Tysers P&I Report 2014

International Insurance and Reinsurance Brokers

The P&I Report 2014

2

ContentsAbout Us 3

P & I Team Contacts 4

Cartel Implosion? 5-6

International Group 2014 – World Cup Special 7

Current International Group Issues 8

Summary of 2013/14 Results 9

P&I Market Share 10

Standard & Poor’s Ratings of P&I Clubs 11

Average Expense Ratios (AER) 12

General Increases 13

Supplementary Call Record 14

Pooling and Reinsurance 15

Excess of Loss reinsurance rates 16

Estimated Cost of Notified Pool Claims 16

P&I Club Information 17-18

• American Steamship Owners Mutual Protection

& Indemnity Association, Inc. 19

• The Britannia Steam Ship Insurance

Association Limited 20

• Gard P&I (Bermuda) Limited 21

• The Japan Ship Owners’ Mutual Protection

& Indemnity Association 22

• London Steamship Owners Mutual

Insurance Association Ltd 23

• The North of England P&I Association

Limited 24

• The Shipowners Mutual Protection

& Indemnity Association (Luxembourg) 25

• Assuranceforeningen Skuld 26

• The Standard Club Ltd 27

• The Steamship Mutual Underwriting

Association (Bermuda) Ltd 28

• The Swedish Club 29

• The United Kingdom Mutual Steam Ship

Assurance Association (Bermuda) Limited 30

• The West of England Shipowners Mutual

Insurance Association (Luxembourg) 31

3

About Us

Founded in 1820, Tysers is a leading independent international Lloyd’s broker that is based at the heart

of the world’s premier insurance market in London. Tysers employs some 240 people; handles around

$800 million of annual premiums; and works with leading insurance markets worldwide to deliver risk

solutions to a global client base. All departments - management, brokers, claims, technical, accounts

and documentation - are based on the same floor in the Beaufort House office, ensuring a seamless,

professional service backed by expertise across a wide range of specialist insurance classes.

Not surprisingly for a company that started life nearly two centuries ago and spawned a shipping line,

Tysers’ Marine division is one of the oldest and most highly respected in the London market. All our people

are client focused and combine to provide a seamless broking, administration and claims service.

Areas of Expertise

• Protection and Indemnity, FDD, other Marine

Liabilities including Contractual and Specialist

Operations

• Charterers’ Covers

• Containers and Chassis

• Ship Agents’ Liabilities

• Ports and Terminals

• Loss of Hire/Trade Disruption

• Hull & Machinery

• War Risks

• Piracy

• Kidnap and Ransom

• Reinsurance

• Builders Risks – including Related Delay Covers

and Contract Repudiation

• Mortgagees Interest

Key Strengths

Global expertise With particular strength in the UK,

Europe, Indian sub-continent, South East Asia, the Far

East and South America.

Established market presence Strong relationships

with Market and P&I underwriters facilitate

competitive pricing. We work with all 13 Clubs in

the International Group.

Extensive experience Our team has a unique blend of

expertise to put at clients’ disposal, having worked

previously for International Group P&I Clubs, leading

insurers and other major brokers.

Reinsurance expertise Our reinsurance clients

range from the London Market to other major marine

underwriting centres, P&I Clubs, fixed premium and

overseas insurers.

Proactive claims service Our integrated claims team

is involved in all accounts from day one, before any

loss occurrence. The broking and claims teams work in

harmony to deliver a complete service.

4

P&I Team Contacts

Martin Hubbard

Email: [email protected]

Direct line: +44 (0)20 3037 8309

Mobile: +44 (0)7971 501 747

Nearly 40 years P&I experience, mainly as a Senior Underwriter

and Director with the Steamship Mutual Underwriting Association

Ltd. Joined Tysers in 2005.

Ian Harris


Direct line: +44 (0)20 3037 8301

Mobile: +44 (0)7881 265060

Ian joined Tysers from Willis in January 2014, and has nearly 40

years P&I and H&M experience, including ten years in claims.

Piers O’Hegarty


Direct line: +44 (0)20 3037 8315

Mobile: +44 (0)7971 501 742

Joined the Marine Division in 1999 having previously been with

Sedgwicks and Aon.

Chris Sydenham


Direct line: +44 (0)20 3037 8340

Mobile: +44 (0)7971 501 772

Claims Director, responsible for all Marine claims. Over 30 years

with Tysers.

Jason Crowhurst


Direct line: +44(0)20 3037 8357

Mobile: +44(0)7824 463735

Marine Claims Manager. Joined Tysers in 2011.

Simon Smart


Direct line: +44 (0)20 3037 8303

Mobile: +44 (0)7801 553866

Over 20 years a P&I broker, joined Tysers in 2012.

John Strange


Direct line: +44 (0)20 3037 8328

Mobile: +44 (0)7977 251514

A marine broker for over 30 years. Joined Tysers in 2013 from

Ropners and specialises in yachts.

Julien Hubbard


Direct line: +44 (0)20 3037 8308

Mobile: +44 (0)7971 501 770

A marine broker since 1990. Joined Tysers in 2004 from Miller

Marine.

Simon Haycock


Direct line: +44 (0)20 3037 8342

Mobile: +44 (0)7971 501 757

Marine Claims Manager. Joined Tysers in 2005.

5

Cartel Implosion?

2013/14 was a benign year for the International Group. Four Clubs

had a positive technical result and many others suffered only small

losses. Overall, the average combined ratio was 102% which is

about where it should be. Total net investment income of $360m

helped push the Group’s free reserves over $4.3 billion, equivalent

to $4.01 per owned GT ($3.94 last year).

Most Clubs have reported that attritional claims are flat or

reducing, perhaps as a result of regular deductible increases

in recent years as part of the general increase requirements.

However, many Clubs are seeing a rise in frequency and value of

larger claims over $1m. There were 17 claims on the Pool, down

from 25 in 2012, and only one claim hit the Group’s Excess Loss

Reinsurance although the recent further deterioration on the

“Costa Concordia” (now estimated at $1.44 billion) hits the third

layer ($1 billion excess of $1 billion).

We are concerned that over the last twelve months there has

been a decline in relationships within the International Group.

The Chairman, Grantley Berkeley, felt compelled to raise this

issue in the Group’s annual review, commenting: “Diversification

may enable Clubs to enhance the benefits which they can offer to

shipowners... but it also has the potential to damage or undermine

the concept of mutuality, both within the Clubs themselves, and

within the Group. It may also raise issues for Clubs with their

respective solvency/financial regulatory authorities. The issue will

be one of increasing focus within, and outside, the Group in the

year ahead.”

Dissent among the ranks appears to have been caused by:

• A larger than usual number of allegations of breaches of the

International Group Agreement. Some of these were a result of

diversified Clubs apparently offering some covers at reduced

rates to provide a financial incentive, others related to Clubs

seeking to avoid the IGA pricing limitations by offering covers on

a fixed premium basis.

• Standard Club’s initiative to set up its own COFR scheme, against

the stated policy of the Group. The idea was dropped following

opposition from all Clubs except Steamship Mutual.

• Disagreement between the Clubs over the types of vessel which

qualify for Pooling, arising from a claim involving the removal

of the wreck of a mobile offshore drilling unit. This prompted a

change to the Pooling Agreement to make it clear that drilling

units are not eligible for Pooling.

We remain of the view that diversification is essential for the long-

term future of the Clubs, but it needs to follow the Gard example.

You only need to look at our section on “current issues” to see

the good work being done by the International Group on behalf of

their members. Clubs must not prejudice the future of the Group

because of pressure to grow their business, be it P&I or other

products, at any cost.

Of course, there would be less pressure and a more stable

environment if there were less Clubs of a larger size, and we still

strongly believe that consolidation is the best way forward.

With apologies to our friends in South America, our Club ratings this year have a World Cup theme. Gard is still the worthy champion and is joined in the final by UK, which looks very solid. Shipowners Club committed some bad passes on the service side which caused its defeat in the semi final, while a succession of red and yellow cards derailed Skuld’s progress through the competition.

6

Last year saw general increases ranging from 2.5% to 12.5%, with

an average of just over 8%. While the 2013/14 figures are good

enough for us to plead for no increases for 2015, and 2014 seems

to be running well to date, we have no doubt whatsoever that

Clubs will argue for further rises on the back of an environment of

increasing claims and continued investment uncertainty. We are

hopeful the average for 2015 will be closer to 5% although one or

two Clubs may feel the need to seek close to 10%. We shall update

the position in our supplementary report later this year.

We understand there will be no change to the individual Club

retention of $9m but we imagine a further increase in the Pool

may be considered if appropriate savings can be achieved on the

Excess loss contract, as an eventual limit of $100m is the target

for a number of Clubs. Some Clubs perhaps need reminding

of the benefits of the International Group’s Pooling and market

reinsurance arrangements when considering how far they are

prepared to go to expand their business.

The Clubs were previously concerned that the future of the Group

was under threat from external pressures such as the European

Commission. The threat now appears to be more from within the

Group and we hope we shall see far more gentlemanly conduct in

line with Group understandings over the next twelve months.

Finally, we mentioned last year that the one benefit of the

abandoned European Commission investigation was the Clubs’

agreement to reduce and justify release calls. While release calls

have generally reduced, we fail to see why they are required at all

for 2012 and the levels being maintained for 2013 and the current

year are still far too high. With Clubs continuing to grow their free

reserves on the basis, it is said, that they are needed for regulatory

and rating purposes and to provide a buffer against unbudgeted

calls, does any Club actually feel there is any risk at all it will need

an unbudgeted call at the levels shown in the release call table

below? It appears that it is still too easy for a Club to impose a

release call at a level geared solely to anti-competition and this

remains the unacceptable element of the mutual system.

Amer

ican

Brita

nnia

Gard

Japa

n

Lond

on

Nor

th

Ship

owne

rs

Skul

d

Stan

dard

SSM

Swed

ish

UK Wes

t of

Engl

and

2012 20 7.50 5 5 15 5 0 0 3 5 7.50 12.50 5

2013 20 10 15 5 15 5 0 0 4 10 12.50 20 15

2014 20 17.50 20 5 15 20 0 15 8 25 20 15 30

Release Calls as at September 2014

7

International Group 2014: World Cup Special

Semi-finalists

Made the final

Qualified for knock-out stage

Stuck at Group level

UK P&I CLUB

8

Current International Group Issues

Maritime Labour Convention 2006

We reported last year on the Convention, which came into force in

August 2013 and resulted in the Clubs amending their rules, mainly

to cover crew repatriation following a shipowner’s insolvency.

Amendments to the Convention are likely to be adopted in 2015 in

respect of liability and financial security for contractual claims for

injury, death and abandonment to provide up to four months’ back

wages. It is likely that yet another “Blue Card” scheme will be

required, and Club Boards are still to consider whether cover can

be extended to cover back wages.

Removal of Wreck

With the “Costa Concordia” now likely to cost $1.5 billion, and other

expensive cases such as the “Rena”, the Group has been involved

in some important work on the handling of wreck removal claims. Its

Large Casualty Working Group has been analysing the underlying

cost drivers of major claims over the last decade and has developed

a Memorandum of Understanding which it is discussing with

various countries in the hope it will promote co-operation and

facilitate effective response to wreck removal cases.

China Oil Pollution Regulations

China introduced regulations in 2012 requiring most vessels to

contract with an approved Ship Pollution Response Organization

(SPRO) prior to entering any Chinese port. The regulations have

continued to develop over the last two years, with the practical

problem that no single SPRO provides a China-wide service

and shipowners thus having to contract on an ad hoc basis

with numerous of the 130 SPROs spread over the country. The

International Group has taken the lead role for the shipping

industry in working closely with the various Chinese authorities

involved to try to keep the administrative and contractual

procedures as simple as is possible in this difficult jurisdiction.

Standard contract wordings have been developed and are now

widely used, and ITOPF has also provided assistance regarding

appropriate cost rates for items within the SPRO tariffs. The

Group will continue its work to standardise contracts and tariffs

across China and increase the level of co-operation with the spill

response industry and central and local authorities.

Sanctions

The Group takes the view that P&I cover is designed to ensure

that compensation is available for third-party victims of maritime

incidents, not for the direct benefit of the primary targets of

sanctions, and that restricting the availability of cover carries with

it a significant risk of unintended and adverse consequences for

third-party victims. It has therefore continued its policy of active

engagement with policy makers on the increasingly complex

sanctions issues implemented by the EU, EU member states and

the USA, most recently involving Russia and Ukraine.

The Clubs continue to offer clear advice to members on trade

which may be affected by sanctions.

9

Summary of 2013/14 Results

Club

U/W Profit/Loss

2013/14 ($M)

Net Combined

Ratio 2013/14

Investment Income 2013/14

($M)

Surplus Feb 2014

($M)

Free Reserves Feb 2014

($M)

Total Owned Gt

Feb 2014 (M)

Free Reserves Per

Owned Gt Feb 2014

American (11) 111.3% 14 3 57 17 $3.43

Britannia (21) 109.3% 48 26 472* 108 $4.37

Gard (44) 97.0% 114 69 944 187 $5.06

Japan (10) 105.4% 19 9 156 92 $1.70

London (19) 121.78% 24 7 161 43 $3.71

North 21 90.1% 13 0** 312 130 $2.40

Shipowners 2 98.9% 22 23 299 24 $12.65

Skuld 4 99.0% 27 29 335 80 $4.18

Standard (4) 101.0% 10 6 369 109 $3.40

Steamship 9 96.7% 6 15 301 69 $4.38

Swedish (6) 94.0% 7 17 168 37 $4.53

UK (6) 102.0% 36 30 528 124 $4.26

West (1) 100.8% 20 19 216 57 $3.78

Total (86)

Average 102.10%

Total 360

Total 274

Total 4,318

Total 1,076

Average $4.01

Figures in red are consolidated figures covering all lines of business rather than P&I alone.

* Includes Boudicca

** See Club review

10

P&I Market Share

P&I Club Owned GT %Accounting Year

Premium $ %

Gard 186,700,000 17.36 585,606,000 15.68

North of England 130,000,000 12.08 384,627,000 10.30

UK 124,000,000 11.53 396,281,000 10.61

Standard 108,500,000 10.09 336,100,000 9.00

Britannia 108,000,000 10.04 284,167,000 7.61

Japan 91,840,000 8.54 258,851,000 6.93

Skuld 80,000,000 7.44 379,391,000 10.16

Steamship 68,700,000 6.38 345,731,000 9.26

West of England 57,200,000 5.32 203,311,000 5.44

London 43,300,000 4.03 106,895,000 2.86

Swedish 37,100,000 3.45 99,646,000 2.67

Shipowners 23,600,000 2.19 243,715,000 6.52

American 16,700,000 1.55 110,598,000 2.96

Total 1,075,640,000 100 3,734,919,000 100

These comparisons show the relative size of P&I Clubs by owned gross tonnage as at 20 February 2014.

11

Standard & Poor’s Ratings of P&I Clubs

Insurance Year 2010 2011 2012 2013 2014

Gard A A A A+ A+

Britannia A A A A A

North of England A A A A A

Standard A A A A A

Skuld A– A– A A A

UK Club A– A– A– A– A

Shipowners BBB BBB BBB A– A–

Steamship BBB+ A– A– A– A–

Swedish Club BBB BBB BBB+ BBB+ BBB+

Japan Club BBB BBB BBB BBB+ BBB+

London Club BBB BBB BBB BBB BBB

West of England BBB BBB BB BBB BBB

American Club BB– BB BB+ BBB– BBB–

12

Average Expense Ratios (AER)

The AER was introduced in 1998 as a means of comparing the administration costs of the mutual P&I Associations under the terms of their

exemption from the E.U. Competition Directive. The Clubs are only obliged to report their five-year AER and most do not show their annual

expense ratio. The below figures are all five-year averages.

2010 2011 2012 2013 2014

American Club 15.30% 16.50% 18.30% 19.30% 19.30%

Shipowners 19.00% 19.00% 20.00% 20.00% 18%

West of England 13.79% 13.66% 14.75% 15.43% 14.24%

North of England 11.40% 11.90% 12.60% 13.10% 12.50%

Skuld 12.20% 12.10% 12.40% 12.30% 12.30%

Swedish 11.40% 11.60% 13.00% 13.30% 12.10%

Gard 11.80% 12.00% 13.00% 14.10% 11.30%

Steamship 11.80% 12.00% 12.30% 12.40% 11.30%

Standard 13.30% 13.30% 13.40% 13.20% 10.90%

UK Club 9.37% 9.16% 9.46% 9.47% 9.35%

London Club 8.90% 8.70% 9.40% 9.63% 8.36%

Britannia 8.16% 8.09% 8.49% 8.49% 8.03%

Japan Club 6.56% 6.27% 6.18% 5.69% 5.73%

Average 11% 10.95% 12.56% 12.80% 11.80%

13

* Applies to premium net of Group Excess Loss Reinsurance costs

** Estimated

*** Includes the increase in Group Excess Loss Reinsurance costs

The total shows the cumulative increase based on 2006 premium of 100.

Average 192

Gard

Skul

d

SOP

Swed

ish

Stan

dard

UK SSM

Wes

t*

Brita

nnia

Lond

on

Nor

th

Amer

ican

Japa

n

2007 5 2.5 5 7.5 5 7.5 9 5 5 7.5 7.5 10 10

2008 10 7.5 20 15 15 17.5 15 15 23.8 17.5 17.5 15 20

2009 15 15 10 15 15 12.5 17.5 19 12.5 15 17.5 29 27.5

2010 0 5 5 2.5 3 5 5 5 5 5 5 4 12.5

2011 0 0 0 2.5 3.5 5 0 5 5 5 3 2 10

2012 5 0 0 5 5 3 5 5 5 5 5 5 3

2013 5 8.5 5*** 7.5 7.5 7.5 7.5 7.5 16.5 12.5 15 10 5

2014 5 8.5** 5*** 7.5 12.5 10 10 7.5 2.5 10 7.5 10 7.5

Total 2007/2014

154 157 160 181 184 191 192 192* 202 208 208 220 242

General Increases

14

Supplementary Call Record

(Original Estimate/Current Estimate)

* Includes ‘Surplus enhancement calls’

+ For members entered on ETC basis, but Nil for members entered on Advance Call basis

Called above Estimated Total Call

Called below Estimated Total Call

Called full Estimated Total Call

Amer

ican

*

Brita

nnia

Gard

Japa

n

Lond

on

Nor

th o

f Eng

land

Ship

owne

rs+

Skul

d

Stan

dard

SSM

Swed

ish

UK Wes

t of E

ngla

nd

2004 0/0 40/30 25/25 30/30 40/40 0/0 25/25 0/0 0/0 0/0 0/0 0/0 20/35

2005 0/20 40/30 25/20 30/30 40/40 0/0 25/25 0/0 0/0 0/0 0/0 0/0 20/35

2006 0/20 30/30 25/20 30/60 40/89 0/0 25/25 0/0 0/0 0/12.5 0/35 0/20 20/40

2007 0/30 30/30 25/25 30/30 40/89 0/0 10/10 0/0 0/0 0/14 0/35 0/25 20/55

2008 0/25 40/40 25/25 30/30 40/75 0/0 10/10 0/0 0/0 0/20 0/0 0/20 20/65

2009 20/20 40/32.50 25/10 40/40 40/40 0/0 10/10 0/0 0/0 0/0 0/0 0/0 30/30

2010 25/25 40/40 25/15 40/50 0/0 0/0 10/10 0/0 0/0 0/0 0/0 0/0 30/30

2011 25/25 40/40 25/20 40/40 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/-2.50 30/30

2012 0/0 40/40 25/15 40/40 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0 30/30

2013 0/0 45/45 25/15 40/40 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0 35/35

2014 0/0 45/45 25/25 40/40 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0 35/35

15

Pooling and Reinsurance

Layers of International Group Programme 2014/15

Collective overspill protection 5%

100%

95% 5%

Layer 3 US$1,000m 100%

95% 5% Berkshire Hathaway Layer

Layer 2 US$500m 95%

Layer 1 US$500m

65%

30% Hydra

35% Hydra

Upper-Upper Pool (Hydra) US$20m

Upper Pool (Hydra) US$15m

Lower Pool (Hydra) US$15m

Pool US$21m

Club retention US$9m

3,100

3,080

2,100

2,080

5% Berkshire Hathaway Layer

1,100

US$500m 95% 1,080

US$500m

65%

30% Hydra 580

35% Hydra 100

5% ICR* 80

10% ICR* 60

45

30

9

Protection and Indemnity Oil pollution US$m

*ICR – Individual Club retention

16

Estimated Cost of Notified Pool ClaimsFor 2014, the Club retention remained at $9m while the

Pool limit increased from $70m to $80m. The figures

below show the total cost of Pool claims based on

historical thresholds

Excess of Loss reinsurance rates

2005 2006 2007 2008 2009 2010 2011 2012 2013 20140.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

0.8

The Actual 2014 rates US$ per GT are:

Dirty Tanker – 0.7963

Estimates in USD millions as at February 2014

Clean Tanker – 0.3415

Passenger – 3.7791

Other – 0.5203

0

100

2007 2008 2009 2010 2011 2012 2013

200

300

400

500

399.

4

119.

5

246.

9

252.

5 280.

8

453.

9

279.

8

17

P&I Club Information

Introduction

• The information contained in this report is not and is not

intended to be a definitive analysis of the Clubs’ accounts.

• In so far as is possible we have homogenised the data to

enable comparison.

• Calls and Premiums are the consolidated totals for all classes.

• The net underwriting statistics express the ‘technical’ result

for the year and exclude any ‘non-technical’ investment

income.

• Operating Expenses include management expenses and

business acquisition costs.

• Solvency margins are calculated as the ratio between total

assets and gross outstanding claims.

• All monetary figures shown are US dollars.

• Whilst every effort has been made to ensure that the

information contained in the report is accurate and up-to-date

at the time of printing, this cannot be guaranteed by Tysers.

Under no circumstances shall Tysers be responsible or liable

for any loss or damage caused directly or indirectly by the

publication or use of this information.

18

American 19

Britannia 20

Gard 21

Japan 22

London 23

North of England 24

Shipowners 25

Skuld 26

Standard 27

Steamship Mutual 28

Swedish 29

UK 30

West of England 31

Protection & Indemnity Club Reviews

19

American Steamship Owners Mutual Protection & Indemnity Association, Inc.

american steamship

american steamship

Gross Tonnage

Owned 16,700,000

Chartered 1,000,000

Free reserves

2014 57,344,000

2013 54,229,000

2012 60,219,000

2011 63,612,000

2010 48,331,000

Standard & Poor’s Rating

BBB –

Managers

SCB Inc (Eagle Ocean Management LLC)

Tonnage by Vessel Type

Tonnage by Area

Bulkers

Tankers

General Cargo/ Passenger/Container

Tugs/Barges/Small craft

Europe

North America

Asia

Other

3%

7%

45%

45%

3%

9%

40%48%

Year 2014 2013 2012 2011 2010

Calls/Premium 110,598 108,032 114,686 118,032 114,986

Reinsurance Cost 18,581 18,585 16,283 9,362 12,282

Net Claims (incurred) 65,064 83,265 72,986 69,236 75,918

Operating Expenses 35,250 31,995 33,045 34,691 35,378

Net Underwriting Result (8,297) (25,813) (7,628) 4,743 (8,592)

Gross Outstanding Claims 225,545 263,563 261,902 249,892 283,154

Total Assets 328,712 359,110 358,048 343,067 361,290

Average Expense Ratio 19.30% 19.30% 18.30% 16.50% 15.30%

Solvency Margin 1.46 1.36 1.37 1.37 1.28

Reserves/GT Ratio $3.43 $3.61 $3.74 $4.13 $3.20

It looks to have been a quiet year at the American Club with the Directors reporting that 2013 was “a challenging year”, which we take to be an improvement on the “highly challenging period” reported last year. The technical deficit was halved to $11m, and a sound investment return of $14m (6.7%) resulted in an increase in free reserves of just over $3m. Claims in 2013 are expected to be slightly down on the two previous years, although there were 14 losses in excess of $1m, including a significant wreck removal in South Korea and a large salvage/SCOPIC casualty off Thailand. Tonnage increased by 1.6m to 16.7GT.

The Club states that it has maintained its policy of product diversification, but this is actually limited to its continued involvement in the Managers’ fixed premium P&I facility, Eagle Ocean Marine. The Club now writes a 20% line in a quota share arrangement with Lloyd’s underwriters for the first $25m, and Eagle Ocean also has excess reinsurance enabling it to offer cover up to $100m for vessels up to 25,000GT.

The Club has managed to secure top place in one of our tables but, sadly, it is the Average Expense Ratio one. An increase of 10% has pushed the Club’s operating costs over $35m and its Ratio of 19.30% (being the ratio of expenses, other than claims costs, to premium and investment income) is now the highest in the International Group. Another area of concern is the departure of a number of senior staff who have either retired or moved on to other careers. This has prompted the Club to decentralise its underwriting and business development functions, which are now done on a regional basis – North America, Europe, China and Asia. The Club states that the underwriting directors for each region “have been given substantial authority to manage their portfolios and to pursue new opportunities”. We worry that this is a dangerous route for any Club to take and it has caused problems for other Clubs in the past.

All

figur

es $

’000

20

The Britannia Steam Ship Insurance Association Limited

*Excluding Boudicca reserves, which included in Reserves/GT Ratio below

Britanna steam ship

Britanna steam ship

Gross Tonnage

Owned 108,000,000

Chartered 23,000,000

Free reserves

2014 352,998,000*

2013 326,817,000*

2012 290,677,000*

2011 274,908,000*

2010 222,093,000*


A (pi)

Managers

Tindall Riley (Britannia) Limited


Tonnage by Area

Bulkers/OBO

Tankers (Crude)

Containers

Tankers (Other)

Cargo/Other

Asia

Scandinavia

Europe

Americas

Other

34%

19%

29%

12%

6%

53%

16%

22%

6%

3%

Year 2014 2013 2012 2011 2010

Calls/Premium 284,167 294,057 281,772 298,482 289,605




Net Underwriting Result (21,026) (2,674) (20,932) (5,681) (39,801)

Gross Outstanding Claims 1,122,485 1,147,253 1,010,461 903,840 828,465

Total Assets 1,499,487 1,499,103 1,326,366 1,203,366 1,085,413


Solvency Margin 1.34 1.31 1.31 1.33 1.31


Chairman Nigel Palmer reports another year of high claims for the Club, and feels the trend will continue unless further steps are taken to improve crew training. While attritional claims are down, 2013/14 suffered 40 claims excess of $1m, including two collision cases which crept into the Pool. With 70% of the Club’s tonnage under ten years of age, the Club’s performance appears to contradict the general view that it is older vessels which cause all the problems.

Despite the high claims levels, the Club’s free reserves grew by $34 million (including the surplus of its dedicated reinsurer, Boudicca), thanks to a strong investment return of 4.8% or $48 million. The equity holding of 21% produced a very welcome return of 21.6%.

The Club’s owned tonnage reduced by 2.5 million GT to 108 million, and chartered tonnage also suffered a small decline.

The Chairman is scathing of Standard Club’s now defunct plans to issue US OPA COFRs, stating that “the issue raises fundamental

questions of trust between the Clubs of the International Group and a divided approach has the potential to undermine the ability of the Group to speak as an influential voice on behalf of shipowners...” Palmer also launches a strong defence of mutuality, reminding us of its core strengths and values and bemoaning the fact that its benefits are sometimes too easily overlooked in favour of short-term financial saving. Is this just a reaction to owners who have left the Club, or does it reflect a deeper concern that some Clubs may not, in developing new products, writing fixed premium business and interpreting liberally the International Group Agreement, be as loyal to the Group as they should be?

Palmer further warns that P&I, although non-profit-making, is not a charity and must be paid for; “it is vital that underwriting is equitable and reflects the risk involved”. We are hopeful this is a justification for the club’s last two renewals and the 2015 general increase will be modest.

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21

Managers

Lingard Limited

Gard P&I (Bermuda) Limited

Note: items marked * are Group figures and include all business lines, not just P&I.

Gard

Gard

Gross Tonnage

Owned 186,700,000


Free reserves

2014 944,123,000*

2013 894,792,000*

2012 825,618,000*

2011 789,695,000*

2010 557,542,000


A+


Tonnage by Area

Tankers & Gas

Bulkers/OBO

Containers

Dry Cargo

Car Carriers

Passenger/Cruise/MOU/Other

Asia

Norway

Europe

Germany

Greece

Americas

18%

14%

4%5%

24%

35%

9%

14%

15% 16%

21%

25%

Year 2014 2013 2012 2011 2010

Calls/Premium 585,606 529,973 504,812 463,098 447,598





Gross Outstanding Claims 1,375,264* 1,344,151* 1,370,242* 1,277,702* 872,238

Total Assets 2,722,301* 2,531,375* 2,494,244* 2,352,141* 1,359,147

Average Expense Ratio 11.30% 14.10% 13% 12.00% 11.80%

Solvency Margin 1.98* 1.88* 1.82* 1.84* 1.55

Reserves/GT Ratio $5.06* $5.13* $5.08* $5.46* $4.20

A new Chairman in Bengt Hermelin and a new CEO in Rolf Thore Roppestad, but it is business as usual at the Gard with another good year enabling the Club to reduce its deferred call for the fifth year in a row, with the 2013 call reduced from 25% to 15%. This is worth $35 million to the members, and all the figures in our Report are net of this return, except for the combined ratio of 97% which is on an ETC basis.

Like Britannia, Chairman Hermelin takes a swipe at Standard’s failed attempts to provide COFRs, stating that “The International Group’s ability to influence legislation going forward is dependent on the unity of the Group Clubs... there should be debate... but hopefully one that will result in a single, unified position which is then followed until it is agreed to change”.

At Group level, Gard achieved an overall net surplus of $69m, including an investment return of 4.3% ($114m), and free reserves are now getting very close to $1 billion. The P&I result was much improved, with a technical deficit of just $9m before the $35m rebate, and the year was noticeable for its lack of major losses, with no claim over $10m compared to six in the previous year. Entered tonnage grew by 7% to 187m GT.

It is all getting boringly but solidly predictable at the Gard, and it is safe to assume there will be a general increase of 5% followed by a further reduction in deferred call next year.

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22

Japan

The Japan Ship Owners’ Mutual Protection & Indemnity Association

62%17%

14% 2%

5%

Japan

Gross Tonnage

Owned 91,840,000


Free reserves

2014 156,012,000

2013 157,546,000

2012 166,949,000

2011 157,827,000

2010 134,369,000


BBB+

Managers

Self-Managed56%

15%

11%

9%

9%Tonnage by Vessel Type

Tonnage by Registry

Bulk carriers

Tankers

Car Carriers

Container Ships

General Cargo/Other

Panama

Others

Japan

Hong Kong

Liberia

Year 2014 2013 2012 2011 2010

Calls/Premium 237,738 244,631 251,773 280,927 230,981




Net Underwriting Result (9,849) 1,619 (1,343) 22,277 6,020


Total Assets 561,647 560,360 557,471 534,169 446,497


Solvency Margin 1.43 1.52 1.49 1.49 1.47

Reserves/GT Ratio $1.70 $1.71 $1.86 $1.72 $1.46A

ll fig

ures

$’0

00

New Chairman Koichi Muto recalls that the Club was founded in 1950 as the sole P&I Club in Japan, and has grown from 1.9m GT to 92m GT over the 64 years. However, recent market liberalization now allows competition from other Clubs and the Chairman reports that the Japan Club has responded to this by seeking to improve its service levels and, in particular, its loss prevention initiatives so that claims records improve and the members will have full confidence in the Club.

Director General Yoshikazu Minagawa then summarises the Club’s accomplishments over the last year:

• Increased loss prevention measures such as regular seminars have resulted in a reduction in retained claims, and there has indeed been a declining trend for the last four years.

• Increased investment returns, with a 2.6% return producing $19m.

• Development of a new financial strategy to take account of the weakening of the Yen.

• The opening of the Club’s Singapore office.

The year saw an underwriting deficit of $10m and, in dollar terms, free reserves dipped slightly to $156m. It will be interesting to see if other Clubs can make inroads in Japan, and whether the Japan Club will be able to develop international tonnage via Singapore. Our impression is that service levels are still somewhat short of those of other Group Clubs, but local tonnage is very loyal and happy with the competitive premiums offered, even if they come with some risk of unbudgeted additional calls.

23

London Steamship Owners Mutual Insurance Association Ltd

London Steamship

London Steamship

Gross Tonnage

Owned 43,300,000

Chartered 5,000,000

Free reserves

2014 160,644,000

2013 154,029,000

2012 144,669,000

2011 145,070,000

2010 141,426,000


BBB (pi)

Managers

A Bilbrough & Co Ltd


Tonnage by Area

Bulkers

LNG/LPG & Tankers

Container

Cargo

S. Europe

Far East

N. Europe

Other

57%25%

16%

2%

46%

34%

16%

4%

Year 2014 2013 2012 2011 2010

Calls/Premium 106,895 101,951 109,190 113,224 121,011



Operating Expenses 11,921 11,483 $11,367 11,021 11,103



Total Assets 492,489 521,630 569,078 593,142 565,980


Solvency Margin 1.53 1.46 1.36 1.36 1.40


ll fig

ures

$’0

00

Chairman John Lyras reports a satisfactory overall result for the Club, with free reserves up $6.6m due to a strong investment return of over $24m (7%) and owned tonnage up 2m GT to 43.3m.

However, increased claims activity at the higher severity end of the Club’s retention resulted in an overall increase of $10m in net claims, and the continued effect of “churn” on premium income combined to produce an underwriting loss of $18.7m, compared to $14.4m last year. With an average vessel size of 42,300GT, the entered tonnage is equivalent to just 1024 ships and 60% of the tonnage is under ten years of age. The Club simply cannot afford to lose its already small market share (4%), and we imagine that the pressure on pricing for new vessels, especially on split fleets, is somewhat higher than with other Clubs and accounts for the Club’s continuing problem of churn.

The London Club has a reputation for good service, and CEO Ian Gooch reports that during the year new recruits were employed not only in London but also in the Hong Kong and Piraeus offices, and IT and loss prevention services have also been enhanced.

The Chairman refers to developments during the year on the “Prestige”, which sank off the coast of Spain in 2002 and is disappointed that charges brought against the Spanish state official responsible for the decision to deny the ship access to a place of refuge and for ordering her out to sea where she sank, were dismissed. He makes the point that, 12 years on, other large casualties have suffered similar problems where efforts to mitigate pollution or other risks have been hampered by a reluctance of authorities to provide a suitable place of refuge. Lyras points out that the continuing work being done by the International Group to engage with authorities over wreck removal and place of refuge issues is a good example of how the Group is able to act for the benefit of its members. However, he pointedly emphasizes that the effectiveness of the Group’s representation of its members is dependant on “commitment to the cohesion of the Group by the member-Clubs”.

Perhaps the most telling comment in the Annual Report is the very last one: “there will undoubtedly be other work done on maintaining the integrity of the Pool.” A sad confirmation that integrity among the Clubs has become an issue.

24

The North of England P&I Association Limited

The North of England

The North of England

Gross Tonnage

Owned 130,000,000


Free reserves

2014 312,274,000

2013 312,236,000

2012 314,013,000

2011 312,434,000

2010 240,262,000


A

Managers

North Insurance Management Ltd


Tonnage by Area

Bulkers

Tankers

Containers

Car Carriers

Other

Europe

Asia Pacific

Middle East

Americas

Scandinavia

Others

37%

28%

22%

5%

8%

42%

35%

6%7%

9%

1%

Year 2014 2013 2012 2011 2010

Calls/Premium 383,534 365,347 346,348 314,243 285,051




Net Underwriting Result 20,847 (10,874) (8,185) 53,865 10,159


Total Assets 1,361,357 1,249,306 1,167,710 1,030,154 1,028,994


Solvency Margin 1.41 1.42 1.43 1.48 1.33


ll fig

ures

$’0

00

North has turned so Skuld-like with its sound-bytes this year that we have started to wonder whether more mergers are in the air. We start with “the historic and successful merger” with Sunderland Marine. We are then told The Club has a “merger integration team” working to deliver further merger benefits for the North Group, and there is also an “Operational Effectiveness initiative” to improve efficiency and provide an “engaging working environment”. This includes a new organisational structure, with a new “Global Expertise Group” and five geographical syndicates, and so many Directors that board meetings will probably need to be held in St James Park.

Chairman Pratap Shirke reports a solid financial performance with an excellent underwriting surplus of $20m and an investment return of $13m (1.94%). However, free reserves remained unchanged at $312m as the Club this year had to make allowance in its Accounts for a pension deficit of $33m. We are told the fact that the pension deficit and the operational surplus are the same is pure coincidence. Owned tonnage

grew by 4% to 130 million, and the Chairman is confident the Club is on track to fulfil its strategic vision as “the most cost-effective marine insurance Group with the highest levels of service”.

2013 did see the Club suffer the largest two claims in its history – the grounding of the “Smart” ($110m) and a dock damage claim involving the “Wu Yi San” ($55m). However, it was a benign year for routine claims and, overall, the result for net retained claims was lower than anticipated and below the level of the two preceding years.

With the merger with Sunderland Marine finalised after 20th February, we expect next year’s figures for the North Group to show a healthy increase in free reserves, but will this result in a lower general increase than the last two years?

25

The Shipowners Mutual Protection & Indemnity Association (Luxembourg)

Harbour

Barges

Fishing

Ferries

Offshore

Dry

Tankers

Yachts

Shipowners mutual protection

Shipowners mutual protection

31%

22%

10%

44%

11%

24%

14%

13%

4%

4%

8%

8%

4%

2%


Tonnage by Area

Europe

Americas

S.E Asia & Far East

Australia/NZ & Pacific

Africa/Rest of World

Middle East & India

Gross Tonnage

Owned 23,600,000

Chartered N/A

Free reserves

2014 298,555,000

2013 275,633,000

2012 234,760,000

2011 187,914,000

2010 135,040,000


A–

Managers

The Shipowners’ Protection Ltd

Year 2014 2013 2012 2011 2010

Calls/Premium 243,715 221,925 209,689 196,815 174,190




Net Underwriting Result 2,334 8,938 28,560 26,157 (2,195)


Total Assets 779,090 719,969 603,184 552,268 497,018

Average Expense Ratio 18% 20% 20% 19 % 19%

Solvency Margin 1.88 1.87 1.90 1.74 1.55


ll fig

ures

$’0

00

In his final report, Chairman Donald MacLeod proudly recounts the turnaround in the Club’s fortunes during his six-year tenure. Free reserves have grown by 142%, from $124m to $299m, the average combined ratio has been 90.6%, the membership has grown by 26% and annual net earned premium has risen by 71.6%. MacLeod points out this was all done without the need for unbudgeted calls, with the Club operating on the principle that it should have a balanced underwriting result with investment income used to bolster reserves and not to subsidise rates.

The 2103/14 year result was a perfect example of this, with an underwriting surplus of just $2.3m bolstered by an investment return of $21.8m, resulting in free reserves rising by $23m to $299m. The one downside is that operating costs rose by $8m to $52m, with administration costs alone (i.e. excluding brokerage) up $5m compared to the previous year. The Vancouver office has been closed due to lack

of business, but a new office has opened in Hong Kong. Overall staff numbers are up from 120 to 140 but we do have issues at times with the service of the London office, both in terms of speed and quality of response on technical matters. The new underwriting IT system is also pretty cumbersome and we understand the Club is looking at improvements. Due to these service issues, we do not feel the Club quite merits “Cup finalist” status.

Despite all this, we remain a firm supporter of a Club which is totally averse to release calls, unbudgeted additional calls and large general increases, and which has performed so well despite competition not only from other Clubs but also the vast array of fixed premium P&I providers.

We shall miss Mr MacLeod’s warm smile and engaging personality. His successor, Phil Orme, has a tough act to follow.

26

Assuranceforeningen Skuld

Note: For years marked * all figures are Group figures including all business lines, not just P&I.

Gross Tonnage

Owned 80,000,000

Chartered Not advised

Free reserves

2014 334,548,000

2013 308,425,000

2012 291,429,000

2011 266,436,000

2010 201,505,000


A

Managers

Self-ManagedAssuranceforeningen Skuld

Assuranceforeningen Skuld


Tonnage by Area

Tankers

Bulkers

Container

General Cargo

Other

Europe

Far East

Nordic

Americas

Other

Year 2014* 2013* 2012 2011 2010

Calls/Premium 379,391 317,936 299,971 272,429 255,386




Net Underwriting Result 3,959 969 11,658 30,608 10,627


Total Assets 855,985 757,939 722,709 671,148 567,334


Solvency Margin 1.64 1.55 1.36 1.34 1.15


ll fig

ures

$’0

00

40%

10%

32%

11%

7%

29%

36%

24%

8% 3%

President Douglas Jacobsohn reports another strong year for Skuld, with Group premium rising 19% to $379m, further diversification into new products and geographical areas and a bottom line result of $29m pushing free reserves up to a new record level of $335m. Despite the lack of any serious casualties hitting the Pool, net claims were also at an all time high of $246m, compared to the previous year of $212m, but the Club managed yet another year of underwriting surplus at $4m. The investment return was 5.4%.

Chairman Klaus Kjaerulff notes that an increasing number of Clubs are pursuing diversification to ensure their financial stability, but he feels “some clubs will likely seek to strengthen their position by joining forces.” He heaps praise on the Club’s staff, but we have to say we see better claims service from others and during the current year the London office has seen the departure of a number of senior staff. He may also wish to review his marketing department which published the below photograph of CEO-elect Stale Hansen pointing the Club “full astern” rather than “full steam ahead”.

Douglas Jacobsohn refers to “controlled growth” as the Club seeks to reach its goal of $500m premium income by 2015. However, 2015 is fast-approaching and we are concerned that, in reality, staff are under immense pressure to gain new business such that, at times, they go beyond the boundaries that other Clubs and also brokers deem to be acceptable. For this reason, Skuld only managed to make it to our semi-finals.

27

the standard

the standard

25%

11%

3%

6%

9%

The Standard Club Ltd

Year 2014 2013 2012 2011 2010

Calls/Premium 336,100 294,100 286,200 278,100 250,291




Net Underwriting Result (4,200) (39,600) (44,100) 18,000 1,341

Gross Outstanding Claims 986,900 1,005,400 860,700 660,300 558,068

Total Assets 1,395,800 1,429,900 1,261,600 1,049,900 890,683


Solvency Margin 1.41 1.42 1.47 1.59 1.6


Gross Tonnage

Owned 108,500,000


Free reserves

2014 368,500,000

2013 362,600,000

2012 352,600,000

2011 349,700,000

2010 242,567,000


A

Managers

Charles Taylor & Co (Bermuda)


Tonnage by Area

Tankers

Cargo/Container

Bulkers

Passenger & Ferries

Offshore

Other

Europe

Asia

USA

Rest of World

Canada

UK

12%

27%

43%

3%

9%

26%

26%

New Chairman Rod Jones’s first report concentrates more on the personnel changes at both Board and Management level rather than the Club’s financial performance, although he does feel that “the Club has performed very well in difficult conditions... and is well positioned to prosper in an increasingly competitive market environment”.

The underwriting result was vastly improved, with the combined ratio down from 113% to 101% but the investment return was only 0.6% – something of a surprise as the Club has for a number of years been returning some of the best results in the International Group, averaging a 10% return for the four prior years. Owned tonnage grew by 3.5m GT, but chartered tonnage is down from 30m to 22.5m GT.

The Club has seen a continuation of the claims trend whereby the total incurred claims cost is concentrated in a relatively small number of claims – the largest 20 claims accounted for over two-thirds of the overall claims cost for the year. There is concern at the regular incidence of engine-room fires leading to engine and electrical failures

and the subsequent loss of the ship, and explosions/fires on container ships involving improper stowage of dangerous goods have also produced a number of large claims. The Club is actively engaging with container ship operators in an attempt to reduce the frequency of such claims.

The club decided to drop its controversial plan to offer US COFRs in the light of strong opposition from the majority of Clubs in the International Group. It does, though continue to look at further diversification and we understand the managers will shortly be confirming their establishment of a Lloyd’s syndicate, which is a positive development and potentially of greater benefit to the membership than their “sponsored” covers such as hull and K&R.

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28

The Steamship Mutual Underwriting Association (Bermuda) Ltd

Gross Tonnage

Owned 68,700,000


Free reserves

2014 301,199,000

2013 286,207,000

2012 295,838,000

2011 303,307,000

2010 251,562,000


A–

Managers

Steamship Mutual Management (Bermuda) Limitedsteamship mutual

steamship mutual

15%

13%

3%

6%

24%

39%

7%7%

9%

15%

30%

39%


Tonnage by Area

Bulkers

Tankers

Container

Cruise/Ferry

General Cargo

Other

Far East

Europe

North America

Latin America

Other

Middle East/India

Year 2014 2013 2012 2011 2010

Calls/Premium 345,731 315,265 329,646 316,054 305,431




Net Underwriting Result 9,289 (33,775) (40,940) 21,111 21,098

Gross Outstanding Claims 1,205,156 1,281,692 944,222 714,962 722,687

Total Assets 1,533,031 1,633,952 1,276,622 1,051,945 1,016,696


Solvency Margin 1.27 1.27 1.35 1.47 1.41


After two tough years of underwriting losses and declining free reserves, Chairman Heinrich Schoeller must be relieved to report a much improved performance this year. A technical surplus of $9m plus a small net investment return of $6m (1%) – reflecting the Club’s ultra-conservative investment policy – helped push free reserves back over the $300m mark of three years ago. Owned entered tonnage grew by 3.3m GT to nearly 69 million, and chartered tonnage saw considerable growth.

Claims within the Club retention of $9m were actually 9% higher than for the previous year and also significantly higher than most prior years, with the biggest increase being on claims excess of $1.8m. The Club also had two claims which hit the Pool.

Schoeller believes that different business models being pursued by Clubs may be the cause of friction within the International Group, citing the examples of the COFR issue reported elsewhere and the recent discussions regarding the kinds of operations and the types of

vessels that should be permitted for Pooling. Somewhat optimistically and showing rather more tolerance than Britannia and Gard, Schoeller hopes that “such differences will be handled in a spirit of mutual respect and tolerance for alternative points of view”.

While the Club has had a better year, its three-year average combined ratio of 108% remains well above the objective of 100%. At the 2014 renewal, it achieved an 8.2% increase (including allowance for increased deductibles) against its general increase of 10%. With the lowest investment income in the Group last year and a measly average return of 2.7% over the last ten years, we must assume similar premium increases for 2015.

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29

The Swedish Club

* All classes of business

Note: items marked * are Group figures and include all business lines, not just P&I.

Free reserves*

2014 167,952,000

2013 150,971,000

2012 141,900,000

2011 151,200,000

2010 121,700,000


BBB+

swedish club

swedish club

60%

40%

31%

20%

40%

6%

3%


Tonnage by Area

Container

Tankers

Bulkers/General Cargo

Passenger

Other

Europe

Asia Pacific

Year 2014 2013 2012 2011 2010

Calls/Premium 99,646 91,742 91,356 85,280 78,742




Net Underwriting Result (6,368) (17,264) (11,371) 5,258 2,211

Gross Outstanding Claims* 318,933 351,349 385,568 224,889 210,457

Total Assets* 547,368 562,829 584,741 425,095 371,959

Average Expense Ratio 12.10% 13.30% 13% 11.60% 11.40%

Solvency Margin* 1.72 1.60 1.52 1.89 1.77

Reserves /GT Ratio* $4.53 $4.34 $4.13 $4.89 $4.70

Chairman Lennart Simonsson appears pretty relaxed as he reports that 2013 was a “calm” year and a satisfactory one for the Club. He believes that one of the most important decisions during the year was to allow members free access to Maritime Resource Management (MRM) training – “the single most powerful step we can take to address the human dimension of accident prevention”.

It is left to M.D. Lars Rhodin to review the figures, and 2013 was certainly much better than the two prior years. Across all classes, the net combined ratio was 94%. P&I claims were down over $10m, with no claims on the Pool and the P&I technical deficit reduced to just over $6m from $17m. P&I owned tonnage grew by 2.3m GT to just over 37m, and there was good growth in the charterers’ book. Across the

Club as a whole, there was a healthy rise in free reserves from $151m to a record $168m. Rhodin concludes that the Club is maintaining its steady course. “We believe in the inherent value of diversification and in taking firm action on loss prevention... Shipowner liabilities can only increase in a world intolerant of marine accidents. In this climate we are sure that the mutual approach to risk-sharing is our greatest benefit to shipowners.”

We agree with Mr Rhodin, but remain concerned with the Club’s low market share and limited geographical spread. The other Scandinavian Clubs now have a strong presence in London and we would suggest it may be time for the Swedish Club to follow suit.

All

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es $

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Gross Tonnage

Owned 37,100,000


Managers

Self-Managed

30

The United Kingdom Mutual Steam Ship Assurance Association (Bermuda) Limited

* Exclude 98.34m hybrid capital

Free reserves*

2014 430,004,000

2013 394,056,000

2012 386,459,000

2011 378,993,000

2010 310,940,000


A

the standard

the standard

38%

14%2%

2%4%

40%

9%

38% 53%

Year 2014 2013 2012 2011 2010

Calls/Premium 396,281 360,181 360,540 364,791 447,183




Net Underwriting Result (6,003) (13,233) 4,329 3,524 7,171

Gross Outstanding Claims 1,066,134 1,046,420 1,109,910 1,105,013 1,131,010

Total Assets 1,624,107 1,563,442 1,621,371 1,609,705 1,562,143


Solvency Margin 1.52 1.49 1.46 1.46 1.38

Reserves /GT Ratio $3.47* $3.28* $3.45* $3.61* $2.96*


Tonnage by Area

Tankers/Gas

Bulkers

Container

Passenger/Ferry

Car Carrier

Other

Europe/M.East/Africa

Asia Pacific

Americas

New Chairman Alan Olivier feels very privileged to have become Chairman of the Club “at a turning point in its fortunes”, stating that over the past five years the Club has been able to rebuild its capital base, bring discipline to its underwriting and improve its service proposition. He feels the Club is now significantly closer to its goal of being the leading shipowner controlled Club, and we do not disagree with him.

A combined ratio of 102% and an investment return of 4.5% pushed free reserves up to a new high of $528m, including hybrid capital of $98m. Owned tonnage grew by 4m to 124m GT and chartered tonnage remains strong at around 80m GT. Net claims are projected to be the highest since 2007 and 25% higher than the average of the last five years. While the increase was offset in 2013 by an improvement on back years’ claims, it looks like we can expect another sizeable general increase for 2015 to reflect the Club’s commitment to disciplined financial management. At the 2014 renewal, a premium increase of 7% was achieved against the general increase of 10%.

We are pleased that the Club has sought to give some explanation of its capital requirements, albeit on a limited basis. It has explained that the target is to hold sufficient capital (free reserves plus hybrid) to meet regulatory and external rating agency requirements plus suitable buffers to avoid the need for unbudgeted calls following “shock events”. The Club states it has set its buffer above the regulatory capital requirement such that it can cope with a loss equivalent to a 1 in 20 event and still have sufficient regulatory capital, and this broadly equates to holding capital equivalent to the AA/AAA range on the S&P capital model. The International Group Pool and reinsurance programmes, plus the Club’s own extensive retention reinsurance help to limit the range of potential outcomes for any particular year. We especially like the final comment that if the Club’s capital were to exceed the needs of regulators and rating agencies, then a return of premium to members would be considered.

All

figur

es $

’000

Gross Tonnage

Owned 124,000,000


Managers

Thomas Miller

UK P&I CLUB

31

The West of England Shipowners Mutual Insurance Association (Luxembourg)

west of england

west of england

28%

16%

12% 3%

2%

39%

6%6%

38%

50%

Free reserves

2014 216,196,000

2013 197,421,000

2012 179,356,000

2011 182,664,000

2010 169,109,000


BBB

Year 2014 2013 2012 2011 2010

Calls/Premium 203,311 195,483 211,551 243,167 239,589






Total Assets 810,755 894,939 968,947 981,200 928,021


Solvency Margin 1.48 1.50 1.44 1.34 1.32

Reserves /GT Ratio $3.78 $3.75 $3.55 $3.73 $3.19A

ll fig

ures

$’0

00


Tonnage by Area

Bulkers

Tankers

Containers

Cargo/Reefers

Ferries/Passenger

Other

Europe

Asia

Americas

Other

Chairman Matheos Los reports another positive year as the West “revival” continues. The combined ratio was just the wrong side of positive at 100.80%, and an investment return of $20 million (3.4%) resulted in a 10% increase in free reserves to $216m, although the return does include GB£3.3m relating to the revaluation of the Club’s London office. The claims picture looks very stable, with the Club seeing a significant shortening of the claims “tail”, due to a reduced exposure to personal injury claims, the result of “derisking” in 2011 when a number of US ship owners and cruise operators were not renewed. The Club also continues to benefit from a low contribution to the International Group Pool, with its 2014 provisional percentage now under 6%.

The progressive strengthening of the Club has been recognized by the market, and led to an increase of around 5m in entered tonnage. M.D. Peter Spendlove hastens to add that the Club’s strategy “remains to

maintain a high quality Membership” and at the 2014 renewal the Club turned down $10 million of new business which did not fit the strategy. Sadly, he then spoils the good news by insisting that premiums must continue to rise to meet the current pressures of increased regulation and maintain acceptable credit ratings. The Club’s free reserves have grown by nearly $50m over the last five years, or from $3.19 to $3.78 per GT. We can fully understand the Club’s frustration that S&P has failed to recognize the improvement in the Club’s fortunes, but we do think the membership should be given a clearer indication of the level of reserves the Club feels it needs for regulatory compliance, an A rating and, most importantly, to ensure a suitable buffer against the risk of additional calls. Vague indications that further capitalisation is required are not sufficient for ship owners who have suffered so much over the last five years.

Gross Tonnage

Owned 57,200,000


Managers

Self Managed

Tyser & Co. Ltd. of Beaufort House, 15 St Botolph Street, London, EC3A 7EE is an Independent Lloyd’s broker. We are authorised and regulated by the Financial Services Authority

(FSA). Our permitted business is arranging general insurance contracts. Our FSA Register number is 308648. These details can be checked on the FSA’s Register by visiting the

FSA’s website - http://www.fsa.gov.uk/pages/register or by contacting the FSA on 0845 606 1234.

Tyser & Co Limited

Tel: +44 (0)20 3037 8000

Fax: +44 (0)20 3037 8010

Beaufort House

15 St Botolph Street

London

EC3A 7EE

United Kingdom

www.tysers.com

Tysers P&I Report 2014

Documents

Transcript of Tysers P&I Report 2014