Tysers P&I Report 2015

International Insurance and Reinsurance Brokers

The P&I Report 2015

1

ContentsAbout Us 4

P&I Team Contacts 5

How Will They Spend the Money 6-7

International Group 2015 League Tables 8

Summary of 2014/15 Results 9

P&I Market Share 10

Standard & Poors Ratings of P&I Clubs 11

Average Expense Ratios (AER) 12

General Increases 13

Supplementary Call Record 14

Freight, Demurrage and Defence Summary 15

Pooling and Reinsurance 16

Excess of Loss Reinsurance Rates 17

Estimated cost of notified Pool claims 17

Current International Group issues 18

P&I Club Information 19-21

American Steamship Owners Mutual Protection

& Indemnity Association, Inc. 22

The Britannia Steam Ship Insurance

Association Limited 23

Gard P&I (Bermuda) Limited 24

The Japan Ship Owners Mutual Protection

& Indemnity Association 25

London Steamship Owners Mutual

Insurance Association Ltd 26

The North of England P&I Association Limited 27

The Shipowners Mutual Protection

& Indemnity Association (Luxembourg) 28

Assuranceforeningen Skuld 29

The Standard Club Ltd 30

The Steamship Mutual Underwriting

Association (Bermuda) Ltd 31

The Swedish Club 32

The United Kingdom Mutual Steam Ship

Assurance Association (Bermuda) Limited 33

The West of England Shipowners Mutual

Insurance Association (Luxembourg) 34

3

4About Us

Founded in 1820,Tysers is a leading independent international Lloyds broker that is based at the heart of the worlds premier insurance market in London.Tysers employs some 240 people; handles over $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 fully integrated 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 StrengthsGlobal 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.

P&I Team Contacts

Martin Hubbard

Email: [email protected]

Direct line: +44 (0)20 3037 8309

Mobile: +44 (0)7971 501 747

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.

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.

Piers OHegarty


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.

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

6How will they spend the money?

A second consecutive quiet year on the claims front now sees the

International Group awash with cash, to the extent that unless

Clubs return money to their members this year we would have to

question whether one of the basic principles of mutuality is dead

in the water. The average net combined ratio for the Group was

just under 100%, and an overall net surplus of $325 million has

pushed total free reserves over $4.6 billion, which in our view, and

we suspect the view of more than one member of the IG Group, is

excessive. Perhaps there are other dark forces at work which are

driving this relentless accumulation of free reserves .

Only one Club, London, failed to record a surplus in 2014 and their

net combined ratio of 134% is a worry. They have survived for some

years on the back of excellent investment returns and free reserves

of $3.59 per owned GT still look adequate, but a poor investment

year would soon change the picture unless the technical result

improves dramatically. North also had a poor year P&I-wise but

were saved by a timely surplus of $41 million from their Sunderland

Marine business, one in the eye for those who deny the benefits of

diversification or consolidation. Steamship Mutual and Britannia

(including Boudicca) were the stars in terms of growth in free

reserves and Gard continues to return funds to the members. All

the other Clubs made good progress, except for the American Club

whose owned tonnage is now below 14 million GT.

The Groups free reserves have developed as follows:

Year Owned GT Free ReservesReserves

per GT

2011/12 988,000,000 3,955,000,000 $4.00

2012/13 1,036,000,000 4,086,000,000 $3.94

2013/14 1,076,000,000 4,318,000,000 $4.01

2014/15 1,104,000,000 4,623,000,000 $4.19

What are the free reserves for? In the old days, they were used

to smooth over a bad year, providing a buffer to try to avoid

unbudgeted calls. Today, they are also required to meet regulatory

requirements (particularly Solvency II which at the moment is due

for implementation in January 2016) and also to satisfy what we

feel are the misplaced requirements of Standard & Poors (S&P).

We do believe that S&P now has too much influence over

the International Group and, having announced that it was

withdrawing public information ratings for insurance companies

in Western Europe, all Clubs feel obliged to pay S&P for an

interactive rating, with London Club the last to succumb in

December 2014. We now have eight A rated Clubs, three at BBB+,

and only the London and American Clubs at a lower rating. Sadly,

the Clubs attach so much importance to their rating that they are

under continuous pressure to keep increasing free reserves, to the

detriment of their members and the basic concept of mutuality.

With S&P and regulators also preferring multiline insurers, is

there a long term future for any monoline mutual P&I Club? The

Scandinavian Clubs clearly think not, and Standard and North

are in the same camp. UK and Britannia appear to be happy as

they are, with Britannias Chairman Nigel Palmer stating in the

Clubs annual review that the IG systemhas served Members

well and it is essential that the broader commercial ambitions of

some do not destroy it, to the long-term detriment of the majority

of shipowners worldwide. At least these two Clubs have size on

their side, but what of the smaller, more conservative and focused

Clubs such as West of England and London? Can they withstand

long-term the pressures of S&P and the diversified or larger

Clubs, and will the cracks in relationships between the Clubs,

which we mentioned last year and which have been raised again

this year in some quarters, continue to grow and to erode the

basis of the International Group?

Many top P&I managers are now getting close to retirement and

the next generation will face a much tougher life and some very

difficult decisions. Standing still is not an option and there can

be no assumption the International Group will exist in its current

format in ten years time. This is sad, as the mutual system has

served shipowners so well for so long but, rather like the author

of this Report, it is now creaking at the joints.

Our view remains that Clubs need either to follow the Gard

diversification model, or to merge so that all Clubs have an

influence in the market. A minimum owned tonnage of 100 million

GT and minimum free reserves of $3.75 per owned GT is our

preferred solution for a stable future.

What can we expect at the 2016 renewal? We are worried that

despite two quiet years and the average combined ratio now

where it should be at a fraction under 100%, a number of Clubs

keep referring to a hostile claims environmnent as if to warn

us that premiums will continue to rise. Last year saw an average

general increase just over 3%, with three Clubs opting for no

increase at all. We do believe that the 2016 average should

be lower than 2015, and that the majority of the International

Group is in such a strong position that it should not require any

increase. The one caveat is the current turmoil in global stock

markets which will certainly hit the Clubs investment returns,

but there is $4.6 billion in the kitty to cover possible investment

losses and any upsurge in claims. We further feel that a number

of Clubs should be able to follow Gard and return premium to their

members, particularly Britannia, UK and Steamship Mutual. The

simple message to the Clubs is that they have too much money,

shipowners need a break and any owner with a good or even

average record should not be asked to pay more. Lets have a

sensible mutual approach rather than one dictated by S&P.

Finally, we should update you on that unsavoury aspect of

mutuality release calls. Following discussions with the European

Commission, the International Group Agreement was amended to

provide that each Club must publish at least annually its release

calls, with an explanation of the factors taken into account in

setting the release call percentages, which must include objective

actuarial information regarding:

a. premium risk (the risk that the premiums to be charged in

respect of the current policy year are insufficient to cover the

claims that arise in respect of that policy year);

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2013 20 7.50* 5 5 12.5 5 0 0 2 5 7.50 10 3.7

2014 20 7.50* 15 5 15 10 0 5 3 5 12.50 15 7.4

2015 20 15* 20 5 15 20 0 15 7 15 20 15 14.8

Release Calls as at September 2015

b. reserve risk (the risk that the claims reserves established in

respect of past policy years prove to be insufficient to cover

the ultimate cost of the claims);

c. catastrophe risk (the risk of one or more claims running into

hundreds of millions of dollars);

d. market risk (the risk of losses on investments, liquidity risk,

and currency risk);

e. counterparty default risk (the risk that a Club is unable to

recover amounts due from a member, a deposit-taker such as a

bank, or a reinsurer),

f. operational risk (the risk of losses arising from inadequate

or failed internal processes, people or systems or from

external events)

Sadly, this has led to no more disclosure than in the past and the

following statement from the American Clubs Annual Report is

typical of all Clubs failure or refusal to explain adequately their

release call calculation:

In conformity with this policy, in November 2014, being the same

time at which individual open years release call margins were

notified to Members, the Clubs Board explained the factors which

it had taken into account in calibrating the figures in question.

Specifically, these were premium risk, catastrophe risk, reserve

risk, market risk and counterparty default risk, as well as the

exposure of the Club generally to the wide variety of operational

risks which, over time, it needs to consider in determining both its

basic premium and, more particularly, release call needs in regard

to all open policy years.

Is this really all that the European Commission required and does

it in any way explain or justify release calls as high as 20%?

* Percentage of advance call. All other figures are percentage of total premium.

7

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8

International Group 2015:

Summary of 2014/15 Results

ClubU/W Profit/

Loss 2014/15 ($M)

Net Combined

Ratio 2014/15

Investment Income 2014/15

($M)

Surplus Feb 2015 ($M)

Free Reserves Feb 2015

($M)

Total Owned GT Feb

2015 (M)

Free Reserves

Per Owned GT Feb 2015

American (7) 106.9% 8 1 59 14 $4.22

Britannia* 63 71.5% 12 74 546 109 $5.03

Gard 10 98%*** 23 25*** 969 189 $5.12

Japan 0 100% 43 31 172 93 $1.85

London (30) 134% 28 (3) 157 44 $3.59

North** (28) 109% 25 26 338 127 $2.66

Shipowners 11 94.6% (10) 1 300 24 $12.74

Skuld 1 99.8% 14 13 348 83 $4.19

Standard 0 100% 12 12 380 112 $3.41

Steamship 63 78.6% 12 75 376 74 $5.06

Swedish 4 87% 3 17 186 42 $4.49

UK (20) 104.6% 47**** 25 548 127 $4.31

West 5 97.4% 25 28 244 68 $3.61

Total 72

Average 98.57%

Total 242

Total 325

Total 4,623

Total 1,104

Average $4.19

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

* Includes Boudicca

** See Club review for explanation of figures

*** GARD NCR and Surplus are net of $37m return on 2014 deferred call. On ETC basis the NCR is 91%

and the surplus $87m. Surplus is also net of pension liabilities

**** UK investment income is net of $7.5m interest paid on perpetual subordinated securities

9

10

P&I Market Share

P&I Club Owned GT %Accounting Year

Premium $ %

Free Reserves

%

Gard 189,000,000 17.12 628,672,000 15.75 968,590,000 20.95

UK 127,000,000 11.50 408,059,000 10.22 547,766,000 11.85

North of England 127,000,000 11.50 526,196,000 13.18 338,109,000 7.31

Standard 111,500,000 10.10 354,000,000 8.87 380,300,000 8.22

Britannia 108,500,000 9.83 269,726,000 6.75 545,567,000 11.80

Japan 93,400,000 8.46 233,096,000 5.84 172,369,000 3.73

Skuld 83,000,000 7.52 411,246,000 10.30 347,685,000 7.52

Steamship 74,300,000 6.65 365,341,000 9.15 376,187,000 8.14

West of England 67,500,000 6.12 216,798,000 5.43 243,692,000 5.27

London 43,800,000 3.97 111,290,000 2.78 157,414,000 3.41

Swedish 41,500,000 3.76 106,006,000 2.65 186,342,000 4.03

Shipowners 23,600,000 2.14 247,342,000 6.20 300,273,000 6.50

American 13,900,000 1.26 114,798,000 2.88 58,600,000 1.27

Total 1,104,000,000 3,992,570,000 4,622,894,000

These comparisons show the relative size of P&I Clubs by owned gross tonnage, financial year income and free reserves as at 20

February 2015.

Standard & Poors Ratings of P&I Clubs

Insurance Year 2011 2012 2013 2014 2015

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 A A A-

Steamship A A A A A-

Swedish Club BBB BBB+ BBB+ BBB+ BBB+

Japan Club BBB BBB BBB+ BBB+ BBB+

West of England BBB BB BBB BBB BBB+

London Club BBB BBB BBB BBB BBB

American Club BB BB+ BBB BBB BBB

11

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.

2011 2012 2013 2014 2015

American Club 16.50% 18.30% 19.30% 19.30% 21.60%

Shipowners 19.00% 20.00% 20.00% 18.00% 20.00%

West of England 13.66% 14.75% 15.43% 14.24% 14.86%

Swedish 11.60% 13.00% 13.30% 12.10% 13.00%

Skuld 12.10% 12.40% 12.30% 12.30% 12.90%

North of England 11.90% 12.60% 13.10% 12.50% 12.40%

Steamship 12.00% 12.30% 12.40% 11.30% 11.80%

Gard 12.00% 13.00% 14.10% 11.30% 11.40%

Standard 13.30% 13.40% 13.20% 10.90% 11.40%

UK Club 9.16% 9.46% 9.47% 9.35% 9.66%

London Club 8.70% 9.40% 9.63% 8.36% 8.78%

Britannia 8.09% 8.49% 8.49% 8.03% 8.43%

Japan Club 6.27% 6.18% 5.69% 5.73% 5.25%

Average 10.95% 12.56% 12.80% 11.80% 12.42%

General IncreasesGa

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

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

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

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

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

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

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

2015 2.5 0 0*** 2.5 0 2.5 5 6.5 2.5 4.75 6 4.5 3

Total 2008/2015

150 153 153 173 176 188* 188 189 197 203 205 209 227

* 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 2007 premium of 100.

Average 185

13

14

Supplementary Call Record

* 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

(Original Estimate/Current Estimate)

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

2015 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

Freight, Demurrage and Defence Summary

General Increases

2015 Limits and Deductibles

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2013 10 10 5 0 12.5 10 5 0 15 7.5 5 7.5 9

2014 10 0 10 7.5 10 5 5 0 12.5 10 7.5 5 7.5

2015 4.5 0 10 0 6 2.5 0 0 5 0 5 0 0

Club Standard Limit (US$) Standard Deductible

American 2,000,000 $5,000, then 25% maximum $50,000

Britannia 10,000,000 (but 2m newbuilding/conversion disputes) One-third of all costs excess of $5,000

Gard 10,000,000 (but 2m newbuilding/conversion disputes) 25%, minimum $5,000

Japan Yen 1.5 billion (approx. $12,000,000) One-third of all costs excess of $1,000

London 7,500,000 25% all costs

North None (but 250,000 building, purchase, sale disputes) 25%, minimum $10,000 maximum $150,000

Shipowners 5,000,000 First $750 of costs up to $3,000, then 25% maximum $30,000

Skuld 5,000,000 (but 300,000 building, purchase, sale disputes) 25%, minimum $10,000

Standard 5,000,000 25%, minimum $10,000

Steamship 10,000,000 $5,000, then one third all costs subject overall maximum $30,000.

Swedish 5,000,000 $12,000, plus 25% of any costs in excess of $250,000

UK 15,000,000 Nil, but no cover for disputes under $10,000

West 10,000,000 $5,000, then 25% maximum $50,000 but $100,000 for building disputes.

15

16

Pooling and Reinsurance

Layers of International Group Programme 2015/16

*ICR Individual Club retention

2014 16 MultiYear Private Placement, 5% share

2015 17 MultiYear Private Placement, 5% share

Upper-Upper Pool reinsured by Hydra

Upper Pool reinsured by Hydra

Lower Pool reinsured by Hydra

Lower Pool

Individual Club Retention (ICR)

3.08bn

Oil Pollution

Protection and indemnity

Single per-vessel retention

Collective OverspillExcess of underlying

Third LayerExcess of underlying

Second Layer90% market share

First LayerMarket share

Hydrashare

First LayerMarket share

Hydrashare

Second Layer90% market share

3.1bn

2.08bn

1.08bn

560m

80m

60m

45m

30m

9m

2.1bn

1.0bn

100m

5% ICR

10% ICR

Excess of Loss Reinsurance Rates

Dirty Tanker

Clean Tanker

Passenger

Other

Year 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

Tankers (Dirty) 0.6799 0.6797 0.7300 0.8079 0.7554 0.7038 0.6515 0.7565 0.7963 0.7317

Tankers (Clean) 0.3201 0.3187 0.3498 0.3667 0.3335 0.3055 0.2798 0.3245 0.3415 0.3138

Dry Cargo 0.2851 0.2837 0.3196 0.3695 0.3867 0.3709 0.3561 0.4942 0.5203 0.4888

Passengers 0.8006 1.3714 1.4985 1.6026 1.5654 1.4780 1.3992 3.1493 3.7791 3.7791

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Estimated Cost of Notified Pool Claims

0

100

200

300

400

500

266.

7

122.

9

386.

9

250.

6 289.

6

179.

6

467

327

2007 2008 2009 2010 2011 2012 2013 2014

For 2015, the Club retention remained at

$9m and the Pool limit at $80m. The table

show the total cost of Pool claims based

on historical thresholds.

Estimates in USD millions as at February 2015

The Actual rates US$ per GT are:

17

18

Current International Group Issues

Maritime Labour Convention 2006

All Clubs in the International Group have incorporated provisions

in their rules to extend cover to repatriation costs following

abandonment and in addition, all flag states currently accept Club

certificates of entry as evidence of compliance with the financial

security provisions of the MLC.

Amendments to the MLC have recently been approved and will

come into force during 2017. These amendments include an

entitlement for seafarers to receive four months wages in the

event of abandonment. It has now to be determined whether the

International Group Clubs will be willing to extend the scope of

P&I cover to include unpaid wages in the event of abandonment.

We understand there is agreement in principle to provide cover,

but this may be limited to amounts within the individual Club

retention (currently $9 million). It is also possible that yet another

Blue Card scheme will be required from 2017.

Nairobi Wreck Removal Convention 2007

The Convention came into force on 14th April 2015, requiring

vessels over 300GT registered in or using a port in the territory

of a State party to have insurance or other financial security to

meet the Convention liabilities.

The Convention applies to a States Exclusive Economic Zone,

but States have the option to extend the application to their

own territory, including territorial seas. It is surprising that

many States have not taken this option as most wrecks occur in

territorial waters.

The Convention does not change any existing limitation rights,

and does apply the usual IMO Convention defences of acts of

war, natural phenomena, intentional acts of third parties and

negligence of authorities responsible for navigation aids.

The Clubs agreed to issue Blue Cards under a system similar

to that adopted for the CLC and Bunker Convention, but other than

the compulsory insurance and financial security arrangements,

the Convention would not appear to make much difference to

previous liabilities for wreck removal.

Sanctions

New sanctions legislation, particularly involving Russia and the

Ukraine,resulted in increasing complexity for shipowners and their

insurers, and kept the International Group busy throughout 2014.

Sanctions against Iran also continued to feature prominently,

with some progress apparently made towards a resolution of

the concerns surrounding Irans nuclear programme. 2014 saw a

temporary relaxation of a number of sanctions against Iran that

impacted the shipping and insurance sectors, but the ambiguity

of many of the provisions, especially those of the EU, means

that Clubs continue to advise considerable caution to members

considering trade to Iran.

As we go to print, it does appear that sanctions against Iran

are likely to be lifted perhaps before the end of 2015, and an

invasion of Tehran by the Clubs can be anticipated as they seek to

persuade NITC and IRISL to return to the fold.

Liquefaction of bulk cargoes

The Group continued to focus on concerns regarding potential

liquefaction of certain bulk cargoes. A number of IMO States

have failed to implement and apply the mandatory requirements

established by the International Maritime Solid Bulk Cargoes

(IMSBC) Code, and some of them are exporting significant

quantities of bulk cargoes that are prone to liquefaction. The

Group is working closely with Intercargo to address these

concerns at the regulatory level, and with the IMO and individual

States which mine and export such cargoes.

The Group is also leading an industry wide review in relation

to ongoing problems concerning the carriage of Direct Reduced

Iron (DRI).

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.

19

American 22

Britannia 23

Gard 24

Japan 25

London 26

North of England 27

Shipowners 28

Skuld 29

Standard 30

Steamship Mutual 31

Swedish 32

UK 33

West of England 34

Protection & Indemnity Club Reviews

21

22

American Steamship Owners Mutual Protection & Indemnity Association, Inc.

Gross Tonnage

Owned 13,900,000

Chartered 1,150,000

Free reserves

2015 58,600,000

2014 57,344,000

2013 54,229,000

2012 60,219,000

2011 63,612,000

Standard & Poors Rating

BBB

Managers

SCB Inc (Eagle Ocean Management LLC)

Tonnage by Area

Tonnage by Vessel Type

Bulkers

Tankers

General Cargo/ Passenger/Container

Tugs/Barges/Small craft

Europe

North America

Asia

Other

american steamship

2%

10%

40%

48%

american steamship

7%

10%

60%

23%

Year 2015 2014 2013 2012 2011

Calls/Premium 114,798 107,959 112,126 111,955 114,631

Reinsurance Cost 20,553 18,581 18,585 16,283 9,362

Net Claims (incurred) 65,962 65,064 83,265 72,986 69,236

Operating Expenses 34,795 35,250 31,995 33,045 34,691

Net Underwriting Result (6,512) (10.936) (21,719) (10,359) 1,342

Gross Outstanding Claims 228,457 225,545 263,563 261,902 249,892

Total Assets 326,897 328,712 359,110 358,048 343,067

Average Expense Ratio 21.60% 19.30% 19.30% 18.30% 16.50%

Solvency Margin 1.43 1.46 1.36 1.37 1.37

Reserves/GT Ratio $4.22 $3.43 $3.61 $3.74 $4.13

The Managers report that the Club made solid progress in 2014 and experienced many positive developments during a characteristically busy year. We have looked hard at the Annual Report to find these positive developments but all we can find is an underwriting deficit of $6.5m (which is a big improvement on the previous three years) and an investment return of 4% which resulted in an overall surplus for the year of just over $1 million. The Clubs Average Expense Ratio has risen to 21.6% maintaining their position at the top of the league.

There is only a passing reference to tonnage and premium suffering a reduction over the 2015 renewal, but the Club has confirmed that owned tonnage reduced by nearly 17% from 16.7m last year to 13.9m as at 20th February 2015, the lowest level since 2009.

On the claims performance, the year started badly with the Club suffering one of its largest ever claims, an oil spill in Texas, but thereafter the year developed favourably. There were only seven claims which exceeded $1 million. These were mainly collision cases, and both cargo and crew claims were down on prior years, which the Club attributes to the members growing implementation of its loss prevention initiatives.

The Club also mentions that its Managers fixed premium P&I facility, Eagle Ocean Marine, has grown market footprint with solid profitability. Eagle Ocean Marine, has grown market footprint with solid profitability. Eagle Ocean now offers a limit of $500 million, with the Club writing a 20% share of the first $25 million, and will accept vessels up to 25,000GT. Perhaps in response to criticism from other parts of the International Group, the Club does give over one page of its Annual Report to extolling the virtues of mutuality. It states that the not-for-profit principle permits flexible insurance pricing when shipowner earnings are depressed (strange as the Club has charged a cumulative general increase of 35% over the last five years), that the mutual system offers an unsurpassed service ethic and that the exceptional strength of the International Groups collective reinsurances provides an overarching canopy of unmatched security.

The Club thus concludes that the uniqueness of the mutual club ethos confers singular benefits on the maritime community. So why is it involved in a fixed market facility which is willing to accept vessels up to 25,000GT?

All

figur

es $

000

The Britannia Steam Ship Insurance Association Limited

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

Britannia steam ship

Britannia steam ship

Gross Tonnage

Owned 109,000,000

Chartered 27,000,000

Free reserves

2015 371,267,000*

2014 352,998,000*

2013 326,817,000*

2012 290,677,000*

2011 274,908,000*


A

Managers

Tindall Riley (Britannia) Limited


Tonnage by Area

Bulkers/OBO

Tankers (Crude)

Containers

Tankers (Other)

Cargo/Other

Asia

Scandinavia

Europe

Americas

Other

35%

17%

31%

11%

6%

51%

24%

17%

6%2%

Year 2015 2014 2013 2012 2011

Calls/Premium* 269,726 284,167 294,057 281,772 298,482

Reinsurance Cost* 73,191 74,866 66,820 63,681 74,468

Net Claims (incurred)* 156,241 203,516 200,594 209,634 201,818

Operating Expenses* 24,963 26,811 29,317 29,389 27,877

Net Underwriting Result* 15,331 (21,026) (2,674) (20,932) (5,681)

Gross Outstanding Claims* 1,093,595 1,122,485 1,147,253 1,010,461 903,840

Total Assets* 1,489,236 1,499,487 1,499,103 1,326,366 1,203,366

Average Expense Ratio* 8.43% 8.03% 8.49% 8.49% 8.09%

Solvency Margin* 1.36 1.34 1.31 1.31 1.33


Chairman Nigel Palmer reports that 2014 has been a frustrating year for shipowners, with the optimism at the start of the year proving unfounded due to lower than expected demand. He states that the only reason to smile was the low price of bunkers but we imagine the members will also be happy with a good set of figures from the Club. 2014 was a quiet year for claims, with claims under $1 million down 18% on 2013 and only 15 claims totaling $59.3m over $1 million compared to 33 claims in 2013 totaling $107.2m. Just one claim hit the Pool, and total estimated retained claims are at their lowest level since 2010. Not so good was the investment performance, which produced a paltry return of $4m, but an underwriting surplus of $15m the first for many years plus a very substantial surplus of $55m from the Clubs dedicated reinsurer, Boudicca, saw overall free reserves grow from $472m to $546m

Palmer does comment that it is important for free reserves not to be excessive and that current levels are well within the capital paramiters set by the Committee, and we hope this is a hint of some good news for the members later this year

The Clubs owned tonnage remained static at 109 million, but chartered tonnage grew by 4m GT.

The Chairman, no doubt prompted by Grantley Berkeley (current Chairman of the International Group), repeats his concerns from last year over the future wellbeing of the IG, bemoaning the growth of fixed premium facilities by some Clubs and in particular the fact that some Clubs are willing to write large vessels on a fixed basis in direct competition with the IG mutuals, including themselves. Palmer also expresses his worries at the potential problems for mutuality caused by diversification of some Clubs into new business areas citing, as an example, that if P&I rates are being subsidised by profits from other business lines then P&I call income will be artificially distorted and will reduce a Clubs contribution to pool claims. The IG system of pooling claims has served members well and it is essential that the broader commercial ambitions of some do not destroy it, to the long-term detriment of the majority of shipowners worldwide.

Strong and wise words indeed from this conservative Club.

All

figur

es $

000

*Excludes Boudicca

23

24

All

figur

es $

000

Gard P&I (Bermuda) Limited


Tonnage by Area

Tankers & Gas

Bulkers/OBO

Containers

Dry Cargo

Car Carriers

Passenger/Cruise/MOU/Other

Asia

Norway

Europe

Germany

Greece

Americas

Africa

Gard

18%

14%

3%4%

25%

36%

Gard

9%

19%

13%16%

16%

26%

1%

Year 2015 2014 2013 2012 2011

Calls/Premium 628,672 585,606 529,973 504,812 463,098




Net Underwriting Result 10,364 (43,744) (92,844) (29,291) (26,426)

Gross Outstanding Claims 1,379,308* 1,375,264* 1,344,151* 1,370,242* 1,277,702*

Total Assets 2,745,611* 2,722,301* 2,531,375* 2,494,244* 2,352,141*

Average Expense Ratio 11.40% 11.30% 14.10% 13% 12.00%

Solvency Margin 1.99* 1.98* 1.88* 1.82* 1.84*

Reserves/GT Ratio $5.12* $5.06* $5.13* $5.08* $5.46*

Chairman Bengt Hermelin is pleased to report yet another strong performance for the Gard group.

The net combined ratio for Gard as a whole was 88%, before allowance for pension liabilities of $25m and a reduction in the deferred P&I call for 2014 of $37 million. The ratio for P&I alone was 98% after the return of premium. As a result, the Group free reserves grew by $25 million to $969 million.

It is no surprise that the 2015 renewal saw the Clubs highest net tonnage increase for some years, and while some commentators have questioned the high level of Gards release calls (5% for 2013, 15% for 2014 and 20% for 2015) this would appear to be somewhat hypothetical as we cannot imagine many or any members thinking of leaving.

The Club has now returned a total of $187 million to members over the last six years in a clear signal that diversification can work if done properly.

The Chairman concludes his report with the comment that there can be no doubt that, by focusing on the principles of mutuality, there is a genuine alignment of interests across the membership, clients, management and staff which forms a strong foundation for the business, which looks like a swipe at other Clubs who question whether diversification is in the interests of the International Group

We expect more of the same in 2015, and a zero general increase.

Managers

Lingard Limited

Gross Tonnage

Owned 189,000,000


Free reserves

2015 968,590,000*

2014 944,123,000*

2013 894,792,000*

2012 825,618,000*

2011 789,695,000*


A+

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

The Japan Ship Owners Mutual Protection & Indemnity Association

Japan

61%16%

15%2%

6%

Gross Tonnage

Owned 93,400,000


Free reserves

2015 172,369,000

2014 156,012,000

2013 157,546,000

2012 166,949,000

2011 157,827,000


BBB+

Managers

Self-Managed

Japan

59%14%

10%

8%

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 2015 2014 2013 2012 2011

Calls/Premium 233,096 237,738 244,631 251,773 280,927




Net Underwriting Result 716 (9,849) 1,619 (1,343) 22,277


Total Assets 557,348 561,647 560,360 557,471 534,169


Solvency Margin 1.61 1.43 1.52 1.49 1.49

Reserves/GT Ratio $1.85 $1.70 $1.71 $1.86 $1.72A

ll fig

ures

$0

00

New Chairman Junichiro Ikeda reports that the P&I climate generally appears to be one of improving stability and the Japan club had a solid year with a technical result around breakeven on both ocean-going vessels and its Naiko Class (coastal trade). There were no Pool claims, and net claims were the lowest for five years. Both Ikeda and Director General Yoshikazu Minagawa feel the Clubs positive claims trend is due to a large extent to its increased loss prevention activities, in particular seminars and publications which Minigawa-san feels has improved the Clubs reputation with its members.

An investment return of 2.65%, helped by US$ investments, produced a very useful dollar profit of US$43 million and, after tax, the Clubs overall surplus was $31 million.2014 saw the Club achieve its target of free reserves exceeding net premium, while from 2015 the Club has started a new three-year plan called JPIs CHANGE Phase II, the

aim of which is to pursue sustainable growth of our entered tonnage by obtaining new good quality entries, recapturing vessels which have left us, strengthening our domestic business foundation and expanding overseas to target ship owners in the Asia region via our Singapore branch. The plan also involves the implementation of a comprehensive risk management system and consideration of a move into less traditional areas of marine risk.

Owned mutual tonnage grew by just over 1 million GT in the face of increased competition from other Clubs which, we have to say, are some way ahead of the Japan Club in terms of service, loss prevention and marketing and whose free reserves per owned GT are more than double those of Japans $1.85.

25

26

London Steamship Owners Mutual Insurance Association Ltd

London Steamship

London Steamship

Gross Tonnage

Owned 43,800,000

Chartered 7,500,000

Free reserves

2015 157,414,000

2014 160,644,000

2013 154,029,000

2012 144,669,000

2011 145,070,000


BBB

Managers

A Bilbrough & Co Ltd


Tonnage by Area

Bulkers

LNG/LPG & Tankers

Container

Cargo

S. Europe

Far East

N. Europe

Other

56%26%

16%

2%

43%

34%

19%

4%

Year 2015 2014 2013 2012 2011

Calls/Premium 111,290 106,895 101,951 109,190 113,224



Operating Expenses 12,483 11,921 11,483 $11,367 11,021

Net Underwriting Result (29,915) (18,736) (14,398) (16,731) (21,464)


Total Assets 517,374 492,489 521,630 569,078 593,142


Solvency Margin 1.49 1.53 1.46 1.36 1.36


ll fig

ures

$0

00

2014 was not a great year for the London Club. The underwriting loss of $30 million was the highest since 2008 and, while an investment return of $28m helped steady the ship, even this included a convenient $9m from the revaluation of the Clubs London office. The overall deficit was thus $3.2m. Owned tonnage remained pretty static, although the relatively new chartered tonnage continues to grow.

Chairman John Lyras reports that 2014 saw an unusual and challenging run of expensive claims. There were 14 claims over $1 million and the three largest involved dock damage (FFO) incidents. Two of these hit the Pool. Net incurred claims totaled $104 million, compared to an average for the prior three years of just under $90 million.

Excluding the property revaluation windfall, investments produced a healthy return of 5.5% ($18.8 million). The Club takes the view that a well-diversified portfolio containing some exposure to risk assets will generate superior returns in all but the most extreme years, and its current asset allocation includes close to 25% in equities.

This strategy has fortunately worked well in recent years and helped cover underwriting losses totaling over $100 million during the last five years.

CEO Ian Gooch has for some time accepted that it is essential for the Club to improve its technical performance but premium increases are being suppressed by the continuing effect of churn which, as we mentioned last year, is probably a bigger issue for the London Club than others given its small market share. Gooch confesses that profits from the fixed-premium charterers entries are essential to subsidise the mutual book, and regards growth in this area as an important strategic objective.

For this conservative Club, diversification means nothing more than trying to increase the spread of risk in terms of geography and tonnage. It accepts that it cannot continue with its current reliance on 40,000GT bulkers in Greece and the Far East and must attract a much wider range of tonnage from new areas, as well as continuing to grow its profitable charterers book. The problem is to convince ship owners that the Club is a viable alternative to the larger and stronger Clubs in the International Group.

The North of England P&I Association Limited

The North of England

The North of England

Gross Tonnage

Owned 127,000,000


Free reserves

2015 338,109,000

2014 312,274,000

2013 312,236,000

2012 314,013,000

2011 312,434,000


A

Managers

North Insurance Management Ltd


Tonnage by Area

Bulkers

Tankers

Containers

Car Carriers

Other

Europe

Asia Pacific

Middle East

Americas

Scandinavia

Others

39%

27%

19%

8%

7%

40%

35%

6%7%

11%

1%

Year 2015* 2014 2013 2012 2011

Calls/Premium 526,196 383,534 365,347 346,348 314,243




Net Underwriting Result (6,618) 20,847 (10,874) (8,185) 53,865

Gross Outstanding Claims 1,069,483 964,222 880,655 814,450 696,008

Total Assets 1,622,621 1,361,357 1,249,306 1,167,710 1,030,154


Solvency Margin 1.52 1.41 1.42 1.43 1.48


ll fig

ures

$0

00

Never before has a Geordie been heard to compliment someone from Sunderland, but North must be so grateful that the Sunderland Marine purchase has saved the day and turned a poor year into an acceptable one.

Norths P&I figures show an underwriting loss of $28.3 million, while the benefit of an investment gain of $31.9 million (including a handy $6.9m from a revaluation of the Clubs Newcastle property) was reduced by a further pension provision of $19.1m.The overall loss of $15.5m would have pushed free reserves below $300 million and set a few alarm bells ringing, but thankfully Sunderland Marine came in with a $41.4 million surplus to turn the loss into a $26 million surplus for the year.

Chairman Pratap Shirke describes 2014 as an interesting and busy year for North with a number of challenges and positive developments. The underwriting result is referred to as difficult perhaps an understatement for a year when the Club suffered over 50 claims in excess of $1 million, compared to 30 in the previous year. Claims on container vessels appear to have risen substantially, and a review of all

claims over $500,000 indicates that the most common causes relate to poor operational practices, with procedures either being unsuitable or not properly implemented. As a result, the Club will be concentrating on loss prevention measures including its Member Review Programme.

Owned tonnage fell by 3 million GT to 127 million and chartered tonnage dropped by 14%, which the Club attributes to the tough stance it took with members with poor claims records.

The Club did have its best investment performance for some years, returning 4.29% ($25 million) but obviously the main success has been the acquisition of Sunderland Marine. As the Chairman states, the acquisition is a major benefit for the mutual membership, providing us with both a significant financial boost at 20 February, but also with a diversification platform, without incurring the significant start-up investment costs normally associated with this level of diversification. A nice little dig at the Standard and Skuld Clubs.

*2015 includes Sunderland Marine.

27

28

The Shipowners Mutual Protection & Indemnity Association (Luxembourg)

Shipowners mutual protection

17%

12%

47%

12%

8%

4%

Shipowners mutual protection

21%15%

5%

5%

8%13%

29%

4%Harbour

Barges

Fishing

Ferries

Offshore

Dry

Tankers

Yachts


Tonnage by Area

Europe

Americas

S.E Asia & Far East

Australia/NZ & Pacific

Africa/Rest of World

Middle East & India

Gross Tonnage

Owned 23,578,000

Chartered N/A

Free reserves

2015 300,273,000

2014 298,555,000

2013 275,633,000

2012 234,760,000

2011 187,914,000


A

Managers

The Shipowners Protection Ltd

Year 2015 2014 2013 2012 2011

Calls/Premium 247,342 243,715 221,925 209,689 196,815




Net Underwriting Result 11,438 2,334 8,938 28,560 26,157


Total Assets 764,253 779,090 719,969 603,184 552,268

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

Solvency Margin 1.96 1.88 1.87 1.90 1.74


ll fig

ures

$0

00

In his first report as Chairman, Philip Orme advises that the Clubs guiding principle remains underwriting prudence, so he was pleased to see an underwriting surplus of $11.4m producing a combined ratio of 94.6%. 2014 appears to have been a comparatively quiet year for the Club. It did pull out of the US fishing business and also had to withdraw from the Canadian yacht market following the closure of its Vancouver office. This resulted in a loss of 1,300 vessels but probably improves the overall profile of the Club. More disappointing was the loss of a book of European inland vessels although we imagine this moved elsewhere at very keen rates.

Reassuringly, the Club saw growth in all other sectors so overall the renewed tonnage was virtually unchanged from the previous year. The offshore sector has remained very strong, although the Club bemoans the refusal of the International Group to allow accommodation vessels to benefit from the Groups reinsurances. The fall in oil process has also put pressure on owners involved in seismic and survey work, with overcapacity putting pressure on these owners to accept more onerous contractual conditions in place of the traditional knock for

knock provisions. Increased exposure should mean higher premium but earnings are low and owners will argue they cannot afford higher premiums. Having suffered two serious offshore property claims in 2014, the Club admits it will need to monitor these developments carefully.

Overall, 2014 saw a small reduction in claims frequency but, in pure incurred values, the cost of claims rose by 14% on 2013. This was due mainly to two claims in excess of $7m, the largest being the grounding of the container vessel Yusuf Cepnioglu off Mykonos, Greece. Perhaps this serves as a warning as the Club seeks to attract larger tonnage? There were six further claims excess of $1m, but crew, passenger and cargo claims were down.

The only real downside to the year was an investment loss of $11m, although this was covered by the underwriting surplus. The Club remains in a very solid position and is, by far, the market leader for small vessels. Last year, we did raise some service issues but we are pleased to report these were swiftly resolved and service levels have since been excellent. We now just want the Club to stick to what it knows best small vessels.

Assuranceforeningen Skuld

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

Gross Tonnage

Owned 83,000,000

Chartered Not advised

Free reserves

2015 347,685,000

2014 334,548,000

2013 308,425,000

2012 291,429,000

2011 266,436,000


A

Managers

Self-Managed


Tonnage by Area

Tankers

Bulkers

Container

General Cargo

Other

Europe

Far East

Nordic

Americas

Other

Year 2015* 2014* 2013* 2012 2011

Calls/Premium 411,246 379,391 317,936 299,971 272,429




Net Underwriting Result 786 3,959 969 11,658 30,608


Total Assets 903,704 855,985 757,939 722,709 671,148


Solvency Margin 1.63 1.64 1.55 1.36 1.34



38%

11%

34%

11%

6%


28%

36%

26%

6%4%

It looks like new CEO Stale Hansen has had his PR team working overtime to come up with a People at the forefront theme based on the Skuld ABCD value. We shall leave those of you bold, caring and dedicated enough to work out accurately what the ABCD stands for as we do not have the space or enthusiasm to repeat it all here.

Perhaps a lot of time is given over to staff details and statistics because the 2014 financials are somewhat bland and Hansen describes the year as no better than respectable. The combined ratio was a shade below 100% with premium growing by 8% due entirely to an increase in the Clubs commercial lines of business. A net investment return of 1.9% helped push overall free reserves up by $13m.

Owned tonnage grew by 3m to 83m and, as the table above shows, free reserves per GT have remained very constant over the last five years at around the $4.20 mark. We rather like this, as $4 per ton looks to be a very comfortable number and more than enough for ongoing stability.

Interestingly, there is no mention this year of the Clubs previously stated goal to reach $500 million premium in 2015. We assume the Club accepts this cannot now be achieved, with last year only reaching $411m.

Chairman Klaus Kjaerulff states that the P&I market is going through challenging times. Against a background of two very benign and profitable years for the International Group, we were very keen for him to elaborate on this rather strange comment but, alas, there is no explanation and Kjaerulff instead goes back to the ABCDs No matter where in the world I go, if I am in a Skuld office, I instantly recognize the values that Skuld personnel live out in their day-to-day work: the Skuld ABCD. To be frank, Mr Chairman, we think our readers would have been more interested to learn how the Club will deal with its continuing churn problem and how it will make its commercial lines profitable.

All

figur

es $

000

29

30

the standard

the standard

23%

14%

3%

6%

13%

The Standard Club Ltd

Year 2015 2014 2013 2012 2011

Calls/Premium 354,000 336,100 294,100 286,200 278,100




Net Underwriting Result (400) (4,200) (39,600) (44,100) 18,000

Gross Outstanding Claims 1,000,400 986,900 1,005,400 860,700 660,300

Total Assets 1,449,600 1,395,800 1,429,900 1,261,600 1,049,900


Solvency Margin 1.45 1.41 1.42 1.47 1.59


Gross Tonnage

Owned 111,500,000


Free reserves

2015 380,300,000

2014 368,500,000

2013 362,600,000

2012 352,600,000

2011 349,700,000


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

9%

27%

42%

2 %

5%

25%

31%

Chairman Rod Jones regards 2014 as a positive year for the Club, making it an even stronger market-leading player in an increasingly competitive environment. It looks to us that the year was actually rather boring, with the highlight being a breakeven technical result after losses totalling for the previous three years of $88 million. An investment return of 1.8% pushed free reserves up by $12 million to $380 million. Owned tonnage rose by 3 million GT.

While Jones feels the Club is in a strong position, he is worried that the state of the shipping market overcapacity and depressed rates will force ship operators to look to expand into new unfamiliar trades and geographies and could lead to a reduction in maintenance and training budgets. With the shortage of experienced crew also an on-going problem, Jones states that the Club is pessimistic about the outlook for the operating quality of the world fleet, and the resulting claims environment. This sounds like a clear warning there will be a general increase at the 2016 renewal.

The Club has developed various additional covers in recent years and 2015 saw the start of its Lloyds syndicate, writing hull, marine and energy liability, and physical damage, D&O, E&O and cargo. The Clubs Asia base also started a War Risks mutual for Singapore-based operators. The board will continue to look at opportunities to extend the range of products offered and feels the demand for additional covers demonstrates members desire for club-style service for covers beyond poolable P&I cover, as well as being positive for the financial strength of the Club.

The Chairman concludes: My fellow board directors and I are keenly aware of the need for the IG to work constructively together, but we also believe that no aspect of the IG should be immune to challenge.The board is wholeheartedly supportive and committed to the IG, but we will continue to encourage our partners in the IG to look for continuing improvement in the way that it operates. This sounds like a degree of frustration at the attitude of the more conservative Clubs.

All

figur

es $

000

The Steamship Mutual Underwriting Association (Bermuda) Ltd

Gross Tonnage

Owned 74,300,000


Free reserves

2015 376,187,000

2014 301,199,000

2013 286,207,000

2012 295,838,000

2011 303,307,000


A

Managers

Steamship Mutual Management (Bermuda) Limited

steamship mutual

steamship mutual

14%

12%

6%3%

24%

41%

6%

10%

15%

29%

40%


Tonnage by Area

Bulkers

Tankers

Container

Cruise/Ferry

General Cargo

Other

Far East

Europe

North America

Latin America

Middle East/India

In his final statement as Chairman, Heinrich Schoeller sports a broad smile as he reports on a wonderful year for the Club, with the operating performance one of the strongest in the Clubs history.

A whopping $64 million underwriting surplus plus an investment return of $12 million (1.6%) have pushed free reserves up by 25% to $376 million, or $5.06 per owned GT which puts them on a par with the big guns like Gard and Britannia. We do like the fact the Clubs Managers have been very modest about these results, accepting that there is an element of luck involved in avoiding large claims.

Claims were down 13.4% on 2013, and claims within the Club retention of $9 million were 17.9% down on 2013 and were significantly lower than any year in recent memory. There was one claim which hit the Pool. In addition, back years saw a considerable improvement. The Chairman does accept that the incidence of big claims is largely random, but also feels the Board should take some of the credit for the good performance as it has consistently required the Managers to prioritise financial

stability over growth in tonnage. A measured approach to growth, together with a rigorous assessment of risk selection... has been a major contributor to the results we have seen this year.

Owned tonnage rose by over 5 million to 74.3 million GT, and chartered tonnage was also up slightly. New members include blue chip names such as MSC, Peter Doehle and Cargill, no doubt attracted by the Clubs climb up Tysers league tables.

The Clubs investment policy remains one of the most conservative in the International Group, with only 6% held in equities, and the total return of just under $12 million includes nearly $5 million relating to the revaluation of the Clubs London property. It is therefore vital for the Club to achieve a positive underwriting result and the 78.6% combined ratio achieved in 2014 has helped improve the three year average to 95.9% down from 108% last year. As the target is 100%, we wonder whether we can expect the Members to benefit from the excellent 2014 year by means of a return of premium?

Year 2015 2014 2013 2012 2011

Calls/Premium 365,341 345,731 315,265 329,646 316,054




Net Underwriting Result 63,304 9,289 (33,775) (40,940) 21,111

Gross Outstanding Claims 1,024,708 1,205,156 1,281,692 944,222 714,962

Total Assets 1,445,909 1,533,031 1,633,952 1,276,622 1,051,945


Solvency Margin 1.41 1.27 1.27 1.35 1.47


ll fig

ures

$0

00

31

32

The Swedish Club

* All classes of business

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

Free reserves*

2015 186,342,000

2014 167,952,000

2013 150,971,000

2012 141,900,000

2011 151,200,000


BBB+

swedish club

55%

45%

swedish club

44%

17%

35%

3%

1%


Tonnage by Area

Container

Tankers

Bulkers/General Cargo

Passenger

Other

Europe

Asia Pacific

Chairman Lennart Simonssons overview concentrates on the fragmented state of the shipping markets, with uncertainty the norm it is like gazing into a crystal ball to try and second guess what the future will bring. However, he does feel the members can be confident that the Club is committed to the strategy of ongoing stability driven by a policy of business as usual and diversification with a purpose.

M.D. Lars Rhodin is happy to report the best set of results for some years. Across all classes, the net combined ratio was 87% which, with an investment return of 1.6% resulted in free reserves rising by over $18m to $186m. Rhodin feels the good results are a clear sign of the benefits of diversification, and 2014 saw the introduction of new covers, including Builders Risks, Kidnap & Ransom and Extended Charterers Liability.

The P&I book produced an underwriting surplus for the first time since 2011, and owned tonnage grew by over 4m to 41.5m GT, with chartered tonnage also up over 10%. Claims frequency was similar to previous

years, but the Club benefited from an absence of large claims and no Pool claims. The Clubs loss prevention efforts continue to focus on crewing and assisting owners to implement a sustainable safety culture throughout their organization, via the Clubs Maritime Resource Management campaign (MRM) and Operations Review (SCORE)

It looks like the Club has given up on securing an A rating from S&P, so has now obtained an A- from A.M. Best. The fact that A.M. Best refers to the Clubs good profit for 2013 and an expected good pre-tax profit for 2014 rather confirms our suspicions that the rating agencies do fail to grasp the essentials of mutuality.

In summary, a good year all round for the Club but we need to see further considerable growth and a more international presence for the Club to be a seriously attractive alternative to our top-rated Clubs. The very recently announced opening of the Clubs London office (as recommended in our Report last year) is an excellent step in the right direction.

Year 2015 2014 2013 2012 2011

Calls/Premium 106,006 99,646 91,742 91,356 85,280




Net Underwriting Result 3,969 (6,368) (17,264) (11,371) 5,258

Gross Outstanding Claims* 272,959 318,933 351,349 385,568 224,889

Total Assets* 537,017 547,368 562,829 584,741 425,095

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

Solvency Margin* 1.97 1.72 1.60 1.52 1.89

Reserves /GT Ratio* $4.49 $4.53 $4.34 $4.13 $4.89A

ll fig

ures

$0

00

Gross Tonnage

Owned 41,500,000


Managers

Self-Managed

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

*Excludes 98.7m hybrid capital

Free reserves*

2015 449,069,000

2014 430,004,000

2013 394,056,000

2012 386,459,000

2011 378,993,000


A

the standard

the standard

39%

15%1%

3%4%

38%

10%

38%52%

Year 2015 2014 2013 2012 2011

Calls/Premium 408,059 396,281 360,181 98.7 364,791




Net Underwriting Result (20,368) (6,003) (13,233) 4,329 3,524

Gross Outstanding Claims 978,931 1,066,134 1,046,420 1,109,910 1,105,013

Total Assets 1,554,953 1,624,107 1,563,442 1,621,371 1,609,705


Solvency Margin 1.59 1.52 1.49 1.46 1.46

Reserves /GT Ratio $3.54* $3.47* $3.28* $3.45* $3.61*


Tonnage by Area

Tankers/Gas

Bulkers

Container

Passenger/Ferry

Car Carrier

Other

Europe/M.East/Africa

Asia Pacific

Americas

Chairman Alan Olivier reports that 2014 was a good year for the Club, with a solid investment return of 5% more than compensating a 104% combined ratio and resulting in free reserves rising by $20m to $548m, including $99m hybrid capital. Olivier is perfectly happy with the underwriting loss given the current soft market conditions, and a five year average combined ratio of 101% is, he feels, a very creditable result and amongst the very best in our market, especially as the Club is still dealing with the aftermath of the 2013 policy year which was one of the most expensive in the Clubs history.

After twelve months, notified claims for the 2014 policy year were 20% lower than for the 2013 year at the same stage of development and $20m lower than the average of the previous 10 years. There were no Pool claims, so the Club continues to benefit from a reduced contribution to the Pool.

Owned tonnage grew by 3 million to 127 million GT, and chartered tonnage is now very close to 100 million GT, up over 20% on the previous year. The Club states it is seeking controlled growth with

operational quality and safety performance being the dominant underwriting criteria. As a result, it declines around one in four applications for membership.

The P&I market was taken aback when the Club came out with a 6.5% general increase at the 2015 renewal, the largest in the International Group. The increase actually achieved was 3.5% (excluding the impact of increased deductibles and other changes to terms) so the Club did listen to the sensible arguments of the quality brokers.

With the continuing improvement in financial performance it is no surprise Chairmans comment that premium must not be allowed to slip behind the levels of claims inflation, and must keep moving forwards. The Club has had a good five years and was easily able to cope with the expensive 2013 policy year. Total free reserves of $4.31 per owned GT are more than enough, so the Club can afford to be gentler on its members at the 2016 renewal and should bear in mind that some of its main competitors may well be returning money to its members later in the year.

Gross Tonnage

Owned 127,000,000


Managers

Thomas Miller

All

figur

es $

000

33

34

The West of England Shipowners Mutual Insurance Association (Luxembourg)

west of england

west of england

31%

17%

11%2%

2%

37%

6%4%

37%53%

Free reserves

2015 243,692,000

2014 216,196,000

2013 197,421,000

2012 179,356,000

2011 182,664,000


BBB+

Year 2015 2014 2013 2012 2011

Calls/Premium 216,798 203,311 195,483 211,551 243,167




Net Underwriting Result 4,549 (1,397) (4,136) (15,544) (36,669)


Total Assets 879,656 810,755 894,939 968,947 981,200


Solvency Margin 1.47 1.48 1.50 1.44 1.34

Reserves /GT Ratio $3.61 $3.78 $3.75 $3.55 $3.73A

ll fig

ures

$0

00


Tonnage by Area

Bulkers

Tankers

Containers

Cargo/Reefers

Ferries/Passenger

Other

Europe

Asia

Americas

Other

Chairman Matheos Los reports that 2014 was the most satisfying financial year for the Club for many years, with the combined ratio of 97.4% and a net investment return of $25m (including $10m from property revaluation), pushing free reserves up by 12.7% to a record $243.7 million, an increase of over $27 million. The Chairman confirms that this conservative Club is going to stick to P&I: For several years it has been central to our strategy to remain a fully focused P&I and FD&D mutual committed primarily to the provision of excellent claims and advisory services through our London and regional offices in Hong Kong and Greece. We have consistently resisted pursuing a policy of diversification into activities like hull and energy insurance which appear to your Board to be already oversubscribed and, we believe, will struggle to add value especially if the risks threaten to erode the Clubs capital base. Los then goes further and suggests that Wests traditional view of the purpose of a P&I Club may actually be reasserting itself more generally in the P&I market, although we struggle to find the evidence of this.

The Clubs technical result is the first positive one for many years and the seventh consecutive year of improvement. M.D. Peter Spendlove aims to

continue this forward momentum by means of the Clubs Enterprise Risk Management framework, which identifies key risks, establishes suitable tolerances for them and then sets controls to ensure the Club is not exposed to the potential of unacceptable losses

On free reserves, Spendlove comments that a mutual should hold enough capital to maintain stability of calls He acknowledges that pressures from regulation and growing rating agency attention have led Clubs to hold levels of capital above traditional levels, and reminds us that a Club must remain mindful that its capital remains that of its Members and that excess capital strength, above that necessary to achieve its business objectives, will be unwelcome. We could not agree more.

With the continuing improvement in financial performance it is no surprise that tonnage has grown, although a year on year rise of over 10 million owned GT must have exceeded expectations and the Club emphasizes it remains very selective about new business. Interestingly, the Club has now decided that vessel numbers are a better indicator of exposure and risk than GT. That is a new one, and the Shipowners Club with its 32,000 vessels (and higher free reserves) may have something to say about it.

Gross Tonnage

Owned 67,500,000


Managers

Self Managed

36

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

Authority (FCA). Our permitted business is arranging general insurance contracts. Our FCA Register number is 308648. These details can be checked on the FCAs Register

by visiting the FCAs website www.fca.org.uk or by contacting the FCA on 0845 606 1234.

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Tel: +44 (0)20 3037 8000

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Tysers P&I Report 2015

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