Aon Marine Insurance Review 2015 - Risk - · PDF fileThe fixed P&I market has seen another...

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Aon Marine Insurance Review 2015Protection & Indemnity

2 Aon Marine Insurance | Review 2015

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Aon Marine Insurance | Review 2014 3

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Mutual Clubs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

P&I Comparative Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

P&I Club Market Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Specialist Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Contents


IntroductionThis coming renewal will mirror the last with an overall average low single digit general increase across the International Group. While most Clubs have enjoyed a trouble-free year with strong technical underwriting results, there has been no joy from investment income. The days of heavily relying on investment income are long gone, but this naturally still has an influence on the final results of each year. If last year’s returns were gloomy, then the current position is positively dire with a number of Clubs reporting negative investment returns. Conservative investment programmes following the meltdown of 2008 has negated the volatility, but the pressure caused by the present financial environment will no doubt figure heavily in renewal negotiations.

Across the International Group claims are a little higher at the time of writing compared to last year and the same can be said of pool claims. These are further reasons why the Clubs will express their need for more premium at this renewal. However, we should not paint a false picture here since the majority of Clubs have never looked better with free reserves climbing to another year of record high levels. With the shipping industry seeing little improvement, it is welcome news to see some announce zero increases at this renewal. Nobody wants to see the International Group falling backwards, but as we have highlighted on a number of occasions, free reserves are not just there for show.

The International Group faced few new challenges through the 2014/15 policy year, but a significant hurdle is still on the horizon with the Maritime Labour Convention (MLC) 2006 where the Group will be expected to guarantee four months crew wages. At the time of writing it is not entirely clear how the additional exposure under the MLC will be handled, although we believe this will be absorbed within the individual Club retention. What happens above that remains to be seen, but the message is clear that the Group will find a workable solution. While the payment of wages does not come into effect until January 2017, it will of course be a discussion point in the coming policy year.

The Insurance Act 2015 came into effect in the UK this year. Those Clubs incorporating the Marine Insurance 1906 will contract out elements that are not applicable. However, those writing yachts and some smaller craft will

be considered more in the consumer than in the commercial category.

The seemingly endless desire to boast a fixed premium facility has seen the London Club enter the arena along with Thomas Miller who opened their wallet to purchase Osprey Underwriting Agency. This now means that all thirteen International Group Clubs, or their Managers, have a fixed premium facility in some form or another. What started for some as a safety net against the threat of fixed P&I providers has developed into a hungry animal requiring a great deal of feeding. Without the International Group Agreement’s handcuffs, operators have the ability to move freely at renewal and it will be interesting to see how this space develops.

Some of these new fixed premium siblings are heavily reinsured in the commercial market yet the certification is often in the name of the Mutual Club, hence the acceptance of Blue Cards and the like. However, the security provided does not come from the Club, but instead the various commercial insurers. With Blue Cards there is precious little by way of defence and they allow for direct action. Albeit remote, this does create an exposure should any reinsuring insurer fail to pay.

What is crystal clear is that the International Group will approach the New Year in good health and perfectly positioned to tackle the challenges ahead.


“Due to the usual factors of ‘churn’, when new vessels entering the Club pay much less than those departing, increased convention limits and claims inflation, Aon expects general increases ranging from 0% to 7.5%.”

Where does your money go?Navigating a Club’s loss ratio is far from plain sailing and in stark contrast to the commercial market. It is not made any easier by each Club having their own format causing some Members with split entries a headache.

While Group reinsurance costs are a fixed sum, other expenses such as abatement, management expenses, incurred but not reported (IBNR) and pool contributions are a moveable feast. The concept of transferring risk at cost is to be applauded, but we would like to see more clarity on these categories.

Quite rightly Clubs are conservative and cautious when it comes to reserving, but what happens when those reserves materialise at far lower levels? Free reserves get a welcome addition, but the Member’s loss ratio may well reflect an inaccurate higher ratio.

While the rationale behind itemising where the Member’s premium goes is understandable (after all it is their money) it does demonstrate how little retained premium there is to pay claims within the individual Club retention. Obviously there can never be complete consistency within the Group, but we calculate that the average fixed cost amounts to 60 cents of every one US dollar. The costs of running a Club are significant and again all report these in a different fashion. The previously rumoured consolidation of Clubs appears to be a forgotten topic, but we have little doubt this will surface in the foreseeable future. Abatement costs are far from consistent within the Group, ranging anywhere from between 5 and 15 percent of the Member’s premium, making a considerable mark on a Member’s loss ratio. These factors are constantly monitored by Aon as they have such a bearing on the Member’s record, the present and what future stance the Clubs will take on renewal.

Fixed Markets The fixed P&I market has seen another entrant in the shape of the London Club and a potential rebirth of Osprey Underwriting Agency. Osprey has been around since 1991 with a historical concentration on the US. Given there were few competitors until the last decade, it is understandable their book has come under pressure of late. Osprey already underwrites a number of maritime lines of business and we understand that UK Club’s Managers, Thomas Miller, will look to develop these further.

To date there are more commercial fixed P&I providers than there are International Group clubs, yet the premium income represents less than 10% of the Group.

With all insurance sectors under pressure on premium levels, the amount of ever-growing capacity and chronic interest rates, it is little wonder attention has focused on P&I. Whether this is viewed as a new nirvana or an element of desperation, it will inevitably lead to the survival of the fittest.

The cards are always stacked against the non-IG fixed markets. The Group’s access to competitive reinsurance, release calls and their undeniable lofty status, all provided at cost, is a tough nut to crack. With the years of unbudgeted calls and crippling general increases behind them, this is a time for the non-IG fixed markets to re-group.

With practically every Group club offering a fixed premium alternative it is clear there is simply not enough business to go around. As Aon has constantly stated we thrive off competition but this must be coupled with sustainability and service. More than any other class, the complexities and long-tail nature of P&I requires a high level of expertise and heavy staffing. Couple this with the necessity to provide adequate security to enable vessels to operate unencumbered and it is easy to see why over the years few commercial insurers have turned their attention to this class of business.

Today we see a great volume of business on a merry go round at renewal putting intense pressure on premiums with the inevitable outcome being reductions. Given the number of underwriters there are varying degrees of underwriting quality. Most notable and worrying is settlement of claims - all have the ability to pay, but it is the willingness that is the crucial factor. Couple this with the ever-present need to provide adequate security and you can see how careful selection is paramount.

Sadly we fail to see how all of the facilities can survive. With rates spiralling downwards this creates an unsustainable marketplace long-term. It is already creating a false environment and managing expectations when troubles arise will leave an unpleasant legacy.

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“Against the background of the good loss record since Costa Concordia and the reasonably significant additional retentions taken by the Pool and Hydra, we would be disappointed to see any further premium increases at this renewal.”

Consolidation would make sense here. Mergers are an obvious choice giving better economies of scale or perhaps put egos to one side and operate on a collective basis by way of subscription. We see many underwriters spreading themselves too thinly across every maritime area. Would it not make sense joining forces in many parts of the world by writing a share of the risk in order to make underwriting more cost effective? We have no wish to see premiums escalate; consolidation would create a more sustainable and ultimately better product.

All of this may sound alarming, but rest assured there are a number of excellent fixed P&I providers in the market today. They know the business well and provide a first class service; simply there is not enough of that business to feed every mouth.

The 2016 Group Reinsurance RenewalAfter a difficult couple of renewals for the International Group Excess of Loss Reinsurance contract, the 20 February 2015 renewal was a welcome change for shipowners offering reductions for all but passenger ships.

As we now approach the 20 February 2016 renewal we are pleased to advise the positive claims trend has continued and although there have been major casualties there has been nothing large enough to penetrate a long way into the Excess of Loss layers.

Although not forgotten, the Costa Concordia and Rena claims are no longer being used to penalise the International Group. After the reduction in premium last year and further good performance so far in the 2015 policy year, we would expect the International Group and their reinsurance brokers to push for further reductions in the cost of contract this renewal. It is also anticipated Hydra will take further risk away from the commercial reinsurance market meaning that the competition among reinsuring underwriters will increase. There is already an excess of capacity in the market, which should make price reductions more easily achievable.

As mentioned, the claims view is so far positive. There is however further evidence that wreck removal claims of even small vessels have the ability to create large claims. The Shipowners’ Club claim Yusuf Cepnioglu is estimated at around USD 53 million and the Amadeo 1 for the Standard

Club is USD 76 million. These are both small vessels that in the past would not have been associated with claims of this size. Although neither of these claims are big enough to reach the International Group Excess of Loss contract they will make underwriters think that if a difficult small vessel wreck removal can cost this much, what would it cost to remove a 19,000 TEU container ship or a 220,000 GT cruise ship.

The other noticeable losses have involved ferries. The Norman Atlantic fire resulted in a total loss and the deaths of passengers. This was followed by the Sorrento fire. At the time of writing the cause of these fires has not been determined and we do not have a reliable figure for the estimated claim amounts, but added to the Amadeo 1 loss is a bad run of claims for the ferry sector after many years without major incidents.

On the positive side, it has been mooted that the four categories currently used should be split further, with container ships being separated from other dry cargo vessels after a spate of major container ship losses. There have now been very few container ship losses over the last couple of years; whereas there have been a couple of major bulk carrier claims meaning that pressure has all but ceased and we do not expect any further splits this year. Similarly after Costa Concordia ferry operators had argued they must be treated differently from cruise ships and it is now ferry operators with large claims and cruise ships have run well. This demonstrates that all ship types can have a major claim and there does not appear to be specific trends in major losses by ship type. The key trend is that most major losses involve an extremely expensive wreck removal.

In summary, unless there is a significant loss before the renewal we would expect to see reductions in the cost of the International Group Excess of Loss programme, the increased involvement of Hydra and perhaps the participation of other non-traditional underwriters along similar lines to the Berkshire Hathaway/Liberty placings. We do not expect these reductions to be huge however as the losses we have detailed demonstrate there is certainly as much exposure to large P&I claims as there has always been even if claims on smaller vessels have ultimately been settled beneath the USD 80 million level.


Mutual Clubs

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American Club . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Britannia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Gard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Japan Club . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

London Club . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

North of England . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Shipowners’ Club . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Skuld . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Standard Club . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Steamship Mutual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Swedish Club . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

UK P&I Club . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

West of England . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Commentary on individual Clubs has been supplied by the Clubs themselves.

Income Statement data includes combined P&I and FD&D figures if applicable.


American ClubAmerican Steamship Owners Mutual Protection and Indemnity Association, Inc. Shipowners Claims Bureau, Inc., 1 Battery Park Plaza, 31st Floor, New York, NY 10004, USA american-Club.com t +1.212.847.4500

Number of ships (owned entries only)

Total owned entered GT

Total chartered GT

Entered GT by vessel type

Entered GT by region

2015 2014 2013 1,015 1,260 1,341

2015 2014 2013 13,900,000 16,700,000 15,100,000

2015 2014 2013 1,150,000 1,000,000 500,000

Manager’s comment The American Club saw an increase in entered gross tonnage early in 2014, and during the year there was some healthy consolidation of a large fleet, with the Club’s overall tonnage remaining relatively stable. The American Club’s fleet is well-balanced by ship-type at 48% bulk carriers, 40% tankers, 10% unitized/passenger/ro-ro and 2% small craft by GT, which is broadly in line with the global fleet.

Tugs/barges/small craft

2%



Breakdown of investment by type

Tankers 40%

Europe 60%

Asia 23%

North America

10%

Bulk types 48%

Unitised/ pax/roro

10%

Rest of world 8%

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Income Statement (year ending December) USD 000s

Release Call Percentage - as at August 2015


2014 2013

Income

Calls and premiums 114,798 107,959

Excess Calls 0 0

Reinsurance Premiums -20,553 -18,581

Total Income 94,245 89,378

Expenditure

Net claims incurred -65,962 -65,064

Net operating expenses -34,795 -35,250

Total expenditure 100,757 -100,314

Underwriting result pre investment /other financial income and tax -6,512 -10,936

Investment/other financial income 8,202 14,290

Tax/interest charged -434 -239

Overall result 1,256 3,115

Free reserves 58,600 57,344

S&P Rating Current Rating Aug-14

Rating BBB- BBB-

Outlook Stable Stable

Type of rating Interactive Interactive

Policy year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

General Increase % 10.0 10.0 20.0 7.5 0.0 2.0 5.0 10.0 10.0 4.5

Supplementary Call Record % 0/35 0/30 0/25 20/20 25/25 25/25 0/0 0/0 0/0 0/0

2013 2014 2015

20% 20% 20%

“It is far from plain sailing for the Club. Results although steady, are far from spectacular and growth is very much needed to address the balance. Taking control of the ailing Hellenic Mutual is an interesting expansion and we wait to see how that develops.”Aon Comment




Cash/cash equivalents

0.8%

Fixed income securities

67.5%

Equities 31.7%


BritanniaThe Britannia Steam Ship Insurance Association Limited 45 King William Street, London, EC4R 9AN, UK britanniapandi.com t +44 (0)20 7407 3588



Total chartered GT

2015 2014 2013 2,925 2,924 2,925

2015 2014 2013 109,000,000 108,000,000 110,500,000

2015 2014 2013 27,000,000 23,000,000 25,000,000



Manager’s comment 2014/15 proved to be a benign claims year, with fewer high value claims over USD 1 million than in previous years. Similarly, routine claims declined both in number and value. The Association achieved a positive investment return over the year, although volatility in equities and exchange losses reduced the overall return to a modest +0.4%. Disciplined underwriting and releases of surplus claim reserves from earlier policy years combined with improved projected claims from the 2014 year helped to produce a positive technical result of USD 41 million. With total resources in excess of USD 545 million, the Association’s financial position remains strong, as confirmed by S&P’s A (stable) interactive rating of the Club. That financial strength has continued to allow the Club to help its Membership during difficult economic times, most recently with reductions in 2014/15’s P&I and FD&D deferred calls saving Members almost USD 10 million.

Others0.81%




Bulk carriers /General cargo

39.81%

Containers30.80%

Tankers28.58%

Asia Pacific27%

Europe20%

Americas20%

Others32%

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Income Statement (year ending February) USD 000s Breakdown of investment by type

2015 2014

Income

Calls and premiums 269,726** 284,167*

Excess Calls 0 0


Total Income 220,785 235,551

Expenditure



Total expenditure -157,954 -257,514

Underwriting result pre investment /other financial income and tax 62,831 -21,963


Tax/interest charged -1,016 -928


Free reserves including Boudicca 545,567 471,898

S&P Rating Current rating Aug-14

Rating A A



* Includes the effect of an increase in budgeted supplementary call.

** Includes the effect of an increase in budgeted supplementary call, however the increase applied to members’ accounts was 7.5% rebate on advance call.

* Calls and premiums for the year ending 20 Feb 2014 include the 7.5% P&I discount offered to renewing tonnage for the 2013/14 policy year and the waiver of half of the deferred call for FD&D for the 2012/13 policy year.

** Calls and premiums for the year ending 20 Feb 2015 include the reduction in the 2014/15 P&I deferred call from 45% to 37.5% and the FD&D deferred call from 50% to 30%, and the waiver of half of the deferred call for FD&D for the 2013/14 policy year.

“Another solid performance enabling the Club to post a welcome reduction in the 2014/15 deferred call. Whether the Club should spread its wings to new parts of the globe is open to conjecture, but what is crystal clear is that the Club maintains its position in the very top tier.”Aon Comment





Government bonds (short)

24%

Government bonds

(medium)14%

Inflation linked bonds14%Corporate

bonds18%

Equities20%

Cash10%

Policy year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

General Increase % 2.5 5.0 23.8* 23.8 5.0 5.0 5.0 16.5** 2.5 2.5

Supplementary Call Record % 30/30 30/30 40/40 40/32.5 40/40 40/40 40/40 45/45 45/37.5 45/45


2013 2014 2015

7.5% 7.5% 15%


GardAssuranceforeningen Gard Gard AS, Kittelsbuktveien 31, NO-4836 Arendal, Servicebox 600, NO-4809 Arendal, Norway gard.no t +47 37 01 91 00



Total chartered GT

2015 2014 2013 6,300 6,050 5,900

2015 2014 2013 188,700,000 169,800,000 158,700,000

2015 2014 2013 57,500,000 57,500,000 57,500,000

Total MOU Entered GT

2015 2014 2013 18,900,000 16,900,000 15,700,000

Manager’s comment Gard performed strongly for the financial year ending 20 February 2015, recording a surplus after tax of USD 87 million on an Estimated Total Call (ETC) basis, a Combined Ratio Net (CRN) of 88% and a return on our investments of 1.8%. Gross written premium grew by 3% to USD 991 million on an ETC basis. These accounting results reflect a 10 percentage point reduction (USD 37 million) in the deferred call agreed by the Board of Directors for the 2014 policy year.

For P&I, gross written premium for the year was USD 666 million and gross claims to 20 February 2015 totalled USD 424 million. The most recent renewal on 20 February 2015 saw the highest net tonnage increase since 2007. Over 2014, we saw a net inflow of tonnage of 19 million GT, and owners’ tonnage increased by 11% to 189 million GT.

Entered GT by vessel typeEntered GT by vessel type



Containers18%

Americas 9%

Europe64%

Other 1%

Asia Pacific26%

Tankers30%

Bulk carriers/General cargo

29%

Others21%

Passengers2%


Mut

ual C

lubs


Income Statement (year ending February) USD 000s

2015 2014

Income


Excess Calls -37,332 -34,808


Total Income 496,057 444,298

Expenditure





Investment/other financial income ** **

Tax/interest charged ** **

Overall result ** 49,332

Free reserves 968,590* 944,123*


Rating A+ A+



* After reduction in deferred call of USD 37 million.

** No longer allocated across individual lines of business.


2013 2014 2015

5% 15% 20%

“Gard continue to go from strength to strength with free reserves climbing above USD 1 billion, spread over all classes. Members have become accustomed to a lower deferred call; one that catches the eye with potential new Members. We still wonder why release calls are set as high as they are.”Aon Comment




Real Estate3.1%

Cash5.5%


Bonds75.8%

Equities15.6%

Policy year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015




Japan ClubJapan Shipowners’ Mutual P&I Association 2-15-14 Nihonbashi-Ningyocho, Chuoh-ku, Tokyo 103-0013, Japan piclub.or.jp t +81 33 662 7401


2015 2014 2013 2,372 2,356 2,399


2015 2014 2013 90,547,803 89,311,735 89,372,736

Total chartered GT

2015 2014 2013 11,790,009 11,362,017 12,724,767

Manager’s comment Japan Club achieved a remarkable financial result in 2014. This was primarily due to low claims frequency, with the Club’s active loss prevention initiative contributing to reduced losses. In sum, the reserves under the financial strategy climbed to ¥20,714 million (USD 172 million), ¥4,657 million (USD 16 million) up from last year, surpassing targets.

For the 2015 renewal, the Club, focusing on securing competitiveness, asked for a 3% general increase for ocean-going vessels, and a 5% for Charterers’ liability, although there was a nil general increase for Naiko Class and FD&D entries.

In 2015, the Club established a new three-year Medium-Term Operational Plan, entitled “JPI’s CHANGE Phase II” maintaining the fundamental policies of the previous plan. Under the new plan, the Club aims to strengthen its domestic business foundation and expand its overseas operation to target ships in the Asia region through its Singapore branch office opened in 2013.




Bulk carriers/General cargo

62.76%

Asia Pacific100%

Containers8.06%

Tanker13.57%

Others15.48%


Passenger 0.12%

Mut

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Income Statement (year ending March) USD 000s

2015 2014

Income


Excess Calls 0 0


Total Income 177,829 181,474

Expenditure






Tax/interest charged -12,198 -4,147




Rating BBB BBB




2013 2014 2015

5% 5% 5%

“A satisfactory underwriting result for the Club this year. However, they are coming under increasing pressure from other Group Clubs opening up shop in Japan.”Aon Comment




Others8.98%

Cash and deposits

(JPY)39%

Corporate bonds

52.02%


Policy year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015




London ClubThe London Steamship Owners’ Mutual Insurance Association Limited A Bilbrough & Co Ltd, 50 Leman Street, London E1 8HQ, UK londonpandi.com t +44 (0)20 7772 8000



Total chartered GT

2015 2014 2013 1,110 1,014 1,174

2015 2014 2013 43,580,000 43,100,000 41,390,000

2015 2014 2013 10,850,000 5,000,000 5,060,000

Manager’s comment In 2014/15, the Club saw an unusual elevation in P&I claims in the layer in excess of USD 1 million. There were 14 such claims with no obvious connection or trend, which was in stark contrast to the Club’s experience over the previous decade in which the number of claims in this band had only once exceeded 8 at expiry. At the same time, there was progress in other areas including a 4.1% increase in the Club’s gross premium income, supported by growth in its Owners’ entries as well as its Charterers’ business. There was also positive investment performance augmented by a revaluation gain in the value of the Club’s London office. A strong free reserve of USD 157.4 million provides a robust platform from which the Club works to deliver its specialised brand of the highest quality P&I service and support.



Americas 4%




Tankers 23%

Southern Europe 43%

Asia Pacific 34%

Northern Europe

19%

Bulk Carriers 56%

Gas Carriers 3%

General Cargo 2%

Containers 16%

Mut

ual C

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2015 2014

Income


Excess Calls 0 0



Expenditure







Overall result -3,230 6,615



Rating BBB BBB


Type of rating Interactive Pi


2013 2014 2015

12.5% 15% 15%

“Underwriting results are still a concern. The Club has an extremely loyal Membership who value the excellent service provided by the Club. Still we feel the Underwriting Net Loss Ratios must make a positive turn to put them back on the front foot.”Aon Comment




Alternatives 0.20%

Fixed income 67.50%

Equities23.60%

Cash and cash equivalents

8.70%


Policy year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015




North of EnglandNorth of England P&I Association Limited The Quayside, Newcastle Upon Tyne, NE1 3DU, UK nepia.com t +44 (0)191 232 5221



Total chartered GT

2015 2014 2013 3,500 3,500 3,500

2015 2014 2013 126,141,453 130,801,946 133,510,307

2015 2014 2013 40,000,000 49,000,000 43,000,000

Manager’s comment Overall, it has been an interesting year for North and as a result of the poor claims experience in 2014/15, we took robust action at the 20 February 2015 renewal. We also had to absorb a further USD 23.9 million technical pension accounting impairment due to extraordinarily low corporate bond yields. On the positive side we achieved an increase in our free reserves, a healthy investment return and a USD 41 million contribution from acquiring Sunderland Marine in 2014.

The following factors contributed to the overall result:

• Acquisition of Sunderland Marine contributed USD 41 million • North P&I Investment return of +4.29% contributed USD 25 million • Newcastle Quayside property revaluation gain contributed USD 7 million • North P&I Underwriting loss of USD 28.3 million • Large number of high-value claims for North P&I: 50 claims in excess of USD 1 million • Further Group pension deficit of USD 23.9 million, USD 57 million impairment over two years • North P&I Combined Ratio: 109% • S&P A rating for the 11th consecutive year

We have seen positive developments since the start of the policy year, with claims activity reducing in terms of number and value.




Bulk carrier/ general cargo

38.90%

Greece 24%

Middle East 13%

Asia Pacific 27%

Americas 8%

Europe 26%

Containers 20.19%

Tanker 29.76%

Others10.7%

Passengers0.45%

Others2%


Mut

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lubs



2015 2014

Income


Excess Calls 0 0


Total Income 316,500 305,649

Expenditure




Underwriting result pre investment /other financial income and tax -28,300 20,362



Recognition of defined benefit pension scheme liability -19,100 -33,451

Sunderland Marine Free reserve at 20 February 2015 41,400 -

Overall result 25,900 38



Rating A A




2013 2014 2015

5% 5% 20%

“A slight change in fortunes this year with a number of claims hitting retained premium. This is only a blip following a series of positive underwriting years. Bolstered by the Sunderland Marine free reserves the Club is in good shape.”Aon Comment




Government bonds 39.40%

Short dated US treasuries and cash

28.06%Non-

government bonds

23.32%


Equities 9.22%

Policy year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015




Shipowners’ ClubThe Shipowners’ Mutual Protection and Indemnity Association St Clare House, 30-33 Minories, London EC3N 1BP, UK shipownersclub.com t +44 (0)20 7488 0911



2015 2014 2013 32,008 33,899 32,781

2015 2014 2013 23,579,295 26,613,022 21,920,725

Manager’s comment Key drivers to the Club’s recent performance have been high business retention levels, coupled with organic and new Member growth, leading to an increase in gross annual premium. However, as a result of withdrawing from the US fishing vessel sector, we reported a slight reduction in entered vessels, from 33,899 to 32,008. Whilst claims costs continue to rise, the Club reported a combined ratio of 94.6%, leading to an increase in capital and free reserves to USD 300.3 million. This was achieved against a background of continued competition and a strengthening US dollar. Although the average cost of claims increased, the total value of claims, net of reinsurance, reduced by 8% to USD 145.5 million.

Trading conditions are still challenging for many, hence the need to continue to offer ‘insurance at cost’ with no hidden extras. The Club has a zero release and supplementary call strategy, and understands the need for stability of premiums for our membership.






Africa 1%

Worldwide 11%

Middle East and India

8%

Australia, NZ and South

Pacific4%

Barges 33.91%

Offshore 24.87%

Tankers 12.77%

Harbour 7.68%

Canada and USA

3%

Fishing3.65%

Yachts1.6%Passengers

4.19%

Dry cargo 11.33%

Central and South America

9%

South East Asia and Far East

47%

Europe 17%

Total chartered GT

2015 2014 2013 n/a n/a n/a

Mut

ual C

lubs



2015 2014

Income


Excess Calls 0 0


Total Income 211,099 213,051

Expenditure




Underwriting result pre investment /other financial income and tax -11,438 2,334

Investment/other financial income -11,077 21,818

Tax/interest charged 1,057 -930




Rating A- A-




2013 2014 2015

0% 0% 0%

“Not much hits the radar at Shipowners, but this year we have seen some high claims and not so high fall on the Club. Their financial strength and that of the mutual system has meant business as usual. This well run Club continues to set the standard in the small ship sector.”Aon Comment




Fixed interest investments

65.27%

Equities 25.92%

Deposits with credit institutions

8.81%


Policy year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015




SkuldAssuranceforeningen SKULD (Gjensidig), Ruseløkkvn. 26, 0251 Oslo, Norway skuld.com t +47 22 00 22 00



2015 2014 2013 4,823 4,354 3,856

2015 2014 2013 82,200,000 81,700,000 75,600,000


2015 2014 2013 5,400,000 5,100,000 3,600,000

Manager’s comment Skuld continues to follow a long-term growth strategy, where diversification and innovation are key. In recent years we have developed our marine portfolio to meet our customers’ requirements for a full insurance package. The diversified product range is provided by Skuld P&I and our Syndicate at Lloyd’s, Skuld 1897. Through synergies between the two we can tailor-make new products for our members and clients.

Keeping our objectives of controlled growth and financial strength in mind, we continue to deliver positive results and to maintain a combined ratio below 100%. No release calls or general increases are part of this picture. Written premiums continue to grow and a significant portion of growth is now driven by our non-mutual business and Lloyd’s Syndicate 1897 operation.

Skuld is a truly international organisation and together we make up a very strong, cohesive team that will continue to abide by the Skuld promise of delivering service and competence that our members and clients can rely on.




Containers 11.19%

Bulk carrier

33.82%

Asia37%

Europe 29%

Nordic 24%

Americas 6%

Others3%

Tanker38.44%

Others10.95%

General cargo5.60%


Total chartered GT

2015 2014 2013 n/a n/a n/a

Mut

ual C

lubs



2015 2014

Income


Excess Calls 0 0


Total Income 347,624 322,833

Expenditure




Underwriting result pre investment /other financial income and tax 786 3,959





S&P Rating Jun-15 Aug-14

Rating A A




2013 2014 2015

0% 5% 15%

“Steady growth with good net underwriting results. Always with an eye for opportunity, we are seeing a little more conservatism in their strategy. The expansion in London with some well-respected figures is reaping rewards.”Aon Comment

Commodities 1%




Hedge fund 1%

Private equity

3%

Fixed income 66%

Equities 23%

Cash 6%


Policy year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

General Increase % 5.0 2.5 7.5 7.5 5.0 n/a n/a n/a n/a n/a



Standard ClubThe Standard Steamship Owners’ P&I Association (Bermuda) Limited 12/13 Essex Street, London WC2R 3AA, UK standard-Club.com t +44 (0)20 3320 8888



Total chartered GT


2015 2014 2013 8,340 8,743 8,007

2015 2014 2013 111,500,000 108,500,000 109,000,000

2015 2014 2013 23,500,000 22,500,000 26,000,000

2015 2014 2013 9,900,000 7,500,000 6,400,000

Manager’s comment The Standard Club aims to provide sustainable, good value cover with first class financial security and excellent service to a high quality Membership. Consistent with these aims, the Club delivered a stable ‘break even’ underwriting performance in 2014-15, combined with conservative, selective growth. Tonnage increased over the policy year by 3% to 135 million GT from 131 million GT. This increase was achieved in spite of a small reduction in tonnage at renewal, as some members were not renewed due either to unacceptable operating standards or an unwillingness to align their premiums with the risk brought to the Club. The investment return was 1.8%, resulting in an increase in free reserves of 3% (in line with tonnage) to USD 380 million. In June 2015, Standard & Poor’s affirmed the Club’s A (strong) rating, with a stable outlook, in recognition of the Club’s continuing financial strength and the stability of its underwriting results.




Container and general cargo

25%Dry bulk

23%

Tankers31%

Americas 15%

Other 9%

Europe 49%

Asia Pacific 27%

Passenger and ferry

5%

Offshore 14%

Others2%


Mut

ual C

lubs



2015 2014

Income


Excess Calls 0 0


Total Income 262,000 253,200

Expenditure




Underwriting result pre investment /other financial income and tax -400 -4,200





S&P Rating Current Rating Jun-15

Rating A A

Outlook Stable Negative



2013 2014 2015

2% 3% 7%

“A good set of underwriting results has seen the Club maintain its solid position in the top tier. With an excellent spread of Membership, the Club is well-placed to face the future. The Lloyd’s syndicate enjoying a great deal of support from Members is much needed in this difficult environment.”Aon Comment




Cash 9%

Alternatives 7.7%


Bonds 70.50%

Equities 12.8%

Policy year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015




Steamship MutualThe Steamship Mutual Underwriting Association (Bermuda) Limited Aquatical House, 39 Bell Lane, London E1 7LU, UK simsl.com t +44 (0)20 7247 5490



Total chartered GT

2015 2014 2013 8,798 8,831 8,782

2015 2014 2013 74,298,503 68,727,878 65,294,099

2015 2014 2013 46,000,000 45,000,000 37,000,000

Manager’s comment The Club had a particularly strong financial performance. Free reserves have increased by USD 75 million to USD 376.2 million, putting the capital comfortably in excess of the AAA level of target capital measured by Standard & Poor’s. The result is mainly due to a good underwriting performance - the financial year combined ratio was 78.6%.

The operating performance was due in part to releases from prior years’ outstanding claims estimates, and in part from a benign current year claims experience.

The release on prior years’ estimates reflects the high level of prudence built into the claims reserves; whilst this year saw a reduction in claims. One important factor is the Club’s measured approach to growth and a rigorous assessment of risk. The healthy financial position of the Club enabled the Board to set a zero standard increase at the 2015 renewal.




Tankers23.78%

Latin America

10%

North America

15%

Europe29%

Far East40%

Bulker / general cargo 47.25%

Container13.94%

Passenger11.87%

Others3.16%

Africa andMiddle East

1%

Indian Sub-Continent

5%


Mut

ual C

lubs



2015 2014

Income


Excess Calls 0 0


Total Income 296,339 284,562

Expenditure




Underwriting result pre investment /other financial income and tax 63,304 9,289






Rating A- A-




2013 2014 2015

5% 5% 15%

“Last year’s result was nothing if not spectacular making topping that this year all but impossible. However, that boast has sent the Club up a notch and they haven’t disappointed with a solid performance. They are heavily biased towards the US, but results clearly show they are ahead of many of their rivals.”Aon Comment

Ente

red

GT b

y ve

ssel

type

Ente

red

GT b

y re

gion

Brea

kdow

n of

inve

stm

ent b

y ty

pe

Alternative investments

7.72%

Equities 5.65%

Cash and deposits24.73%

Property 1.51%

Bonds 60.39%


Policy year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015


Supplementary Call Record % 0/12.5 0/14 0/20 0/0 0/0 0/0 0/0 0/0 0/0 0/0


Swedish ClubSwedish Club Gullbergs Strandgata 6SE-411 04 Göteborg, Sweden swedishclub.com t +46 31 638 400



Total chartered GT

2015 2014 2013 1,076 1,040 1,013

2015 2014 2013 41,400,000 37,100,000 34,800,000

2015 2014 2013 21,700,000 17,700,000 16,600,000

Manager’s comment The year ended on a good note with A.M. Best awarding the Club a financial strength rating of A- (Excellent) and an issuer credit rating of “A-”, with a stable outlook, and stating that the Club is expected to maintain an excellent risk-adjusted capitalisation throughout 2015. The operating result was strong given the claims experience and ongoing market conditions, with the Club recording an overall surplus of USD 18.4 million, while free reserves reached USD 186 million. The consolidated net combined ratio of 86% was more than satisfactory and benefits were seen from the diversity of product mix generating a good balance and some welcome synergies. During 2014, the P&I entries reached the 60 million GT level, of which 40 million GT were owned entries. Loss prevention is seen as key to the long term success of the Club and the value it provides to its members. Throughout the year the Club has provided quality loss prevention advice and a range of informative publications, along with its continuing support for the Maritime Resource Management (MRM) scheme, which contributes to the global drive to reduce large navigational claims arising from shortcomings in human behaviour.





Tanker 17%

Europe55%

Asia Pacific45%

Bulk Carrier / general cargo

35%

Passenger1%

Container44%

Others3%


Mut

ual C

lubs


Income Statement (year ending December) USD 000s

2015 2014

Income


Excess Calls 0 0



Expenditure





Investment/other financial income -242 7,320

Tax/interest charged 0 0

Overall result 3,487 -1,471

Free reserves (includes reserves available to non P&I business) 186,000 168,000


Rating BBB+ BBB+




2013 2014 2015

7.5% 12.5% 20%

“Another Club that has reported some good if not spectacular results. They rightfully have an eye on growing their Membership and the opening of a London office is a step in the right direction. ”Aon Comment

European Equities 1.93%

Emerging market USD Corp bonds

3.31%

Emerging market equities 1.74%

Alternative Investments

4.73%

EUR Sovereign

bonds 1.16%


EuroCorporate

/Credit 8.89%




US Treasures33.01%

US corporate bonds

29.98%

Global Equities 15.25%

Policy year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015




UK P&I ClubThe United Kingdom Mutual Ship Assurance Association (Bermuda) Limited Thomas Miller P&I Ltd, 90 Fenchurch Street, London, EC3M 4ST, UK ukpandi.com t +44 (0)20 7283 4646



Total chartered GT

2015 2014 2013 4,250 3,569 3,455

2015 2014 2013 127,000,000 124,000,000 120,000,000

2015 2014 2013 100,000,000 80,000,000 80,000,000

Manager’s comment This has been a good year for the Club. The amount of business offered to the Club continues to grow and the Club’s financial strength provides the foundation for the confidence which the market has in the UK Club. However, underwriting discipline remains paramount in our determination to protect the Club over the medium and longer term. Disciplined underwriting has delivered a combined ratio for the financial year of 104%, the fifth consecutive year that the Club has performed at or close to its target of 100%. The Club’s portfolio of investments has produced a healthy return of 5%. After accounting for foreign exchange difference, the surplus has increased total free reserves to USD 449 million with a further USD 99 million held in hybrid capital.





Bulk Carrier / general cargo

37.80%

Asia Pacific38%

Europe, Middle East & Africa

53%

Americas9%

Tankers26.77%

Containers14.96%

Others17.32%

Passenger3.15%


Mut

ual C

lubs



2015 2014

Income


Excess Calls 0 0


Total Income 319,090 302,779

Expenditure








Free reserves including Hybrid Capital 547,766 528,342

Free reserves excluding Hybrid Capital 449,069 430,004


Rating A A




2013 2014 2015

10% 15% 15%

“Previous years have been a little bit of a struggle, but the turnaround in fortunes is complete as the Club continues steady growth boasting increased free reserves. Their decision to return 2.5% of premium for the 2014/15 policy year, whilst not huge, is to be applauded and other Clubs should take note.”Aon Comment

Absolute return funds

0.04%

Cash & cash equivalent

4.33%





Fixed interest72.62%

Equities23.01%

Policy year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015


Supplementary Call Record % 0/20 0/25 0/20 0/0 0/0 0/-2.5 0/0 0/0 0/-2.5 0/0


West of EnglandWest of England Ship Owners Mutual Insurance Association (Luxembourg) Tower Bridge Court, 226 Tower Bridge Road, London, SE1 2UP, UK westpandi.com t +44 (0)20 7716 6000



Total chartered GT

2015 2014 2013 3,030 2,893 2,864

2015 2014 2013 67,500,000 59,300,000 53,700,000

2015 2014 2013 24,500,000 24,500,000 22,100,000

Manager’s comment The Club’s financial position has continued to strengthen, with the combined ratio recording its seventh consecutive year of improvement to stand at 97.4% and free reserves growing to a record USD 243.7 million. Claims performance remains a key driver with Members’ own claims running at the same consistently lower levels since 2010 and the older years again having shown an improvement. A concentration on the provision of core P&I and FD&D products supported by service excellence rather than being drawn into diversification efforts which are non-complimentary and unlikely to add value continues to be rewarded by both existing and new Members, with significant additional commitments to the Club now seeing the total entered tonnage exceed 90 million GT.






Greece 20.1%

Other5.9%

Asia Pacific 36.9%

Americas 4.3%

Other Europe 32.7%

Tanker & OBOs30.7%

Bulk cargo carriers37.2%

General cargo & reefers

10.7%

Container17.2%

Other 1.8%

Passengers2.5%

Mut

ual C

lubs



2015 2014

Income


Excess Calls 0 0


Total Income 176,179 166,942

Expenditure






Tax/interest charged -1,146 -594




Rating BBB+ BBB



Release Call Percentage - as at August 2015 on an ETC basis

2013 2014 2015

3.7% 7.4% 14.8%

“Another good year for the Club which has seen a significant turnaround in the Club’s finances and one we trust will catch the eye of Standard & Poor’s. A great deal of work has been done and to continue in that vein we expect a firm renewal stance in light of their 0% General Increase.”Aon Comment




Absolute return0.0%

Fixed income 52%

Cash 29.2%

Equities 9.2%

Property 9.6%


Policy year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015




P&I Comparative DataWithin this section of the review we bring together key comparative data for all thirteen P&I Clubs in a user friendly format. We have included information that enables readers to easily compare the key performance elements of each Club. These measurements have previously been analysed at length in our post-February renewal bulletin and through discussions with individual clients. It is important to realise that each area of comparative data has a direct impact on the financial performance of your P&I Club. If you require a further detailed explanation of how your Club(s) is performing in relation to its peers in the International Group or how any of the individual measurements impact your Club’s overall financial performance, then please contact your usual Aon broker or any of the London P&I team members listed at the end of this review.

P&I C

ompa

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ata


Free Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Combined Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Overall Result Including Investment Income . . . . . . . . . . . . . . . . . . . . . 39

Free Reserves / Net Call Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Owned Entered Tonnage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Lower Pooling Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

2015 Investment Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Data based on information supplied by the Clubs themselves


P&I Comparative Data

Notes

1. The Swedish Club’s year end is 31 December.2. The American Club’s year end is 31 December.3. The Japan Club’s year end is 31 March.

Combined Ratio

NB: (incurred claims + expenses) / (premium - reinsurance)* Gard’s 2015 P&I combined ratio is 91% on ETC basis before the deferred call. The 2015 combined ratio for all classes of business is 88%.

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

Combied Ra�o

2015 2014

0

35%

70%

100%

140%

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

Free Reserves

2015 2014

0100,000,000200,000,000300,000,000400,000,000

600,000,000500,000,000

700,000,000800,000,000900,000,000

1,000,000,000

Free Reserves (USD)

* Gard’s 2015 overall result is after deduction in deferred call of USD 37 million.** Swedish Club and Gard free reserves includes reserves available to non P&I business.*** The UK Club’s free reserves include Hybrid Capital.

P&I C

ompa

rati

ve D

ata


Britannia

American Jap

anGard

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

Overall Result including Investment Income

-10,000,000

0

20,000,000

40,000,000

60,000,000

80,000,000 2015 2014

Overall Result Including Investment Income (USD)

* Gard’s 2015 overall result is after deduction in deferred call of USD 37 million. As Gard no longer provide an overall result for P&I only the above figures include all classes of business.

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

Free Reserves /Net Call Income

2015 2014

0%

75%

150%

225%

300%

Free Reserves / Net call Income

Free reserves shown as a percentage of net call income.Net call income reflects the Club’s assessment of current and future exposure and free reserves are the Club’s safety net. The greater the ratio between free reserves and net call income the greater the Club’s safety net.* Swedish Club and Gard free reserves includes reserves available to non P&I business.** The UK Club’s free reserves include Hybrid Capital.


American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

Owned Entered Tonnage

2015 2014

0

50,000,000

100,000,000

150,000,000

200,000,000

Owned Entered Tonnage (GT)

Lower Pooling Contributions

* Provisional current year pooling contributions.

American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

Lower Pooling Contribu�ons

2015

0%

5%

10%

15%

20%

P&I C

ompa

rati

ve D

ata


American

Britannia

Gard Japan

London

North

Shipowners

Skuld

Standard

Steam

ship

Swed

ish UKWest

2015 Investment Income

2015

-1%

1%

3%

5%

7%

Investment Income - 2015 Financial Year End

* Britannia investment reduced to 0.4% after impact of strong US dollar.

Current Year InvestmentsAs has been well reported, following the financial downturn in 2008, all P&I Clubs have taken a more conservative approach to their investment strategies, instead focusing on underwriting discipline. Whilst this moderates the return that any Club is likely to achieve, usually within the realms of a few percent, it also certainly has the effect of reducing some of the potential negative investment volatility.

Although in recent years the investment returns have been modest and therefore do not generally require much further comment, given the current volatility in the investment environment, most Clubs, especially those with a higher exposure to equities, are likely to be adversely affected as at the 2015/16 mid-year point.

Whilst patterns of growth remain mixed across the global economy, with some advanced economies performing well, growth within the major emerging market economies has been weaker than expected which

triggered sharp declines in global financial markets in the summer of 2015. The increase in volatility has been evident across equity, bond and currency markets which again will likely have adversely affected those Clubs with a higher equity portfolio. Prior to this decline, markets had been fairly flat since the beginning of the 2015 year. Although it clearly depends on the coming six months, we believe it is likely that the investment return across the Clubs will be lower than previous years, which will ultimately have some impact on the financial results. This will of course have more of an impact for those Clubs running with a combined ratio above break even, which in recent years would usually be cushioned by a small investment surplus. That said we would hope that the conservative investment strategies adopted by the Clubs would limit any substantial negative impact and indeed given that the Club’s currently hold record levels of free reserves, they are well placed to weather any modest investment volatility.


P&I Club MarketReference

P&I C

lub

Mar

ket

Ref

eren

ce


2015 Policy Year Mutual Reinsurance Structure . . . . . . . . . . . . . . . . . . 44

Excess of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

2014 and 2015 Policy Year Rating Comparison . . . . . . . . . . . . . . . . . . . 44

Group Excess Reinsurance Historical Rating 2006-2015 . . . . . . . . . . . . 45

Pooling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Group Reinsurance Structure - 2015/16 Policy Year . . . . . . . . . . . . . . . 46

Release Calls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

P&I Class Supplementary Call History . . . . . . . . . . . . . . . . . . . . . . . . . . 47

P&I Class General Increase History . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47


2015 Policy Year Mutual Reinsurance Structure

Excess of loss The 20 February 2015 renewal was a welcome relief for shipowners after a difficult few years with General Increases from Clubs exacerbated by large increases in the cost of the International Group’s Excess of Loss reinsurance programme.

We saw small General Increases across the International Group with the Steamship Mutual and Shipowners’ Club opting for no increase at all. The rating of all types of cargo vessels for the Excess of Loss contract were reduced by reasonable amounts. Unfortunately, passenger vessels, still suffering the fallout from the Costa Concordia claim, did not benefit from a reduction. There have been no claims since the Smart bulk carrier wreck removal reached the USD 80 million level required to hit the Excess of Loss reinsurance programme. There have been significant claims under that level, notably involving ferries. We mentioned the Amadeo 1 in this review last year, which has now been finalised at a significantly higher cost than initially expected. As well as this there have been the total losses of the Norman Atlantic and Sorrento both caused by fires. The estimates on these two claims are unclear at the time of writing, but could potentially sneak above the USD 80 million level. Claims like this could increase the pressure on the International Group Reinsurance sub-committee from strictly cargo vessel Clubs to not allow a reduction on the passenger ship rating.

The vast majority of the Clubs passed the reduction in costs straight through to owners rather than attempting to keep the money for themselves. There was however a couple of Clubs who initially advised they would not be passing the saving back to Members. This, in Aon’s view, is completely unacceptable given all increases have been passed on to the Membership. The offending Clubs did tend to back down after coming under pressure. As was the case last year we would like to repeat our praise of the West of England who treats the International Group Excess of Loss reinsurance as a completely separate cost unlike all other Clubs who apply the General Increase to premiums including the reinsurance rates. This means that over successive General Increases the increases in reinsurance cost we have seen over the last couple of years are compounded. As we stated last year, the West of England deserve more recognition than they receive for their transparent policy on this matter.

The structure of the International Group Excess of Loss programme remained very similar at 20 February 2015. The main differences are Hydra taking further co-reinsurance positions in the first layer and a further 5 percent long-term placing with Liberty replicating the deal done with Berkshire Hathaway the previous year.

Historically separate rating categories, determined by vessel types, have been utilised to allocate premium and this format continued for the 2014/15 policy year with upward variations in the individual rating categories as shown below:

2014 and 2015 Policy Year Rating Comparison

Vessel Type 2014/15 2015/16 Difference Difference

Dirty Tankers 0.7963 0.7317 - 0.0646 -8.11%

Clean Tankers 0.3415 0.3138 - 0.0277 -8.11%

Dry Cargo 0.5203 0.4888 - 0.0315 -6.05%

Passengers 3.7791 3.7791 0.0000 0.00%

Above figures are expressed as USD per GT per annum

P&I C

lub

Mar

ket

Ref

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ce


PoolingThe International Group pooling structure was left relatively unchanged at the 20 February 2015 renewal. Despite pressure from the larger Clubs the Individual Club Retention remained at USD 9 million.

We mentioned last year we expected that to increase to USD 10 million shortly and it has now been announced that the Individual Club Retention will be increased to USD 10 million on 20 February 2016.

The other major pool limits stayed the same as the last renewal with the pool limit remaining at USD 80 million, while the International Group is looking to increase the participation of Hydra in the Excess of Loss contract. Hydra now takes 60 percent of the USD 80 million – USD 120 million layer and also a 10% share of the USD 80 million – USD 100 million layer. We predicted the increased involvement of Hydra last year and expect Hydra to take more of the risk away from the commercial market in the short to medium term.

The Top Pool continues to cover the USD 60 million to USD 80 million layer. This layer also maintains the 5 percent individual Club retention for the Club that brought the claim to the pool. The rest of the pool structure beneath this level remains the same with the 10% individual Club retention in the USD 15 million in excess of the USD 45 million layer. This means that for a

claim that reaches all the way through to the Excess of Loss contract, the Club bringing the claim to the pool will retain USD 12.5 million in total before their contribution to the pool will be affected, assuming no further changes at this coming renewal.

With a soft reinsurance market, reinsurer capital being at an all-time high and a continued absence of major catastrophe losses, increasing the current pool limit of USD 80 million is unlikely to benefit the International Group. Instead of taking further risk by increasing pool limits, we expect the International Group will look to utilise the capacity of Hydra by further co-reinsurance on the Excess of Loss programme.

Claims that exceed the overall limit of the Group’s Excess Reinsurance contract, including the reinsured overspill layer are then pooled among the Group Clubs. The overall limit for this overspill remains unchanged at 2.5% of the limitation funds under the 1976 Limitation Convention for all mutual ships entered in the Group Clubs.

Group Excess Reinsurance Historical Rating 1998-2013

‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘13 ‘14 ‘15‘12

Dry cargo

Year

USDperGTper

annum

Dirty tankersPassengerClean tankers

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Group Excess Reinsurance Historical Rating 2006-2015

Vessel Type 2014/15 2015/16 Difference Difference

Dirty Tankers 0.7963 0.7317 - 0.0646 -8.11%

Clean Tankers 0.3415 0.3138 - 0.0277 -8.11%

Dry Cargo 0.5203 0.4888 - 0.0315 -6.05%

Passengers 3.7791 3.7791 0.0000 0.00%


Group Reinsurance Structure – 2015/16 Policy Year

Release Calls as at August 2015

Oil Pollution

USD1,000 million

USD1,000 million

USD500 million

USD500 million

USD 20 million

USD 15 million

USD 15 million

USD 21 million

USD 9 million

USD 3,080 million

USD 2,080 million

USD 1,080 million

USD 580 million

USD 80 million

USD 60 million

USD 45 million

USD 30 million

USD 9 million

Owned Entries

USD 3,100 million

USD 2,100 million

USD 1,100 million

Protection & Indemnity

Collective Overspill

One Reinstatement

Third Layer

Unlimited Reinstatements

Second Layer 90%


Second Layer 90%


First Layer


First Layer


Coinsurance 30%

Reinsured by Hydra

Coinsurance 30%

Reinsured by Hydra

Hydra 30% Hydra 30%*

**

***

**

***

*

5% ICR

10% ICR Upper Pool USD 45 million – USD 60 million reinsured by Hydra

Lower Pool USD 30 million – USD 45 million reinsured by Hydra

Lower Pool USD 9 million – USD 30 million

Individual Club Retention (ICR)

Top Pool USD 60 million – USD 80 million reinsured by Hydra

American Britannia Gard Japan London North Shipowners Skuld Standard Steamship Swedish UK West*

2013 20 7.5 5 5 12.5 5 0 0 2 5 7.5 10 3.7

2014 20 7.5 15 5 15 5 0 5 3 5 12.5 15 7.4

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

* Coinsurance 5% reinsured by Hydra USD 80 million – USD 100 million.

** 5% reinsurance by Berkshire Hathaway from USD 100 million – USD 1.1 billion on a multi-year fixed placement basis.

* West of England’s Release Calls percentages are provided on an ETC basis so they are comparable with the other clubs.

Release Calls We reported last year that Release Calls remained a significant issue of debate both within and outside of the International Group. The view of Aon has always been that many Clubs use Release Calls as a deterrent to prevent ship owners moving their business and unfortunately nothing significant has happened in the last 12 months to change our thoughts on the matter. It is important we highlight that over the last couple of years some Clubs have made significant strides in bringing Release Call levels in line with the actual exposure the Club has to making Supplementary Calls. The Standard Club, Skuld, Britannia and Japan Club stand out, as of course does

the Shipowners’ Club, which has abolished the concept completely. The Shipowners Club is subject to much greater competition from the commercial market than the big ship Clubs which influences their Release Call policy. The Release Calls of many of the strongest Clubs in the International Group are still far too high in our opinion and we hope that this time next year we will be able to report more Clubs following the example of those highlighted above and aligning them more accurately with the potential exposure.

P&I C

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Ref

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P&I Class General Increase History

P&I Class Supplementary Call History

Original estimate/actual or current estimate as percentage of advance call/estimated total call as applicable.

Percentage of advance call/estimated total call as applicable including any change in budgeted supplementary call estimate.

Excess Supplementary Call

Reduced Supplementary Call

* includes the effect of an increase in budgeted supplementary call.

** includes the effect of an increase in budgeted supplementary call, however the increase applied to members’ accounts was 7.5% rebate on advance call.

Policy Year 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16

American Club 0/35 0/30 0/25 20/20 25/25 25/25 0/0 0/0 0/0 0/0

Britannia 30/30 30/30 40/40 40/32.5 40/40 40/40 40/40 45/45 45/37.5 45/45

Gard 25/20 25/25 25/25 25/10 25/15 25/20 25/15 25/15 25/15 25/25

Japan Club 30/60 30/30 30/30 40/40 40/50 40/40 40/40 40/40 40/40 40/40

London Club 40/89 40/89 40/75 40/40 0/0 0/0 0/0 0/0 0/0 0/0

North of England 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0

Shipowners Club 25/0 25/0 25/0 10/0 10/0 10/0 10/0 0/0 0/0 0/0

Skuld 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0

Standard 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0

Steamship 0/12.5 0/14 0/20 0/0 0/0 0/0 0/0 0/0 0/0 0/0

Swedish 0/35 0/35 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0

UK Club 0/20 0/25 0/20 0/0 0/0 0/-2.5 0/0 0/0 0/-2.5 0/0

West of England 20/55 20/55 20/45 30/30 30/30 30/30 30/30 35/35 35/35 35/35

Policy Year 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16

American Club 10.0 10.0 20.0 7.5 0.0 2.0 5.0 10.0 10.0 4.5

Britannia 2.5 5.0 23.8* 23.8 5.0 5.0 5.0 16.5** 2.5 2.5

Gard 7.5 5.0 10.0 15.0 0.0 0.0 5.0 5.0 5.0 2.5

Japan Club 0.0 10.0 20.0 20.0 12.5 10.0 3.0 5.0 7.5 3.0

London Club 12.5 7.5 17.5 15.0 5.0 5.0 5.0 12.5 10.0 6.0

North of England 7.5 7.5 20.0 17.5 5.0 3.0 5.0 15.0 7.5 4.75

Shipowners Club 0.0 5.0 15.0 15.0 5.0 0.0 0.0 5.0 5.0 0.0

Skuld 5.0 2.5 7.5 7.5 5.0 n/a n/a n/a n/a n/a

Standard 5.0 5.0 15.0 15.0 3.0 3.5 5.0 7.5 12.5 5.0

Steamship 12.5 9.0 15.0 15.0 5.0 0.0 5.0 7.5 10.0 0.0

Swedish 10.0 7.5 15.0 15.0 2.5 2.5 5.0 7.5 7.5 2.5

UK Club 12.5 7.5 17.5 17.5 5.0 5.0 3.0 7.5 10.0 6.5

West of England 12.5 5.0 15.0 15.0 5.0 5.0 5.0 7.5 7.5 2.5


Specialist Markets

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British Marine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Carina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Eagle Ocean Marine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Hanseatic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Hydor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Lodestar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Navigators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Osprey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

RaetsMarine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Charterama . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Charterers Club . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Norwegian Hull Club . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

Specialist Market Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Commentary on individual insurers has been supplied by Aon and the insurers themselves.


British MarinePlantation Place, Fenchurch St, London, UK EC3M 3BD british-marine.com t +44 (0)20 7105 5555

Key Data Carrier: QBE S&P Rating: A+ Limit of Cover: USD 1 billion

Annual P&I Income

Entered Tonnage

Number of Vessels

2014 2013 2012 97,500,000 100,000,000 106,000,000

2014 2013 2012 10,600,000 11,000,000 12,000,000

2014 2013 2012 7,300 7,500 9,500

Aon Comment British Marine was established in 1876 and as such is the longest running fixed premium P&I insurer, offering P&I, Charterers liability, H&M and Defence products. They specialise in small to medium size tonnage and can offer limits up to USD 1 billion for P&I, which was only recently rivalled by its competitors. British Marine is undoubtedly one of the leading fixed premium insurers and is certainly known for having one of the most experienced claims teams in the fixed premium arena, which continues to be a tremendous asset in a market which is otherwise mostly price driven.

Manager’s comment We consider a wide range of vessel types, although our preference is for smaller vessels typically below 15,000 GT. We have a high level of experience in the offshore sector and offer a comprehensive package of contractual and specialist operations liabilities as a complement to P&I placement. We are also one of the larger super-yacht underwriters. As the longest established P&I provider in the fixed premium sector, British Marine certificates are widely accepted by most flag states and port authorities. The fixed premium market has seen increased competition in recent years as new capacity has joined the market putting pressure on rating, which continues. Our joint venture with our colleagues in QBE Asia Pac ,“QBE Asia P&I”, continues to progress well in what is a very competitive and price sensitive market. BM continues to write a substantial book of small vessels’ H&M business (100% basis and in house claims and processing), in conjunction with our QBE Syndicate 1036 colleagues.

Other 4%

Fishing 8% Unitised

6%

Bulk 22%

Insured GT by vessel type


Tank 7%

Miscelleneous carriers

10%

Eastern Europe and Central Asia

7%

Asia Pacific 3%

Others 12%

Tonnage split by region (%)

Tonnage split by vessel type (%)

General Cargo 23%

Bulk 22%

Tug/Barge 13%

Smooth water

7%

Middle East 11%

Far East 15%

Americas 17%

North and South Europe

35%

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CarinaRegis House, 45 King William Street, London, UK EC4R 9AN carinapandi.com t +44 (0)20 7407 3588

Key Data Carrier: 100% Lloyd’s S&P Rating: A+ Limit of Cover: USD 500 million

Annual P&I Income

Entered Tonnage

Number of Vessels

2014 2013 10,000,000 Not available

2014 2013 3,000,000 2,000,000*

2014 2013 approx. 4,825 approx. 4,250

Aon Comment Carina is a fixed premium facility, managed by Tindall Riley Marine (UK) Limited, (also managers of Britannia P&I Club) offering P&I cover for owners and charterers of smaller ships up to 5,000 GT. Although Carina are one of the only fixed providers that have been true to their selected portfolio of vessels, specifically under 5,000 GT, they have certainly seen strong growth in tonnage due to their ability to be competitive on the smaller ships. Cover is provided up to USD 500 million and is backed by Lloyds A+ rated security.

Manager’s comment Over the past 12 months, the facility has seen its book of business grow by 50% in terms of tonnage. This has been due to existing insureds adding to their existing fleets and new insureds purchasing cover from Carina. The products offered include owners’ and charterers’ P&I cover of up to USD 500 million and a variety of ancillary covers. Last year we launched the Carina Yachts P&I Cover, which is a fixed-premium product for yacht owners, managers and charterers. Once again, all policies are backed by underwriters at Lloyd’s. The vast majority of shipowners insured by Carina trade regionally. Around 75% of insured ships are below 500 GT; most of these ships are harbour craft or operate in inland waterways. We are very pleased with Carina’s excellent renewal retention rates in a market that is extremely competitive. Our aim continues to be the provision of a first class service to insureds and their brokers.

* As at 1st July 2014

Other 2%

Fishing 2%

General Cargo 4%

Tug/Barge 4%

Ferry 4%



Tank 9%

Europe 62%

Asia Pacific 26%

Barge 75%


Others 5%

Americas 7%



Europe, Middle East and Africa

11%

Tanker Dirty 1%

Eagle Ocean Marinec/o Eagle Ocean Agencies, Inc. One Battery Park Plaza - 31st Floor, New York, NY 10004 United States eagleoceanmarine.com t +1 212 847 4600

Key Data Carrier: American Club S&P Rating: BBB- Limit of Cover: USD 500 million

Annual P&I Income

Entered Tonnage

Number of Vessels

2014 2013 2012 7,000,000 6,500,000 6,000,000

2014 2013 2012 898,000 760,000 601,000

2014 2013 2012 465 268 263

Aon Comment Formed in 2010 Eagle Ocean Marine is operated by Eagle Ocean Agencies which is an affiliate of Shipowners Claims Bureau, Inc., managers of the American P&I Club. This allows the facility to draw upon some of the expertise and service of the American Club including the ability to issue American Club guarantees. Eagle Ocean have recently increased their P&I limit from USD 100 million to USD 500 million, which comes shortly after an increase from USD 50 million in recent years. We believe this increase in limit will assist the team with further growth of the Eagle ‘book’ given the ongoing trend of a higher limit offering from the fixed arena.

Manager’s comment With security provided by the American Club, Eagle Ocean Marine (EOM) has continued to see stable growth over the past year, building their book of business whilst maintaining a conservative approach to underwriting. Since February 2015 EOM has capacity to offer cover up to USD 500 million. This gives EOM the ability to compete for accounts requiring higher limits of liability. EOM continues to have a strong presence in China and South East Asia, following a commitment by the American Club to increase its representation in the area. EOM has also benefited from having the ability to issue American Club guarantees, enhancing its claims handling service and American Club blue cards, which are recognised worldwide. The facility also enjoys a relatively low cost base, reducing the pressure to grow simply to meet operational overheads.


Asia Pacific 59%

Others33%

Tank 23%

General Cargo 23%

Container Ship 7%

Other3%



Tug/Barge/Offshore 32%

Dry Cargo 48%

South and South East Asia

68%

Americas 3%

Greater China 18%


Tanker Clean 9%

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Hanseatic P&Ic/o Zeller Associates Management Services GmbH, Kreuzfahrtcenter, Van-der-Smissen-Str. 1, 22767 Hamburg, Germany hanseatic-underwriters.com t +49 40 3890739 0

Key Data Carrier: Hanseatic Underwriters Consortium S&P Rating: A+ Limit of Cover: USD 500 million

Annual P&I Income

Entered Tonnage

Number of Vessels

2014 2013 2012 21,000,000 19,500,000 19,700,000

2014 2013 2012 2,850,000 2,700,000 2,400,000

2014 2013 2012 1,720 1,610 1,560

Aon Comment Hanseatic P&I is an insurance consortium managed exclusively by Zeller Associates Management Services GmbH and provides fixed premium P&I up to limits of USD 500 million, backed by Lloyd’s security. The consortium has diversified its risk appetite on a geographical basis, although it retains a focus on small to medium-sized general cargo and container vessels as well as liquid cargo and dry bulkers. The London based representative office still continues to be a key element to the steady growth of Hanseatic through the London broking community. Hanseatic maintain a strong focus on the Northern European market.

Manager’s comment The business continues to grow on the back of sensible and sustainable pricing and the on-going development of our geographical presence has been highly encouraging. We have managed a growth in written business of over 10% in 2014 and anticipate another 15% overall in 2015. The underwriting result has also developed exceptionally well. We have always believed that a cautious and technically sound approach to our operations would reward our participants, a view reflected in their continued support. Being able to offer a fully Lloyds-backed product, with a team which adds benefit for our clients by both its general marine expertise as well as specific insurance pedigree, bodes well in the actual market environment. We are the only international P&I insurer to have been approved by China beyond the International Group clubs, which tells its own story. Furthermore Hanseatic P&I is fully approved by Japan, India and Australia.




Containership 15%

Asia Pacific 22%

Europe 69%

Americas 5%

Others 4%

Bulk 22%

General Cargo 46%

Tug/Barge 7%

Ro/Ro 2%

Other 4%

Fishing 3%

Tank 1%



HydorJonasmyra 20, 1390 Vollen Norway hydor.no t +47 2241 5000

Key Data Carrier: Brit Syndicate 2987 S&P Rating: A+ Strong Limit of Cover: USD 1 billion

Annual P&I Income

Entered Tonnage

Number of Vessels

2014 2013 2012 14,000,000 9,000,000 5,000,000

2014 2013 2012 1,657,000 1,300,000 1,200,000

2014 2013 2012 560 388 306

Aon Comment Hydor was established in 2010 and began writing business in 2011 for vessels up to 10,000 GT. The facility is backed by 100% Lloyd’s security through Brit Syndicate 2987 and offers owners P&I, charterers liability and defence products up to a USD 1 billion limit. Hydor have continued to take a unique approach to the claims handling process and outsources this function to C Solutions Limited which is a legal and claims consultancy.

Manager’s comment Hydor AS has in the past year further positioned themselves as a professional fixed priced Owners’ and Charterers’ P&I facility, providing customised solutions for clients internationally. Hydor AS continues to shape their competitive edge, thus working with the client, rather than for the client to sustain in a highly competitive market. We have seen a shift in focus towards fixed P&I and we attract new segments which traditionally have been placed 100% in the International Group (IG) system. Our aim is to be complimentary to IG and attract those who want an alternative with 1st class service and security outside the IG.




Fishing17%

Bulk16%

Tank8%

Europe 78%

Asia Pacific

8%

Americas 9%

General Cargo 27%

Tug/Barge 13%

Containership 19%


Others 5%

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Lodestar Ltd35 Seething Lane, London, UK EC3N 4DQ lodestar-marine.com t + (0)20 7068 8300

Key Data Carrier: RSA S&P Rating: A Limit of Cover: USD 1 billion

Number of Vessels

2014 2013 2012 2,000 1,623 963

Aon Comment Since its launch in September 2012 Lodestar has seen steady growth in what still remains a very competitive market. The Lodestar underwriting and claims team are widely considered to be highly experienced which has certainly attributed to the growth and ongoing broker support. Lodestar can now offer fixed premium P&I up to a limit of USD 1 billion, which is among the highest in the fixed market, as well as Charterers liability and FDD covers. They have maintained their RSA A rated security and their security is widely accepted including in some of the more challenging parts of the world such as India, Japan and Malaysia.

Manager’s comment Notwithstanding difficult market conditions we continue to grow without sacrificing our underwriting principals or compromising our pricing model. We continually seek quality new business to supplement our existing portfolio which boasts a +95% renewal retention. At our clients request we’ve enhanced our product and can now offer limits up to USD 1 billion and write dry cargo/bulker vessels up to 40,000 GT. Loss prevention surveys play a key part in our development, the theory being that if we can stop a claim happening it lessens the chance of having to ask for more premium. Our ancillary cover package has also been enhanced resulting in a surge of offshore business and all other categories of business have also grown. We continue to travel extensively doing our best to meet as many of our existing and potential clients as possible.

Entered Tonnage

2014 2013 2012 3,427,958 2,756,154 1,777,512

Annual P&I Income

2014 2013 2012 30,000,000 25,000,000 n/a




Tug/Barge 12%

Tank 7%

Offshore 6%

Others 11%

Americas 10%

Asia Pacific 21%

Europe 58%

Bulk 13%

Fishing 3%

Ro/Ro 8%

Ferry 2%

Containership 5%

Yachts 1%

General Cargo 41%

Dredger 2%



Navigators P&I7th floor, 2 Minister Court, Mincing Lane, London, UK EC3R 7BB navg.com t +44 (0)20 7220 6900

Key Data Carrier: Navigators S&P Rating: A strong Limit of Cover: USD 1 billion

Number of Vessels

2014 2013 2012 1,000* 1,575 1,680

Aon Comment Established in 2004, Navigators is a fixed premium facility providing P&I to shipowners and charterers. Re-insurance is provided by Navigators Insurance Company and the risk appetite remains consistent for most vessel types under 10,000 GT but excluding passenger vessels and those with US Flag/ US trading. Navigator’s has also recently increased their fixed P&I limit from USD 500 million to USD 1 billion in line with the upward trend in increasing limits. In what remains a challenging environment for the fixed insurers, Navigators have recently appointed Jason Riley to head the P&I team. This strengthening of the management will undoubtedly support the team’s further growth and stability in the years to come.

Manager’s comment Navigators P&I division celebrated our 10th anniversary in November, confirming us as one of the more established Fixed Premium providers in the market. We remain one of the few non-MGA providers, giving us long-term stability that few in the marketplace enjoy; we are fully in control of our own destiny. With the recent hire of Jason Riley from the UK Club, to head up the operation, our P&I product is undergoing a series of enhancements. There are a number of projects in the pipeline that will take us forward in line with the changing needs of our clients. Now being able to offer cover up to USD 1 billion, we are becoming a very credible threat to the P&I Clubs, although for the time being we will stick to our core vessel tonnage category of around 10,000 GT. The soft market conditions make it difficult in a very crowded market, especially as most of the P&I Clubs themselves have woken up to the threat on their doorsteps, and Owners still look to price being a significant factor in their insurance decision-making.

Entered Tonnage

2014 2013 2012 1,900,000 2,000,000 2,100,000

Annual P&I Income

2014 2013 2012 20,000,000 21,430,000 22,000,000

* As at June 2015

Containship 2%

Bulk 4%

Other 3%Tanker

6%




Tug 18%

Americas23.10%

Others16.20%

Asia 50.70%

Europe 11%

General 31% Fishing

10%

Barge & Supply26%


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OspreyFountain House, 8th Floor, 130 Fenchurch Street, London, UK EC3M 5DJ osprey-uwr.co.uk t +44(0)20 7283 1277

Key Data Carrier: Lloyd’s of London S&P Rating: A+ Limit of Cover: USD 500 million

Number of Vessels

2014 2013 2012 2,100 1,800 2,500

Aon Comment Osprey was formed in 1991 and as such is a well-established marine insurance and fixed premium P&I provider. It should be noted that Osprey recently announced that subject to regulatory approval, Thomas Miller, a leading international provider of insurance and managers of the UK P&I Club, ITIC and TT Club, recently acquired a majority shareholding in Osprey Underwriting Agency. We would anticipate this acquisition by the well-respected Thomas Miller group to be well received by the market and indeed by Osprey’s existing clients. It will undoubtedly also allow Osprey a platform for further growth into the wider insurance market.

Manager’s comment The past year has continued to be a competitive environment for the development of new business, with competing markets more determined on market share at any price. That said we have been successful in positive expansion, albeit with high regard for risk and exposure. Our proportion of non-US business has increased as we have sought to continue the development of this part of our account. In addition to P&I, the Agency continues to offer P&I war risks, Hull & Machinery to USD 5 million value, Marine General Liability and Maritime Employers liability coverage. We offer an MLC financial guarantee product that is already compliant with the proposed amendments due to be implemented by December 2016 as well as the provision of ‘Blue Cards’ that Owners are required to provide in respect of Wreck Removal and Bunker Pollution conventions, all secured by Lloyds.

Entered Tonnage

2014 2013 2012 n/a n/a n/a

Annual P&I Income

2014 2013 2012 27,500,000 30,000,000 38,500,000

South America

6%

Europe 6%

Others 2%




Others 24%

Asia/Middle East 32%

North America 54%

Fishing 16%

Tug/Barge 40%

Offshore 18%


General Cargo

2%


RaetsMarine BVFascinatio Boulevard 622, 2909 VA CAPELLE A/D IJSSEL, the Netherlands raetsmarine.com t +31-10-2425 000

Key Data Carrier: Amlin Overseas Holding Limited S&P Rating: A+ Limit of Cover: USD 1 billion

Number of Vessels

2014 2013 2012 21,500 21,000 23,000

Aon Comment RaetsMarine is a specialist P&I and Marine insurance provider. Founded in 1993, RaetsMarine Insurance B.V. is a 100% subsidiary of Amlin Plc providing Shipowners’ P&I, Charterers Liability (including Damage To Hull) and Multimodal solutions at fixed cost up to limits of USD 1 billion. Although the fixed market has generally faced downward pressure on rating due to competition, strong service and an innovative approach to underwriting means RaetsMarine have maintained a steady position in the market in recent years.

Manager’s comment Shipowners are facing a difficult economic environment and an increasing complexity of marine risks. Next to the increasing limits on conventions and the increasing cost of casualties, it is obvious that there is a challenge for both the ship owners and the fixed premium providers. The fixed premium market is developing very quickly. It has proven to be a real substitute for the International Group. The best proof of this is the diversification of some members of the International Group into fixed premium. The question that will be answered in the near future is how the members of these Clubs will react to the fixed premium placements within these Clubs. Brokers will have to explain why some are in the mutuality and others are fixed premium as they are servicing both markets. The increasing capacity in fixed premium has put pressure on the rates. This competition is forcing the fixed premium providers to be more creative, flexible and innovative. This has always been the strength of RaetsMarine and is in our DNA.

Entered Tonnage

2014 2013 2012 15,500,000 15,366,000 15,806,600

Annual P&I Income

2014 2013 2012 78,500,000 77,500,000 77,000,000


Russia & CIS 1%

Middle East 8%

Africa2%

Tank 6% Containership

1%

Tank 6%

Yachts 2%




Bulk 20%

Other 32%

Tug/Barge 17%

GeneralCargo 19%

Far East 34%

Europe 46%

Americas 9%

Fishing 3%

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Charterama BVVeerkade 1 3016 DE Rotterdam charterama.nl t +31(0)10 741 0 741

Key Data Carrier: Royal & Sun Alliance Insurance Plc, United Kingdom S&P Rating: A Limit of Cover: USD 350 million

Annual P&I Income

2014 2013 2012 10,500,000 10,000,000 8,300,000

Aon Comment Despite entering a congested arena, Charterama is becoming a prominent player in the charterers market and continues to see an expansion in their book of business and team of people.

Manager’s comment Service and knowledge/experience are our main strengths. Despite a highly competitive market we are glad to attract quality clients, whose choice is not driven by price alone. We take our clients seriously and we get respect in return. Also the combination of having an office in Hong Kong, the strong security of RSA and our increased limits contribute to being a recognised provider in the higher segment of the charterer’s liability market with top end operators/traders amongst our clients.

Containership 2%

Other 2%




General Cargo 30%

Tank 18%

Bulk 47%

Others 4%

Asia Pacific 24%

Europe 61%

Americas 11%

Tug/Barge 1%



Charterers P&I65 Leadenhall Street, London, UK EC3A 2AD exclusivelyforcharters.com t +44 (0) 20 7702 3928

Key Data Carrier: Great Lakes/Munich Re Group S&P Rating: AA- Limit of Cover: USD 500 million

Annual P&I Income

2014 2013 2012 28,300,000 28,200,000 27,000,000

Aon Comment The Charterers P&I Club have maintained a strong position in a competitive market. They enjoy a number of loyal clients and despite continued pressure on premium levels, are seeing a steady increase in their portfolio; helped no doubt by their decision to open an office in Dubai.

Manager’s comment Despite an intensively competitive market and a persistent downturn in the shipping industry, the Charterers P&I Club goes from strength to strength and is expecting to grow by over 20% by the end of 2015. We are the largest and most well-resourced specialist in the Charterers market. Success lies in the quality of the product and the scale and depth of experience of a well-resourced team. The restructuring of the business into ‘three hubs one team’ across offices in London, Dubai and Shanghai has enhanced the regional distribution model and enabled the provision of more locally tailored services. Risk consultants and client servicing Managers are also employed in the Americas and Australasia. This, combined with a significant investment in new staff and infrastructure, has underpinned the successful performance against current trends. We believe we are the obvious choice for professional charterers who want a specialist of the highest quality without the compromise and conflict of being insured by an Owners P&I Club.

Americas 4%




Asia Pacific 47%

Europe 35%

Liner 18%

Bulk 76%

Tank 3%

Other 3%


Others14%

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Norwegian Hull ClubOlav Kyrresgate 11 NO-5014 Bergen norclub.no t +47 55 55 95 00

Key Data Carrier: Norwegian Hull Club S&P Rating: A (Stable) Limit of Cover: USD 500 million

Annual P&I Income

2014 2013 2012 9,000,000 11,000,000 11,500,000

Aon Comment The Norwegian Hull Club continues to offer a good product and a knowledgeable team of people. It is clear to see the soft market impacting the Norwegian Hull Club who have seen their annual P&I income decrease by 18%.

Manager’s comment The Norwegian Hull Club’s P&I facility is exclusively for charterers, including chartering operations for commodity traders and producers. The P&I team has considerable experience in bulk and tanker trades and, as an integrated part of one of the world’s leading marine underwriters, is able to draw on the technical and nautical expertise available within the rest of the Club. The considerable resources of the Club’s Loss Prevention Department are also available. The team has significant knowledge and experience of maritime law and is able to offer extensive advice and assistance to its chartering clients regarding all pre- and post-fixture issues. With its exclusive focus on chartering clients, the facility is able to avoid conflicts within the Club between owners’ and charterers’ P&I interests and the tension that inevitably results from a provider concentrating on its owner clients.




Bulk 66%

Asia Pacific 48%

Others 1%

Europe 31%

Americas20%

Othersx%

General Cargo 20%

Others 14%



Specialist Market Summary

* RSA provide security up to USD 100 million and Lloyd’s of London and compnay markets provide security for limits up to USD 1 billion.

Specialist Market Security S&P Rating Limit Owners P&I Max GT.

British Marine (est 1876)

QBE Insurance (Europe) Ltd A+ 1 billion No cap, speciallity is small

& medium sized vessels

Carina (est 2013)

Lloyd’s of London A+ 500 million 5,000

Eagle Ocean Marine (est 2010) The American Club BBB- 500 million 12,500

Hanseatic P&I (est 2005)

Hanseatic Underwriters

ConsortiumA+ 500 million

30,000 bulkers

20,000 tankers

Hydor (est 2010)

Lloyd’s of London - Britt Sydicate 2987 A+ 1 billion 25,000

Lodestar Ltd (est 2012) Royal Sun Alliance (RSA)* A 1 billion

40,000 Non tankers

10,000 tankers

Navigators P&I (est 2004)

Navigators Insurance Company A 1 billion 10,000

Osprey (est 1991) Lloyd's of London A+ 500 million

25,000 Non tankers

20,000 tankers

RaetsMarine BV (est 1993)

Amlin Corporation Insurance BV A+ 1 billion N/A

Charterama BV (est 2009) Royal Sun Alliance (RSA) A 350 million N/A

Charterers P&I (est 1986)

Great Lakes / Munich Re AA- 500 million N/A

Norwegian Hull Club (est 2008) Norwegian Hull Club A 500 million N/A

Specialist Market Security S&P Rating Limit Owners P&I Max GT.

British Marine (est 1876)

QBE Insurance (Europe) Ltd A+ 1 billion No cap, speciallity is small

& medium sized vessels

Carina (est 2013)

Lloyd’s of London A+ 500 million 5,000

Eagle Ocean Marine (est 2010) The American Club BBB- 500 million 12,500

Hanseatic P&I (est 2005)

Hanseatic Underwriters

ConsortiumA+ 500 million

30,000 bulkers

20,000 tankers

Hydor (est 2010)

Lloyd’s of London - Britt Sydicate 2987 A+ 1 billion 25,000

Lodestar Ltd (est 2012) Royal Sun Alliance (RSA)* A 1 billion

40,000 Non tankers

10,000 tankers

Navigators P&I (est 2004)

Navigators Insurance Company A 1 billion 10,000

Osprey (est 1991) Lloyd's of London A+ 500 million

25,000 Non tankers

20,000 tankers

RaetsMarine BV (est 1993)

Amlin Corporation Insurance BV A+ 1 billion N/A

Charterama BV (est 2009) Royal Sun Alliance (RSA) A 350 million N/A

Charterers P&I (est 1986)

Great Lakes / Munich Re AA- 500 million N/A

Norwegian Hull Club (est 2008) Norwegian Hull Club A 500 million N/A

Contacts

Chris ChadwickClient [email protected]+44 (0)20 7086 4185

Chris GimsonClient [email protected]+44 (0)20 7086 3155

David MahoneyClient [email protected]+44 (0)20 7086 3601

Verity Davis Client [email protected] +44 (0)20 7086 3130

Nicola MooreClient [email protected]+44 (0)20 7086 2811

Nik RockliffeClient [email protected]+44 (0)20 7086 4271

Aon Risk Solutions | Global Broking Centre | MarineThe Aon Centre | The Leadenhall Building122 Leadenhall Street | London | EC3V 4AN

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© Aon plc 2015. All rights reserved.The information contained herein and the statements expressed

are of a general nature and are not intended to address the

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