Standard and Poor’s.

Reinsurance Carrier: Amlin Corporate Insurance BV S&P Information: A -Limits offered: Up to US$ 500 MillionVessel Cap: Up to 25,000 GTLocation: Rotterdam, Netherlands (with underwriting authority in London, United Kingdom)



2011 2010 2009 2008 2007

Premium Income $ 95,500,000 - - - -




2011 2010 2009 2008 2007



• RaetsMarine BV has branch offices in Paris, London and Singapore.• The RaetsMarine Charterer products also offers, Bunker Insurance, Kidnap and Ransom Insurance, Charterers’ Piracy, Trade Disruption Insurance,

Detention Insurance, Freight Insurance, Shipowners’ Liability (SOL) Insurance and War Risk Insurance.• Additional Covers also include, Multimodal Insurance (Ports and Logistics), Marine Cargo Insurance, Marine Hull Insurance, Marine Specialist Covers,

Marine Defence Insurance (FD&D), Blue Card – Bunker Convention Liability Cover


19% General Cargo

17% Specialist Craft

16% Tug

15% Fishing

15% Barge

7% Tankers

5% Other

4% Passenger

2% Bulk Carrier

RAETSMARINE BV www.raetsmarine.com

55% Europe

28% Asia-Pacific

8% Middle East/India

5% Central South America

2% Africa

1% North America

1% Russia & CIS

23


Established in 1921, Rosgosstrakh Ltd is one of the leading Insurance companies in Russia. In 2010 the insurance companywas privatized and today it employs over 100,000 professionals in 83 regional branches comprising of 3,000 officesthroughout Russia.

As a Marine Insurer, Rosgosstrakh is the third largest carrier in Russia, which provides H&M and P&I insurance solutions,catering to vessels up to 25,000 GT (and 8,500 GT for tankers), offering limits up to 100 Million. The insurer currentlyhandles in excess of 580 vessels, with a combined GT of 1,005,019 (based on 2011 policy year).

RGS is accredited by MLIT, Japan and UMA of Turkey as well as the maritime authorities and flag states such as Russia,Liberia, Malta, Panama and others. The insurer is also expected to become a member of BIMCO by the end of 2012.

RGS is locally rated by Expert Ra and currently holds a rating of A++

Reinsurance Carrier: USD 500,000 Retention (with a reinsurance treaty with various A rated carriers)S&P Information: Unrated (Local Rating - Expert Ra A++)Limits offered: US$ 100MillionVessel Cap: Up to 25,000 GT with tankers up to 8,500 GT Location: Moscow, Russia



2011 2010 2009 2008 2007

Premium Income $ 3,885,055 $ 3,286,643 $ 1,943,532 $ 744,480 -




2011 2010 2009 2008 2007

Annual Gross Tonnage 1,005,019 1,038,500 562,170 232,258 78,415


• Other products include: • Hull & Machinery insurance • Yacht insurance• Cargo insurance, as well as other liabilities (including terminals, ports, stevedores etc.)


ROSGOSSTRAKH LTD www.rgs.ru

100% Europe 30% Tanker

28% Other

20% Tug

11% General Cargo

4% Passenger

3% Barge

2% Fishing

1% Bulker

1% Reefer

1% RO-RO

1% Supply

25

NON-INTERNATIONAL GROUPP&I MUTUAL MARKETFACTS AND FIGURES

26


Established in 2011, the Ceylon Ship Owners Mutual P&I Club was created by members of the Asian ship owningcommunity, which is incorporated in Sri Lanka, as a company limited by guarantee. The Club only offers its membersMutual Protection and Indemnity insurance.

The Club management and operational undertakings are conducted by the Ceylon P&I Club Management Ltd, headquartered in Colombo. The P&I Club are supported by Asian and Lloyds of London reinsurers.

Currently the focus of the Clubs expertise is regional to the Indian Ocean and South China Sea shipping industry.However the club will expand by offering its product to all geographical regions in the future.

The Club offers limits of liability up to USD 500 Million and can cater to all vessel GT types and tonnages/ includingNon-IACS classed vessels.

Reinsurance Carrier: Kuwait Re – Lloyds of London S&P Information: UnratedLimits offered: Up to US$ 500 MillionVessel Cap: No LimitLocation: Colombo, Sri Lanka



2011 2010 2009 2008 2007

Premium Income $5,412,554 N/A N/A N/A N/A

Claims Incurred $1,037,112 N/A N/A N/A N/A

Surplus/ Deficit N/A N/A N/A N/A N/A


2011 2010 2009 2008 2007

Annual Gross Tonnage 1,178,444 N/A N/A N/A N/A



78% Tanker

10% General cargo

8% Bulker

4% Other Vessels

CEYLON SHIP OWNERS MUTUAL P&I CLUB www.ceylonpaiclub.com/en

74% Middle East

18% India

8% Far East

27


The China Shipowners Mutual Assurance Association was established in 1984, based in Beijing, China, offering mutual P&I,Legal Defence, Charterers Liability and Hull insurance solutions to its Members. In 1994, the CPI set up a service office inHong Kong, with additional representative offices in the major ports of China's mainland, such as Shanghai and Dalian.

The CPI is not a member of the International Group of P&I Club’s, however the Club does rely on reinsurance arrangementsto offer its Members IG-Club limits, through a co-insurance arrangement with the Skuld, Steamship Mutual, UK Club and theWest of England.

The Club has a growing portfolio of predominately Chinese Members and has more recently attracted new Members fromHong Kong, Singapore and other parts of Asia. The Club has an exceptionally strong free reserve amounting to US$ 686Million, which would put CPI second to Gard in terms of free reserve strength (compared to IG-Group Club free reserves).

Reinsurance Carrier: Co-Insured with International Group P&I Club (Skuld, SSM, UK and WofE)S&P Information: UnratedLimits offered: International Group P&I Club LimitsVessel Cap: N/ALocation: Beijing, China



2011 2010 2009 2008 2007

Premium Income $ 53,300,000 $ 46,000,000 $ 46,400,000 $ 37,300,000 $ 34,200,000

Claims Incurred $ 16,500,000 $ 14,400,000 $ 17,300,000 $ 18,600,000 $ 16,300,000

Surplus/ Deficit


2011 2010 2009 2008 2007

Annual Gross Tonnage 27,800,000 24,000,000 17,900,000 16,500,000 14,500,000


• The CPI’s estimated supplementary call rate is 20%, while the estimated release call rate is 35%.

• The Club has not required an unbudgeted supplementary call since 2003.


CHINA SHIPOWNERS MUTUAL ASSURANCE ASSOCIATION www.cpiweb.org

100% Asia Not Disclosed

Note: Most recent two policy years do not include 20% supplementary Call

28


HELLENIC MUTUAL P&I & WAR RISKS ASSOCIATION www.mutual.gr

The Hellenic P&I Mutual was established in 2007, however commenced trading in 2011, providing P&I, FD&D and WarRisks Insurance predominantly to the Greek shipping community. The facility offers limits of liability up to US$ 500 Million(coverage up to US$ 1 Billion is also available).

The insurer will initially focus on writing passenger and dry cargo vessels up to 25,000 GT, which are owned andoperated by Greece ship owners and operators.

The Hellenic P&I Mutual are managed by Agion Insurance Company SA, who are based in Greece and are in the processof setting up a London based representative office.

Reinsurance Carrier: Lloyd’s of London (Various SyndicatesS&P Information: UnratedLimits offered: Up to US$ 500 MillionVessel Cap: Up to 20,000 GTLocation: Athens, Greece



2011 2010 2009 2008 2007

Premium Income $ 1,255,406 $ 332,592 N/A N/A N/A

Claims Incurred $ 500,000 - N/A N/A N/A

Surplus/ Deficit $ 755,406 - N/A N/A N/A


2011 2010 2009 2008 2007

Annual Gross Tonnage N/A N/A N/A N/A N/A


• H&M (Hull value up to USD100 million any one vessel), War Risks on Hull & Machinery, Loss of Hire, Crew Liabilities, War P&I, Kidnap and Ransom,

K&R LOH and Oil Pollution.


80% Europe

20% Middle East

40% RORO

30% Bulkers

30% Tankers

29


KOREA SHIPOWNERS MUTUAL P&I ASSOCIATION www.kpiclub.or.kr

The Korea Shipowners Mutual P&I Association was established in 2000, offering fixed premium P&I solutions, as well asother marine related insurances. KPI operates as a mutual organisation (not for profit), covering in excess of 900 vessels,commanding a collective market share of 10 Million GT, with a premium income of approximately US$ 30 million (basedon 2011 results).

The facility offers P&I limits of liability up to US$ 300 Million (US$ 1 Billion is also available in some cases), backed byreinsurers from Lloyd’s of London, Korean Re and ACR.

KPI targets a large tonnage range of merchant vessels ranging up to 100,000 GT for dry cargo vessels and up to10,000 GT for tanker tonnages. The majority of their portfolio consists of Korean Members, which makes up 97% of the Club.

Reinsurance Carrier: Lloyd’s of London, Korean Re and ACR S&P Information: Unrated Limits offered: Up to US$ 300 MillionVessel Cap: Up to 100,000 GT (tankers up to 10,000 GT)Location: Seoul, Korea



2011 2010 2009 2008 2007

Premium Income $ 30,184,000 $ 25,055,000 $ 19,066,000 $ 11,808,000 $ 8,288,000

Claims Incurred $ 16,700,000 $ 11,965,000 $ 11,873,000 $ 8,106,000 $ 3,993,000

Surplus/ Deficit $ 13,484,000 $ 13,090,000 $ 7,193,000 $ 3,702,000 $ 4,295,000


2011 2010 2009 2008 2007

Annual Gross Tonnage 10,007,000 8,685,000 7,338,000 4,996,000 3,561,000


• 900+ Ships Entered • KPI’s Blue Cards are accepted by Japan, India, Singapore, UK and U.S.A.

Additional Products Include:• Charterer’s Liability, Damage to Hull, FD&D, Shipowners Liability and Slot Charterer’s Liability.


97% Korea

3% Asia-Pacific

59% Bulk/General Cargo

10% Container

9% Other

7% Car Carrier

5% Tanker

4% Passenger

3% Fishing

3% Tug & Barge

31

NON-IG CHARTERERS SPECIALIST FACILITIESFACTS AND FIGURES

32


Charterama BV was established in March 2009, based in Rotterdam, Netherlands, as an underwriting agency offering afull range of Charterers’ P&I coverage, the facility is able to respond worldwide, with their extensive global network ofcorrespondents.

Charterama BV is backed by its primary carrier REAAL Schadeverzekeringen N.V., along with reinsurance throughMunich Re, Chartis and Lloyds of London. REAAL Schadeverzekeringen holds a BBB+ Standard and Poor’s rating.

The facility specialises in Charterers’ Liability, Damage to Hull and FD&D coverage, offering limits up to US$ 100 Millionand US$ 2 Million for FD&D, additional “fringe” products, such as War and Bunkers insurance are also available.

Given the facilities modest size of five staff members, the facility has grown tremendously from a premium income ofUS$ 3 Million in 2009, to US$ 10 Million in 2011.

Reinsurance Carrier: REAAL SchadeVerzekeringen N.V.S&P Information: BBB+Limits offered: Up to US$ 100 Million (Charterers Liability)Vessel Cap: N/ALocation: Rotterdam, Netherlands



2011 2010 2009 2008 2007

Premium Income $10,000,000 $7,000,000 $3,000,000 N/A N/A




2011 2010 2009 2008 2007


OTHER INFORMATION /NEWSAdditional Fringe Covers Available:

• War cover • Detention cover• Bunker cover • Piracy Loss of Hire• Freight cover


CHARTERAMA BV www.charterama.nl

65% Europe

15% Asia Pacific

11% Americas

9% Other

45% Bulkers

29% General Cargo

13% Tankers

6% Reefers

5% Containers

2% Others

33


The Charterers P&I club was founded in 1986, as a mutual insurance company, specialising in charterers liability insuranceand defence coverage. In 1999 the Club was demutualised and an underwriting agency was formed, backed by Lloyds ofLondon security, offering fixed premium charterers liability and other marine related products.

In 2009 the agency switched its security to Great Lakes Munich Re Group, which holds an S&P AA- rating.

Michael Else & Co., are the managers of the Club and provide all underwriting and claims support, though its globalcorrespondent network.

The facility provides limits of liability up to USD 500 million for charterer’s liability and up to USD 2 million for FD&D.

Reinsurance Carrier: Great Lakes - Munich Re GroupS&P Information: AA-Limits offered: Up to US$ 500 Million (Charterers Liability)Vessel Cap: N/ALocation: London, United Kingdom



2011 2010 2009 2008 2007

Premium Income $ 27,200,000 $ 27,400,000 $ 26,500,000 $ 27,300,000 $ 24,100,000




2011 2010 2009 2008 2007



• The Charterers P&I Club do not write cruise or passenger business

Other Business Lines are as follows:• Transmarine, is a Loss of Hire insurer for commercial vessels and also the cruise and passenger industry.• Portside, a specialised insurer for Freight forwarders, NVOCC and similar business’s


CHARTERERS P&I CLUB www.exclusivelyforcharterers.com

38% Europe

35% Asia

10% Middle East/India

9% Australasia

75% Bulkers

17% Liner

5% Tankers

3% Other

5% Africa

3% Americas

34


In 2008 the Club commenced underwriting Charterer’s Liability risks, today their portfolio commands a premium incomeof around US$ 11 Million, with approximately 150 charterers & traders clients.

The Clubs’ charterer’s facility offers limits up to US$ 500 Million for traditional Charterer’s P&I and Damage to Hull.FD&D for charterers is also available in addition to the Clubs extensive marine insurance product range.

The Norwegian Hull Club has a large share of the Norwegian ocean hull market and ranks amongst the largest puremarine underwriters in the world.

Reinsurance Carrier: Not DisclosedS&P Information: A-Limits offered: Up to US$ 200 Million (Charterers Liability)Vessel Cap: N/ALocation: Bergen, Norway



2011 2010 2009 2008 2007

Premium Income $ 11,100,000* - - - -




2011 2010 2009 2008 2007


OTHER INFORMATION /NEWS• The NHC can provide insurance solutions for Offshore Energy & Special Risks, Yachts, Marine Benefits Insurance and Construction All Risk Covers.

*Information provided by Elysian Insurance Services (2011 premium based on Charterers Liability Income only).


NORWEGIAN HULL CLUB www.norclub.no

48% Asia Pacific

41% Europe

11% Other

Not Disclosed

35

INDUSTRY STATISTICS

36


INDUSTRY STATISTICS

COMMERCIAL P&I FIXED PREMIUM (OWNERS P&I)MARKET SHARE BY 2011 PREMIUM INCOME

Observing and comparing industry statistics on the various International Group Club’s is relatively easy due to thetransparent and consistent nature in which the Club report on account, by contrast, analysing the various commercialmarkets is an extremely difficult task. This is mainly due to the following reasons:

• The individual Markets’ willingness to release accurate premium, GT and claims figures;

• Inconsistencies in figures produced by the individual market facilities, as the majority of the declared premium incomealso includes other marine lines, such as H&M and Charterers Liabilities etc.

Therefore, we must point out that some of the annualised premium income figures, shown below, do not give a truerepresentation on “pure P&I” income. To establish which P&I facilities command the majority market share, we set outhere below a table representing each individual market 2011 premium income, highlighting the market leaders:

Pos. MARKET 2011 PREMIUM INCOME

1. BRITISH MARINE US$ 125,000,000

2. RAETSMARINE US$ 62,000,000

3. OSPREY US$ 34,000,000

4. NAVIGATORS US$ 22,500,000

5. INGOSSTRAKH US$ 16,250,000

6. HANSEATIC P&I US$ 15,800,000

7. EAGLE OCEAN US$ 5,000,000

8. ROSGOSSTRAKH US$ 3,800,000

9. HYDOR US$ 2,000,000

10. LODESTAR N/A

44%

22%

12%

8%

6%

5%

1.5%

1%

0.5%


NON- IG MUTUAL P&I FACILITIESMARKET SHARE BY 2011 PREMIUM INCOME


1. CHINA P&I CLUB US$ 53,000,000

2. KOREA P&I CLUB US$ 30,100,000

3. CEYLON P&I CLUB US$ 5,400,000

4. HELLENIC P&I US$ 1,2500,000

NON-IG CHARTERERS MARKET SHARE BY 2011 PREMIUM INCOME


1. RAETSMARINE BV US$ 33,500,000

2. CHARTERERS CLUB US$ 27,200,000

3. NORWEGIAN US$ 11,000,000

4. CHARTERAMA BV US$ 10,000,000

37

59%

33%

6%

2%

59%

33%

6%

2%

38


RATING AGENCY ANALYSIS

Arthur J Gallagher (UK) Ltd (“AJG (UK)”) operates a market security policy which sets a minimum standard for insurancemarkets which can be included on its acceptable market security list. A number of criteria are utilised to evaluate the financialcondition of these markets and one of the criteria used is the ratings allocated by either Standard & Poor’s (S&P) or A M Best.The AJG (UK) security policy sets a minimum rating level of A- from these agencies as an indicator of acceptable security.

Accordingly where a security fails to meet the minimum criteria, we would direct your attention to your P&I Insurers financialstrength rating, where and when it falls below an S&P or AM Best A- rating and where this security no longer qualifies forinclusion on the AJG (UK) market security list; requesting that you advise us if you wish us to attempt to source an alternativemarket. In some cases it may be possible to arrange P&I cover with an S&P or AM Best ‘A’ rated carrier on similar terms.

This is something that we can discuss with you on an individual case by case basis. It is important that you carefully considermaintaining your insurance with your current P&I insurer where the rating is below the AJG(UK) minimum of A- and thatshould you decide to do so that you also understand that AJG (UK) are not responsible for the continuing performance ofany security and that any future credit risk associated with renewing the policy with your current insurer will be borne by you.

We would, therefore, draw your attention to the following ratings and respectfully request that, if you require us to look at other options in respect of your risk here, you advise us accordingly as soon as possible

STANDARD AND POOR’S RATINGS

P&I FACILITY CURRENT RATING P&I FACILITY CURRENT RATING

BRITISH MARINE A+ NORWEGIAN CLUB A-

CEYLON P&I UNRATED KOREA P&I CLUB UNRATED

CHARTERERS P&I AA- HYDOR A+

CHARTERAMA BV BBB+ LODESTAR MARINE A

CHINA P&I UNRATED NAVIGATORS P&I A

EAGLE OCEAN BB+ OSPREY A

HANSEATIC P&I A RAETSMARINE BV A+

HELLENIC MUTUAL UNRATED ROSGOSSTRAKH LTD UNRATED

INGOSSTRAKH BBB-

STANDARD AND POOR’S RATINGS

‘Pi’ ratings are based on public data only; others are based on a periodic review by S&P analysts.

Ratings BBB or higher are regarded as having financial security characteristics that outweigh any vulnerabilities, and arelikely to have the ability to meet financial commitments.

Ratings BB or lower are regarded as having vulnerable characteristics that may outweigh the strengths.

AA: “Very Strong” financial security characteristics.

A: “Strong” financial security characteristics, but issomewhat more likely to be affected by adversebusiness conditions than are insurers with higher ratings.

BBB: “Good” financial security characteristics, but ismore likely to be affected by adverse businessconditions than are higher rated insurers.

BB: “Marginal” financial security characteristics. Positiveattributes exist, but adverse business conditions leadto insufficient ability to meet financial requirements.

B: “Weak” financial security characteristics. Adversebusiness conditions will likely impart the ability tomeet financial commitments.

+ or - Signs show relative standing within the major rating category

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INDUSTRY STATISTICSMAJOR LIMITING CONVENTIONS & STATUTESAFFECTING P&I RISKS

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DEVELOPMENTS IN THE PAST 18 MONTHS

POLLUTION LEGISLATION

In the wake of the ‘Deepwater Horizon’ incident, there was a perhaps understandable call for substantial increases in theOPA 90 and Trust Fund limits in the USA. Pollution legislation was reviewed in Congress and in the Senate but, followinginitial demands for instantaneous action, the review lost momentum at the expense of other legislative matters and mid-term elections. Subsequent to the knee jerk reaction, legislators’ resolve appears to have been weakened in the face ofshipowners’ assertions that the problem is not one caused by the carriers of oil and that substantial increases in theshipowners’ liability ought not be warranted.

Focus instead seems to be shifting to the offshore/ exploration sector and the oil companies themselves but, even here,increases in potential liability look set to be less severe than initially called for. Instead of major change, OPA 90 may beamended to insert a mechanism to allow limits to be increased in the future. These would be in addition to the regular,inflation-based adjustments.

Chinese pollution legislation, which was put in place last year and mirrors the CLC/Fund regime has been further delayedin 2011. The effective date for compliance with the requirement to appoint an approved spill response contractor cameinto force on 1 January 2012 but Club approval of such operators has been slow-moving, arguably due to a lack ofquality in the field.

EU 3RD MARITIME SAFETY PACKAGE

EU Member States have until 1 January 2012 to implement the directives of the EU 3rd Maritime Safety Package, whichcame into force in June 2009. The Passenger Liability Regulation (‘PLR’), which is the part of the 3rd Maritime SafetyPackage that deals with passenger liabilities, will come into force on 31 December 2012, without the need for nationalimplementation. The provisions of PLR essentially mirror those of the 2002 Protocol to the Athens Convention, with onlyminor differences. However, EU Member States are not yet in a position to ratify the Protocol itself and are unlikely to beso by 31 December 2011.

Many EU Member States have indicated that they will require Blue Cards under the PLR. Traditionally, however, Clubshave only issued Blue Cards in response to international conventions as opposed to regional regulation. Discussions areunder way to ensure that there is a consistent approach on both the need for and the uniformity of Blue Cards under thePLR and the Athens Convention

ILO MARITIME LABOUR CONVENTION

The ratification of the Maritime Labour Convention (‘MLC’) by Luxembourg in October brings the total of ratifying statesto 22, 5 of which are in the EU. 30 countries are required to ratify the MLC, it having already attained the ‘33% of worldtonnage target’ with over 54% represented. In 2007, the European Union authorised its Member States to ratify theConvention by the end of 2010. 22 States have yet to do so, although none of these have indicated any opposition to it.Most liabilities under the MLC will fall under normal Club cover, although there are two areas which may cause problems.Firstly, the MLC requires financial security to be in place to cover abandonment and repatriation of crew where theshipowner becomes insolvent. Secondly, the MLC makes the shipowner responsible for non-work-related injuries andillnesses and those arising from war, terrorism and bio-chemical hazards. Normal Club cover does not fully respond tothese risks and so, as things stand, shipowners may not be fully insulated from the impact of the MLC.

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CONVENTION ON LIMITATION OF LIABILITY FOR MARITIME CLAIMS (LLMC), 1976 (IN FORCE 1 DEC 1986)

This convention applies to all vessels involved in incidents in signatory states, except such incidents towhich the Civil Liability Convention (See Section 3) applies. At 31 October 2011, it has been ratifiedby 52 states, covering 51.95% of world tonnage. The right to limit losses under this convention is lostif the incident involves a personal act or omission carried out intentionally or recklessly and with theknowledge that loss would result. Liability under the convention is calculated in accordance with thefollowing formulae (note that, at 22 November 2011, SDR 1 = approximately US$ 1.56):

1.1 PERSONAL INJURY/ LOSS OF LIFE

VESSEL SIZE FORMULA500 GT or less Minimum SDR 333,000501-3,000 GT Add SDR 500 per GT to the above sum3,001-30,000 GT Add SDR 333 per GT to the above aggregate30,001-70,000 GT Add SDR 250 per GT to the above aggregate70,001 GT or more Add SDR 167 per GT to the above aggregateEXAMPLE25,000 GT SDR 8,909,00075,000 GT SDR 21,409,000

1.2 PROPERTY

VESSEL SIZE FORMULA500 GT or less Minimum SDR 167,000501-30,000 GT Add SDR 167 per GT to the above sum30,001-70,000 GT Add SDR 125 per GT to the above aggregate70,001 GT or more Add SDR 83 per GT to the above aggregateEXAMPLE25,000 GT SDR 4,258,50075,000 GT SDR 10,508,500

1996 PROTOCOL TO THE 1976 LLMC (IN FORCE 13 MAY 2004)

This amends the limits of compensation payable and has been adopted by 43 states encompassing45.63% of world tonnage at 31 October 2011. These limits are now as follows:

2.1 PERSONAL INJURY/ LOSS O F L I F E

VESSEL SIZE FORMULA2,000 GT or less Minimum SDR 2,000,0002,001-30,000 GT Add SDR 800 per GT to the above sum30,001-70,000 GT Add SDR 600 per GT to the above aggregate70,001 GT or more Add SDR 400 per GT to the above aggregateEXAMPLE25,000 GT SDR 20,400,00075,000 GT SDR 50,400,000

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1996 PROTOCOL TO THE 1976 LLMC (IN FORCE 13 MAY 2004) CONT.

2.2 PROPERTY

VESSEL SIZE FORMULA2,000 GT or less Minimum SDR 1,000,0002,001-30,000 GT Add SDR 400 per GT to the above sum30,001-70,000 GT Add SDR 300 per GT to the above aggregate70,001 GT or more Add SDR 200 per GT to the above aggregateEXAMPLE25,000 GT SDR 10,200,00075,000 GT SDR 25,200,000

INTERNATIONAL CONVENTION ON CIVIL LIABILITY FOR OIL POLLUTIONDAMAGE (CLC), 1969 (IN FORCE 19 JUNE 1975), PROTOCOL TO CLC, 1992 (IN FORCE 30 MAY 1996)

The Civil Liability Convention covers those who suffer oil pollution damage resulting from maritimecasualties involving oil-carrying ships. The Convention places the liability for such damage on theowner of the ship from which the polluting oil escaped or was discharged. The original Convention hasbeen largely replaced by the 1992 Protocol, which has been adopted by 126 states, encompassing96.93% of world shipping as at 31 October 2011. Liability is strict and insurance is compulsory.

Liability under the convention is calculated in accordance with the following formulae

3.1 LIABILITY UNDER CLC (1992 P ROTOCOL

VESSEL SIZE FORMULA5,000 GT or less Minimum SDR 3,000,0005,001 GT or more Add SDR 420 per GT to the above sumMaximum SDR 59,700,000 (equivalent to 140,000 GT) ExampleEXAMPLE25,000 GT SDR 11,400,00075,000 GT SDR 32,400,000

Following the spill resulting from the loss of the “Erika”, the limits were increasedunder an amendment in 2000 as follows:

3.2 LIABILITY UNDER CLC AS AMENDED IN 2000

VESSEL SIZE FORMULA5,000 GT or less Minimum SDR 4,510,0005,001 GT or more Add SDR 631 per GT to the above sumMaximum SDR 89,770,000 (equivalent to 140,000 GT)EXAMPLE25,000 GT SDR 17,130,00075,000 GT SDR 48,680,000

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INTERNATIONAL CONVENTION ON THE ESTABLISHMENT OF ANINTERNATIONAL FUND FOR COMPENSATION FOR OIL POLLUTION DAMAGE(FUND), 1992 PROTOCOL (IN FORCE 30 MAY 1996)

The purpose of this Fund is to provide compensation for pollution damage to the extent that theprotection afforded by the 1969 Civil Liability Convention is inadequate. It is also intended to give reliefto ship owners in respect of the additional financial burden imposed on them by the 1969 Civil LiabilityConvention, with such relief being subject to conditions designed to ensure compliance with safety atsea and other conventions. The Fund is financed by receivers of persistent oil cargoes in signatorystates, via a governmental levy. It is managed by an inter-governmental organisation, the IOPC Funds.The original 1971 Fund was denunciated in 1998, being effectively replaced by the 1992 Fund.Subsequently the limits in that Fund were increased, effective 2003, by way of a protocol adopted in2000. 108 states have adopted the 1992 Protocol at 31 October 2011, covering 94.31% of theworld fleet. The maximum amount payable under the 1992 Protocol was SDR 135 million, inclusive ofthe ship owners’ primary contribution under the 1992 CLC Protocol. The 2000 protocol increased thismaximum sum to SDR 203 million, inclusive of the primary contribution under the 1992 CLC Protocol.

SUPPLEMENTARY FUND, 2003 (IN FORCE 3 MAR 2005)

The aim of this Fund is to supplement the compensation available under the 1992 Civil Liability and Fund Conventions with an additional, third tier of compensation. The Protocol is optional andparticipation is open to all States which are party to the 1992 Fund Convention. At 31 October 2011,27 states have acceded, encompassing 21.42% of the world fleet.

As with the 1992 Fund, the Supplementary Fund is financed by levies on receivers of persistent oilcargoes. The total amount of compensation payable for any one incident will be limited to a combinedtotal of SDR 750 million inclusive of the amount of compensation paid under the existing CLC/FundConvention system.

TANKER OIL POLLUTION INDEMNIFICATION AGREEMENTS

In recognition of the potential disparities between contributions by ship owners and receivers of cargo towards the cost of pollution incidents, two agreements came into force in 2006 whichsought to remedy the situation.

Under STOPIA, owners of small tankers of 29,548 GT or less indemnify the 1992 Fund for thedifference between their 1992 CLC liability and SDR 20 million. Under TOPIA, all tanker ownersindemnify the 2003 Supplementary Fund in respect of 50% of any claim falling on that fund.

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US OIL POLLUTION ACT (OPA), 1990

The USA is not party to any of the above pollution related conventions. Instead, there are specificstatutes which affect any vessels discharging oil, oil products or oil by-products in US waters. The mainone of these is OPA 1990, which imposes strict liability; the only defence being acts of war, acts ofGod or that the loss was caused solely by the actions of a third party. In July 2006, the US CoastGuard & Maritime Transportation Act 2006 amended limits under OPA 1990 as set out in the tablebelow. For non-tank vessels, the above increases were immediate. For tank vessels, they came intoforce in October 2006.

7.1 LIMITS OF LIABILITY UNDER OPA 1990 AS AMENDED IN 2006

VESSEL SIZE FORMULASingle Hull Tanker: 3,000 GT or less US$ 3,000 per GT with minimum US$ 6,000,000Single Hull Tanker: 3,000 GT or more US$ 3,000 per GT with minimum US$ 22,000,000Double Hull Tanker: 3,000 GT or less US$ 1,900 per GT with minimum US$ 4,000,000Double Hull Tanker: 3,000 GT or more US$ 1,900 per GT with minimum US$ 16,000,000Other Vessels US$ 950 per GT with minimum US$ 800,000EXAMPLE25,000 GT Single: US$ 75,000,000 Double: US$ 47,500,00075,000 GT Single: US$ 225,000,000 Double: US$ 142,500,000The US Coast Guard has subsequently announced increases in liability limits to reflect inflationaryerosions since the 2006 change. These came into effect on a provisional basis on 1 July 2009 andwere formally adopted with effect from 5 February 2010. Further increases are likely every three years.

7.2 AMENDED LIMITS OF LIABILITY UNDER OPA 1990 WITH EFFECT FROM 5 FEBRUARY 2010

VESSEL SIZE FORMULASingle Hull Tanker: 3,000 GT or less US$ 3,200 per GT with minimum US$ 6,408,000Single Hull Tanker: 3,000 GT or more US$ 3,200 per GT with minimum US$ 23,496,000Double Hull Tanker: 3,000 GT or less US$ 2,000 per GT with minimum US$ 4,272,000Double Hull Tanker: 3,000 GT or more US$ 2,000 per GT with minimum US$ 17,088,000Other Vessels US$ 1,000 per GT with minimum US$ 854,400EXAMPLE25,000 GT Single: US$ 80,000,000 Double: US$ 50,000,00075,000 GT Single: US$ 240,000,000 Double: US$ 150,000,000

The US has also established an Oil Spill Liability Trust Fund (‘OSLTF’) which supports OPA 90 and isfunded by a tax on oil produced and imported into the USA. The OSLTF responds where a responsibleparty denies liability or fails to meet that liability or where the first level of liability is insufficient to fundall claims.

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US COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT (CERCLA), 1980

This legislation is focused on ‘hazardous substances’. However, there are circumstances where bothCERCLA and OPA could apply to an incident involving a shipowner, operator, bareboat charterer etc.Club cover is discretionary as regards CERCLA-related claims.

Limits of liability are as follows:

A) for vessels over 300 GT carrying a hazardous substance as cargo – the greater of US$ 5 million or US$ 300 per GT;

B) for any other vessel over 300 GT – the greater of US$ 500,000 or US$ 300 per GT.

These limits did not change when the OPA 90 limits were raised in July 2009.

In respect of obligations under both OPA and CERCLA, Certificates of Financial responsibility(COFRs) are required. As Clubs are unwilling to certify financial responsibility as required by the USregulators, the COFR is generally provided by an independent issuing company, and covers theaggregate of the CERCLA and OPA limits of liability.

EXAMPLEA double hull tanker of 25,000 GT will need a COFR of US$ 55 million, comprising US$ 47,500,000under OPA 1990 as amended plus US$ 7,500,000 under CERCLA.

ATHENS CONVENTION RELATING TO THE CARRIAGE OF PASSENGERS AND THEIR LUGGAGE BY SEA (PAL), 1974 (IN FORCE 30 APR 1989)

The Convention consolidated and harmonized two earlier Brussels Conventions dealing withpassengers and luggage, which were adopted in 1961 and 1967 respectively. It establishes a regimeof liability for damage suffered by passengers carried on a seagoing vessel. It declares a carrier liablefor damage or loss suffered by a passenger, if the incident causing the damage occurred in the courseof the carriage and was due to either the fault or neglect of the carrier.

However, unless the carrier acted with intent to cause such damage, or recklessly and with knowledgethat such damage would probably result, he should be able to limit liability. For the death of, or personalinjury to, a passenger, this limit of liability is set at SDR 46,666 per passenger.

Liability is further limited for losses arising from acts of terrorism to the practically insurable amount.With effect from 2006, this amount is SDR 250,000 per passenger, with an aggregate limit of SDR340 million. Subsequent to the ratification of this convention (by 25 states to date, covering 40.46% of the world’s fleet) the limitation amount has become increasingly inadequate. A 1990 protocolincreasing the limit to SDR 175,000 was not adopted (being ratified by only 6 minor states) and hasbeen superseded by the 2002 protocol. This is presently being ratified: so far only 7 statesrepresenting 0.30% of world tonnage had done so at the close of October 2011.

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9.1 PROPOSED LIMITS UNDER 2002 PROTOCOL TO PAL

TYPE OF LOSS LIMITStrict Liability Passenger Personal Injury / Death SDR 250,000 per passengerOperator Negligence Passenger Personal Injury / Death SDR 400,000 per passengerLoss or Damage to Cabin Luggage SDR 2,250 per passengerLoss or Damage to Vehicle and Luggage therein SDR 12,700 per vehicleLoss or damage to Other Luggage SDR 3,375 per passenger

In the interim, a number of individual States have introduced their own legislation, which increasedthe limits applicable. For example, in the UK, the Merchant Shipping Act 1995, introduced in thewake of the ‘Herald of Free Enterprise’ loss, applies a limit of SDR 300,000 per passenger, inrespect of personal injury or death.

In the USA, under the Limitation of Liability Act last modified in 1996, liability to passengers islimited to US$ 420 times the GT of the vessel.

If this Convention is not ratified by 31 December 2012, which seems unlikely, the limits set by thePassenger Liability Regulation (part of the EU Third Maritime Safety Package) will apply to EUMember States. This regulation effectively adopts the Athens Convention into EU law, with anumber of minor supplementary clauses.

INTERNATIONAL CONVENTION ON CIVIL LIABILITY FOR BUNKER OIL

POLLUTION DAMAGE, (BUNKERS) 2001 (IN FORCE 21 NOV 2008)

The Bunker Convention reached its required criteria of 18 states’ ratification in November 2007 and,by 31 October 2011, had 62 acceptances, covering 89.04% of the world fleet. The Convention coverspollution caused by spills of oil carried as fuel onboard the vessel. The limits are the same as thoseimposed under LLMC 1976, as amended by the 1996 Protocol.

INTERNATIONAL CONVENTION ON LIABILITY AND COMPENSATION FORDAMAGE IN CONNECTION WITH THE CARRIAGE OF HAZARDOUS AND NOXIOUS SUBSTANCES BY SEA (HNS), 2010 (NOT YET IN FORCE)

The original 1996 HNS Protocol established a two tier compensation regime for amounts up to SDR 250 million and has been ratified by 14 states or 13.61% of the world fleet as at 31 October2011. A Focus Group was established in 2007 in order to address administrative concerns of theratifying states, particularly in respect of the operations of the second tier of compensation and thedifficulty in establishing how much HNS was received in any country.

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A revised 2010 protocol, based on the findings of the above focus group, was adopted in April 2010 buthas not yet been ratified by any states. Under this protocol, the total compensation remains the same butthe shipowner’s maximum liability for an incident involving packaged HNS is increased from SDR 100million to SDR 115 million. Thereafter, compensation would be paid by a second tier HNS Fund, financedby cargo receivers. Shipowners’ liability for bulk HNS remains unchanged at SDR 100 million.

The revised protocol will enter into force eighteen months after at least 12 States (including at least 4with over 2 million GT) express their consent to be bound by it. Additional conditions relate to cargoreceiving country contributions.

1.11 LIMITS OF LIABILITY UNDER HNS 1996

VESSEL SIZE FORMULA – BULK HNS FORMULA – PACK AGE DHNS2,000 GT or less Minimum SDR 10,000,000 Minimum SDR 11,500,0002,001-50,000 GT Add SDR 1,500 per GT to the above Add SDR 1,725 per GT to the above50,001 GT or more Add SDR 360 per GT to the above Add SDR 414 per GT to the aggregateMaximum SDR 100 million SDR 115 millionEXAMPLE25,000 GT SDR 44,500,000 SDR 51,175,00075,000 GT SDR 91,000,000 SDR 104,650,000

UN CONVENTION FOR THE INTERNATIONAL CARRIAGE OF GOODS WHOLLY OR PARTLY BY SEA (ROTTERDAM RULES) 2009 (NOT YET IN FORCE)

In 1996, in attempts to harmonize liability regimes, the United Nations Commission on InternationalTrade Law (UNCITRAL) began a review of laws in the area of the international carriage of goods bysea. An additional aim was to update the regimes to reflect modern transportation systems.

This resulted in the ‘Rotterdam Rules’ which became open for signature in September 2009 and willenter into force 12 months after 20 states have ratified it. By 31 October 2011, 24 countries havesigned the Rules, including major shipping nations such as Greece, Norway and the United States.

Collectively, the 24 signatories account for around 25% of world trade. Noticeably, none of the majorAsian trading nations have signed the Rules. The Convention will come into force one year afterratification by the 20th UN Member state. Whilst 24 have signed the Convention, only 1 state (Spain)has actually ratified it as at 31 October 2011.

Although there remains widespread support for the Convention, the expectation is that it may be sometime before the Rules enter into force.

The Rotterdam Rules have eroded some of the traditional defenses available to sea carriers; forexample, the elimination of the ‘nautical fault’ defense. The obligation of due diligence has beenextended to apply throughout the duration of the voyage and limits of liability per package, or unit of weight, have been increased beyond Hague-Visby and Hamburg Rules limits.

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The table below contrasts the liability under the various regimes:

12.1 CONTRASTING LIABILITY UNDER ‘RULES’

‘RULE’ LIMITATION OF LIABILITY LIABILITY FOR DELAYHague (1934) £ 100 per package/unit N/AHague Visby (1968) Higher of SDR 2 per kg or SDR N/A

667 per packageHamburg (1978) Higher of SDR 2.50 per kg or SDR 2.5 times freight on goods

delayed835 per package/shipping unit subject to an upper limit if lost

Rotterdam (2009) Higher of SDR 3 per kg or SDR 2.5 times freight on goods delayed875 per package/shipping unit not to exceed limit under rules US

COGSA (1936) US$ 500 per package/unit N/A

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CONTACTS

JONATHAN SUCKLINGManaging Director+44(0)20 7204 6091+44(0)7825 059 [email protected]

MALCOLM GODFREYExecutive Director+44(0)20 7204 1883+44(0)7789 003 [email protected]

ANDREW JAMESExecutive Director+44(0)20 7204 6059+44(0)7825 059 [email protected]

NICOLA ELLISDivisional Director+44(0)20 7204 1892+44(0)7825 059 [email protected]

SIMON MAUDITDivisional Director +44(0)20 7204 6203+44(0)7825 059 [email protected]

MATTHEW MCCABEDivisional Director +44(0)20 7204 6200+44(0)7825 059 [email protected]

RICHARD STURGEONDivisional Director +44(0)20 7204 1887+44(0)7825 059 631 [email protected]

TIM SULLIVANDivisional Director +44(0)20 7204 6295+44(0)7500 059 [email protected]

NICHOLAS WOLFEDivisional Director +44(0)20 7204 8539+44(0)7500 109 [email protected]

GARY BRANDAssociate Director +44(0)20 7204 6121+44(0)7825 439 [email protected]

JENNY MANKELOWAssociate Director +44(0)20 7204 6225+44(0)7825 609 [email protected]

MATTHEW CRAMP+44(0)20 7204 6051+44(0)7825 059 [email protected]

WAYNE GODFREY+44(0)20 7204 1841+44(0)7500 109 [email protected]

WENDY NEEDHAM+44(0)20 7204 1854+44(0)7557 845 [email protected]

LAUREN OSMAN+44(0)20 7204 [email protected]

ISABEL SALCEDO+44(0)20 7204 6210+44(0)7584 609 336 [email protected]

ALEX VULLO+44(0)20 7204 1891+44(0)7500 109 607 [email protected]

DISCLAIMER: The information contained in this market review has been compiled by Gallagher London from information provided by each insurer. Thisreview does not purport to be comprehensive or to give legal advice. While every effort has been made to ensure accuracy, Gallagher London cannot beheld liable for any errors, omissions or inaccuracies contained within the document. Readers should not act upon (or refrain from acting upon) informationin this document without first taking further specialist or professional advice.

Gallagher London is a trading name of Arthur J. Gallagher (UK) Limited which is authorised and regulated by the Financial Services Authority. Registered address: 9 Alie Street, London, E1 8DE. Registered No. 1193013 England and Wales. www.ajginternational.com

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