International Insurance and Reinsurance Brokers

The P&I Report 2014

2
Contents
About Us 3
P & I Team Contacts 4
Cartel Implosion? 5-6
International Group 2014 World Cup Special 7
Current International Group Issues 8
Summary of 2013/14 Results 9
P&I Market Share 10
Standard & Poors Ratings of P&I Clubs 11
Average Expense Ratios (AER) 12
General Increases 13
Supplementary Call Record 14
Pooling and Reinsurance 15
Excess of Loss reinsurance rates 16
Estimated Cost of Notied Pool Claims 16
P&I Club Information 17-18
American Steamship Owners Mutual Protection
& Indemnity Association, Inc. 19
The Britannia Steam Ship Insurance
Association Limited 20
Gard P&I (Bermuda) Limited 21
The Japan Ship Owners Mutual Protection
& Indemnity Association 22
London Steamship Owners Mutual
Insurance Association Ltd 23
The North of England P&I Association
Limited 24
The Shipowners Mutual Protection
& Indemnity Association (Luxembourg) 25
Assuranceforeningen Skuld 26
The Standard Club Ltd 27
The Steamship Mutual Underwriting
Association (Bermuda) Ltd 28
The Swedish Club 29
The United Kingdom Mutual Steam Ship
Assurance Association (Bermuda) Limited 30
The West of England Shipowners Mutual
Insurance Association (Luxembourg) 31
3
About Us
Founded in 1820, Tysers is a leading independent international Lloyds broker that is based at the heart
of the worlds premier insurance market in London. Tysers employs some 240 people; handles around
$800 million of annual premiums; and works with leading insurance markets worldwide to deliver risk
solutions to a global client base. All departments - management, brokers, claims, technical, accounts
and documentation - are based on the same floor in the Beaufort House office, ensuring a seamless,
professional service backed by expertise across a wide range of specialist insurance classes.
Not surprisingly for a company that started life nearly two centuries ago and spawned a shipping line,
Tysers Marine division is one of the oldest and most highly respected in the London market. All our people
are client focused and combine to provide a seamless broking, administration and claims service.
Areas of Expertise
Protection and Indemnity, FDD, other Marine
Liabilities including Contractual and Specialist
Operations
Charterers Covers
Containers and Chassis
Ship Agents Liabilities
Ports and Terminals
Loss of Hire/Trade Disruption
Hull & Machinery
War Risks
Piracy
Kidnap and Ransom
Reinsurance
Builders Risks including Related Delay Covers
and Contract Repudiation
Mortgagees Interest
Key Strengths
Global expertise With particular strength in the UK,
Europe, Indian sub-continent, South East Asia, the Far
East and South America.
Established market presence Strong relationships
with Market and P&I underwriters facilitate
competitive pricing. We work with all 13 Clubs in
the International Group.
Extensive experience Our team has a unique blend of
expertise to put at clients disposal, having worked
previously for International Group P&I Clubs, leading
insurers and other major brokers.
Reinsurance expertise Our reinsurance clients
range from the London Market to other major marine
underwriting centres, P&I Clubs, xed premium and
overseas insurers.
Proactive claims service Our integrated claims team
is involved in all accounts from day one, before any
loss occurrence. The broking and claims teams work in
harmony to deliver a complete service.
4
P&I Team Contacts
Martin Hubbard
Email: martin.hubbard@tysers.com
Direct line: +44 (0)20 3037 8309
Mobile: +44 (0)7971 501 747
Nearly 40 years P&I experience, mainly as a Senior Underwriter
and Director with the Steamship Mutual Underwriting Association
Ltd. Joined Tysers in 2005.
Ian Harris
Email: ian.harris@tysers.com
Direct line: +44 (0)20 3037 8301
Mobile: +44 (0)7881 265060
Ian joined Tysers from Willis in January 2014, and has nearly 40
years P&I and H&M experience, including ten years in claims.
Piers OHegarty
Email: piers.ohegarty@tysers.com
Direct line: +44 (0)20 3037 8315
Mobile: +44 (0)7971 501 742
Joined the Marine Division in 1999 having previously been with
Sedgwicks and Aon.
Chris Sydenham
Email: chris.sydenham@tysers.com
Direct line: +44 (0)20 3037 8340
Mobile: +44 (0)7971 501 772
Claims Director, responsible for all Marine claims. Over 30 years
with Tysers.
Jason Crowhurst
Email: jason.crowhurst@tysers.com
Direct line: +44(0)20 3037 8357
Mobile: +44(0)7824 463735
Marine Claims Manager. Joined Tysers in 2011.
Simon Smart
Email: simon.smart@tysers.com
Direct line: +44 (0)20 3037 8303
Mobile: +44 (0)7801 553866
Over 20 years a P&I broker, joined Tysers in 2012.
John Strange
Email: john.strange@tysers.com
Direct line: +44 (0)20 3037 8328
Mobile: +44 (0)7977 251514
A marine broker for over 30 years. Joined Tysers in 2013 from
Ropners and specialises in yachts.
Julien Hubbard
Email: julien.hubbard@tysers.com
Direct line: +44 (0)20 3037 8308
Mobile: +44 (0)7971 501 770
A marine broker since 1990. Joined Tysers in 2004 from Miller
Marine.
Simon Haycock
Email: simon.haycock@tysers.com
Direct line: +44 (0)20 3037 8342
Mobile: +44 (0)7971 501 757
Marine Claims Manager. Joined Tysers in 2005.
5
Cartel Implosion?
2013/14 was a benign year for the International Group. Four Clubs
had a positive technical result and many others suffered only small
losses. Overall, the average combined ratio was 102% which is
about where it should be. Total net investment income of $360m
helped push the Groups free reserves over $4.3 billion, equivalent
to $4.01 per owned GT ($3.94 last year).
Most Clubs have reported that attritional claims are at or
reducing, perhaps as a result of regular deductible increases
in recent years as part of the general increase requirements.
However, many Clubs are seeing a rise in frequency and value of
larger claims over $1m. There were 17 claims on the Pool, down
from 25 in 2012, and only one claim hit the Groups Excess Loss
Reinsurance although the recent further deterioration on the
Costa Concordia (now estimated at $1.44 billion) hits the third
layer ($1 billion excess of $1 billion).
We are concerned that over the last twelve months there has
been a decline in relationships within the International Group.
The Chairman, Grantley Berkeley, felt compelled to raise this
issue in the Groups annual review, commenting: Diversication
may enable Clubs to enhance the benets which they can offer to
shipowners... but it also has the potential to damage or undermine
the concept of mutuality, both within the Clubs themselves, and
within the Group. It may also raise issues for Clubs with their
respective solvency/nancial regulatory authorities. The issue will
be one of increasing focus within, and outside, the Group in the
year ahead.
Dissent among the ranks appears to have been caused by:
A larger than usual number of allegations of breaches of the
International Group Agreement. Some of these were a result of
diversied Clubs apparently offering some covers at reduced
rates to provide a nancial incentive, others related to Clubs
seeking to avoid the IGA pricing limitations by offering covers on
a xed premium basis.
Standard Clubs initiative to set up its own COFR scheme, against
the stated policy of the Group. The idea was dropped following
opposition from all Clubs except Steamship Mutual.
Disagreement between the Clubs over the types of vessel which
qualify for Pooling, arising from a claim involving the removal
of the wreck of a mobile offshore drilling unit. This prompted a
change to the Pooling Agreement to make it clear that drilling
units are not eligible for Pooling.
We remain of the view that diversication is essential for the long-
term future of the Clubs, but it needs to follow the Gard example.
You only need to look at our section on current issues to see
the good work being done by the International Group on behalf of
their members. Clubs must not prejudice the future of the Group
because of pressure to grow their business, be it P&I or other
products, at any cost.
Of course, there would be less pressure and a more stable
environment if there were less Clubs of a larger size, and we still
strongly believe that consolidation is the best way forward.
With apologies to our friends in South
America, our Club ratings this year
have a World Cup theme. Gard is still
the worthy champion and is joined in
the final by UK, which looks very solid.
Shipowners Club committed some
bad passes on the service side which
caused its defeat in the semi final, while
a succession of red and yellow cards
derailed Skulds progress through
the competition.
6
Last year saw general increases ranging from 2.5% to 12.5%, with
an average of just over 8%. While the 2013/14 gures are good
enough for us to plead for no increases for 2015, and 2014 seems
to be running well to date, we have no doubt whatsoever that
Clubs will argue for further rises on the back of an environment of
increasing claims and continued investment uncertainty. We are
hopeful the average for 2015 will be closer to 5% although one or
two Clubs may feel the need to seek close to 10%. We shall update
the position in our supplementary report later this year.
We understand there will be no change to the individual Club
retention of $9m but we imagine a further increase in the Pool
may be considered if appropriate savings can be achieved on the
Excess loss contract, as an eventual limit of $100m is the target
for a number of Clubs. Some Clubs perhaps need reminding
of the benets of the International Groups Pooling and market
reinsurance arrangements when considering how far they are
prepared to go to expand their business.
The Clubs were previously concerned that the future of the Group
was under threat from external pressures such as the European
Commission. The threat now appears to be more from within the
Group and we hope we shall see far more gentlemanly conduct in
line with Group understandings over the next twelve months.
Finally, we mentioned last year that the one benet of the
abandoned European Commission investigation was the Clubs
agreement to reduce and justify release calls. While release calls
have generally reduced, we fail to see why they are required at all
for 2012 and the levels being maintained for 2013 and the current
year are still far too high. With Clubs continuing to grow their free
reserves on the basis, it is said, that they are needed for regulatory
and rating purposes and to provide a buffer against unbudgeted
calls, does any Club actually feel there is any risk at all it will need
an unbudgeted call at the levels shown in the release call table
below? It appears that it is still too easy for a Club to impose a
release call at a level geared solely to anti-competition and this
remains the unacceptable element of the mutual system.
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2012 20 7.50 5 5 15 5 0 0 3 5 7.50 12.50 5
2013 20 10 15 5 15 5 0 0 4 10 12.50 20 15
2014 20 17.50 20 5 15 20 0 15 8 25 20 15 30
Release Calls as at September 2014
7
International Group 2014: World Cup Special
Semi-finalists
Made the final
Qualified for knock-out stage
Stuck at Group level
UK P&I CLUB
8
Current International Group Issues
Maritime Labour Convention 2006
We reported last year on the Convention, which came into force in
August 2013 and resulted in the Clubs amending their rules, mainly
to cover crew repatriation following a shipowners insolvency.
Amendments to the Convention are likely to be adopted in 2015 in
respect of liability and nancial security for contractual claims for
injury, death and abandonment to provide up to four months back
wages. It is likely that yet another Blue Card scheme will be
required, and Club Boards are still to consider whether cover can
be extended to cover back wages.
Removal of Wreck
With the Costa Concordia now likely to cost $1.5 billion, and other
expensive cases such as the Rena, the Group has been involved
in some important work on the handling of wreck removal claims. Its
Large Casualty Working Group has been analysing the underlying
cost drivers of major claims over the last decade and has developed
a Memorandum of Understanding which it is discussing with
various countries in the hope it will promote co-operation and
facilitate effective response to wreck removal cases.
China Oil Pollution Regulations
China introduced regulations in 2012 requiring most vessels to
contract with an approved Ship Pollution Response Organization
(SPRO) prior to entering any Chinese port. The regulations have
continued to develop over the last two years, with the practical
problem that no single SPRO provides a China-wide service
and shipowners thus having to contract on an ad hoc basis
with numerous of the 130 SPROs spread over the country. The
International Group has taken the lead role for the shipping
industry in working closely with the various Chinese authorities
involved to try to keep the administrative and contractual
procedures as simple as is possible in this difcult jurisdiction.
Standard contract wordings have been developed and are now
widely used, and ITOPF has also provided assistance regarding
appropriate cost rates for items within the SPRO tariffs. The
Group will continue its work to standardise contracts and tariffs
across China and increase the level of co-operation with the spill
response industry and central and local authorities.
Sanctions
The Group takes the view that P&I cover is designed to ensure
that compensation is available for third-party victims of maritime
incidents, not for the direct benet of the primary targets of
sanctions, and that restricting the availability of cover carries with
it a signicant risk of unintended and adverse consequences for
third-party victims. It has therefore continued its policy of active
engagement with policy makers on the increasingly complex
sanctions issues implemented by the EU, EU member states and
the USA, most recently involving Russia and Ukraine.
The Clubs continue to offer clear advice to members on trade
which may be affected by sanctions.
9
Summary of 2013/14 Results
Club
U/W
Prot/Loss
2013/14
($M)
Net
Combined
Ratio
2013/14
Investment
Income
2013/14
($M)
Surplus
Feb 2014
($M)
Free
Reserves
Feb 2014
($M)
Total
Owned Gt
Feb 2014
(M)
Free
Reserves Per
Owned Gt
Feb 2014
American (11) 111.3% 14 3 57 17 $3.43
Britannia (21) 109.3% 48 26 472* 108 $4.37
Gard (44) 97.0% 114 69 944 187 $5.06
Japan (10) 105.4% 19 9 156 92 $1.70
London (19) 121.78% 24 7 161 43 $3.71
North 21 90.1% 13 0** 312 130 $2.40
Shipowners 2 98.9% 22 23 299 24 $12.65
Skuld 4 99.0% 27 29 335 80 $4.18
Standard (4) 101.0% 10 6 369 109 $3.40
Steamship 9 96.7% 6 15 301 69 $4.38
Swedish (6) 94.0% 7 17 168 37 $4.53
UK (6) 102.0% 36 30 528 124 $4.26
West (1) 100.8% 20 19 216 57 $3.78
Total
(86)
Average
102.10%
Total
360
Total
274
Total
4,318
Total
1,076
Average
$4.01
Figures in red are consolidated gures covering all lines of business rather than P&I alone.
* Includes Boudicca
** See Club review
10
P&I Market Share
P&I Club Owned GT %
Accounting Year
Premium $
%
Gard 186,700,000 17.36 585,606,000 15.68
North of England 130,000,000 12.08 384,627,000 10.30
UK 124,000,000 11.53 396,281,000 10.61
Standard 108,500,000 10.09 336,100,000 9.00
Britannia 108,000,000 10.04 284,167,000 7.61
Japan 91,840,000 8.54 258,851,000 6.93
Skuld 80,000,000 7.44 379,391,000 10.16
Steamship 68,700,000 6.38 345,731,000 9.26
West of England 57,200,000 5.32 203,311,000 5.44
London 43,300,000 4.03 106,895,000 2.86
Swedish 37,100,000 3.45 99,646,000 2.67
Shipowners 23,600,000 2.19 243,715,000 6.52
American 16,700,000 1.55 110,598,000 2.96
Total 1,075,640,000 100 3,734,919,000 100
These comparisons show the relative size of P&I Clubs by owned gross tonnage as at 20 February 2014.
11
Standard & Poors Ratings of P&I Clubs
Insurance Year 2010 2011 2012 2013 2014
Gard A A A A+ A+
Britannia A A A A A
North of England A A A A A
Standard A A A A A
Skuld A A A A A
UK Club A A A A A
Shipowners BBB BBB BBB A A
Steamship BBB+ A A A A
Swedish Club BBB BBB BBB+ BBB+ BBB+
Japan Club BBB BBB BBB BBB+ BBB+
London Club BBB BBB BBB BBB BBB
West of England BBB BBB BB BBB BBB
American Club BB BB BB+ BBB BBB
12
Average Expense Ratios (AER)
The AER was introduced in 1998 as a means of comparing the administration costs of the mutual P&I Associations under the terms of their
exemption from the E.U. Competition Directive. The Clubs are only obliged to report their ve-year AER and most do not show their annual
expense ratio. The below gures are all ve-year averages.
2010 2011 2012 2013 2014
American Club 15.30% 16.50% 18.30% 19.30% 19.30%
Shipowners 19.00% 19.00% 20.00% 20.00% 18%
West of England 13.79% 13.66% 14.75% 15.43% 14.24%
North of England 11.40% 11.90% 12.60% 13.10% 12.50%
Skuld 12.20% 12.10% 12.40% 12.30% 12.30%
Swedish 11.40% 11.60% 13.00% 13.30% 12.10%
Gard 11.80% 12.00% 13.00% 14.10% 11.30%
Steamship 11.80% 12.00% 12.30% 12.40% 11.30%
Standard 13.30% 13.30% 13.40% 13.20% 10.90%
UK Club 9.37% 9.16% 9.46% 9.47% 9.35%
London Club 8.90% 8.70% 9.40% 9.63% 8.36%
Britannia 8.16% 8.09% 8.49% 8.49% 8.03%
Japan Club 6.56% 6.27% 6.18% 5.69% 5.73%
Average 11% 10.95% 12.56% 12.80% 11.80%
13
* Applies to premium net of Group Excess Loss Reinsurance costs
** Estimated
*** Includes the increase in Group Excess Loss Reinsurance costs
The total shows the cumulative increase based on 2006 premium of 100.
Average 192
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5
2.5 5 7.5 5 7.5 9 5 5 7.5 7.5 10 10
2008
10
7.5 20 15 15 17.5 15 15 23.8 17.5 17.5 15 20
2009
15
15 10 15 15 12.5 17.5 19 12.5 15 17.5 29 27.5
2010
0
5 5 2.5 3 5 5 5 5 5 5 4 12.5
2011
0
0 0 2.5 3.5 5 0 5 5 5 3 2 10
2012
5
0 0 5 5 3 5 5 5 5 5 5 3
2013
5
8.5 5*** 7.5 7.5 7.5 7.5 7.5 16.5 12.5 15 10 5
2014
5
8.5** 5*** 7.5 12.5 10 10 7.5 2.5 10 7.5 10 7.5
Total
2007/2014
154 157 160 181 184 191 192 192* 202 208 208 220 242
General Increases
14
Supplementary Call Record
(Original Estimate/Current Estimate)
* Includes Surplus enhancement calls
+ For members entered on ETC basis, but Nil for members entered on Advance Call basis
Called above Estimated Total Call
Called below Estimated Total Call
Called full Estimated Total Call
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2004
0/0
40/30 25/25 30/30 40/40 0/0 25/25 0/0 0/0 0/0 0/0 0/0 20/35
2005
0/20
40/30 25/20 30/30 40/40 0/0 25/25 0/0 0/0 0/0 0/0 0/0 20/35
2006
0/20
30/30 25/20 30/60 40/89 0/0 25/25 0/0 0/0 0/12.5 0/35 0/20 20/40
2007
0/30
30/30 25/25 30/30 40/89 0/0 10/10 0/0 0/0 0/14 0/35 0/25 20/55
2008
0/25
40/40 25/25 30/30 40/75 0/0 10/10 0/0 0/0 0/20 0/0 0/20 20/65
2009
20/20
40/32.50 25/10 40/40 40/40 0/0 10/10 0/0 0/0 0/0 0/0 0/0 30/30
2010
25/25
40/40 25/15 40/50 0/0 0/0 10/10 0/0 0/0 0/0 0/0 0/0 30/30
2011
25/25
40/40 25/20 40/40 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/-2.50 30/30
2012
0/0
40/40 25/15 40/40 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0 30/30
2013
0/0
45/45 25/15 40/40 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0 35/35
2014
0/0
45/45 25/25 40/40 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0 35/35
15
Pooling and Reinsurance
Layers of International Group Programme 2014/15
Collective overspill protection
5%
100%
95% 5%
Layer 3
US$1,000m 100%
95% 5%
Berkshire
Hathaway
Layer
Layer 2
US$500m 95%
Layer 1
US$500m
65%
30% Hydra
35% Hydra
Upper-Upper Pool (Hydra)
US$20m
Upper Pool (Hydra)
US$15m
Lower Pool (Hydra)
US$15m
Pool
US$21m
Club retention
US$9m
3,100
3,080
2,100
2,080
5%
Berkshire
Hathaway
Layer
1,100
US$500m 95% 1,080
US$500m
65%
30% Hydra 580
35% Hydra 100
5% ICR* 80
10% ICR* 60
45
30
9
Protection and Indemnity Oil pollution US$m
*ICR Individual Club retention
16
Estimated Cost of Notified Pool Claims
For 2014, the Club retention remained at $9m while the
Pool limit increased from $70m to $80m. The gures
below show the total cost of Pool claims based on
historical thresholds
Excess of Loss reinsurance rates
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
0.8
The Actual 2014 rates US$ per GT are:
Dirty Tanker 0.7963
Estimates in USD millions as at February 2014
Clean Tanker 0.3415
Passenger 3.7791
Other 0.5203
0
100
2007 2008 2009 2010 2011 2012 2013
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17
P&I Club Information
Introduction
The information contained in this report is not and is not
intended to be a denitive analysis of the Clubs accounts.
In so far as is possible we have homogenised the data to
enable comparison.
Calls and Premiums are the consolidated totals for all classes.
The net underwriting statistics express the technical result
for the year and exclude any non-technical investment
income.
Operating Expenses include management expenses and
business acquisition costs.
Solvency margins are calculated as the ratio between total
assets and gross outstanding claims.
All monetary gures shown are US dollars.
Whilst every effort has been made to ensure that the
information contained in the report is accurate and up-to-date
at the time of printing, this cannot be guaranteed by Tysers.
Under no circumstances shall Tysers be responsible or liable
for any loss or damage caused directly or indirectly by the
publication or use of this information.
18
American 19
Britannia 20
Gard 21
Japan 22
London 23
North of England 24
Shipowners 25
Skuld 26
Standard 27
Steamship Mutual 28
Swedish 29
UK 30
West of England 31
Protection & Indemnity Club Reviews
19
American Steamship Owners Mutual
Protection & Indemnity Association, Inc.

american steamship

american steamship
Gross Tonnage
Owned 16,700,000
Chartered 1,000,000
Free reserves
2014 57,344,000
2013 54,229,000
2012 60,219,000
2011 63,612,000
2010 48,331,000
Standard & Poors Rating
BBB
Managers
SCB Inc
(Eagle Ocean Management LLC)
Tonnage by Vessel Type
Tonnage by Area
Bulkers
Tankers
General Cargo/
Passenger/Container
Tugs/Barges/Small craft
Europe
North America
Asia
Other
3%
7%
45%
45%
3%
9%
40%
48%
Year 2014 2013 2012 2011 2010
Calls/Premium 110,598 108,032 114,686 118,032 114,986
Reinsurance Cost 18,581 18,585 16,283 9,362 12,282
Net Claims (incurred) 65,064 83,265 72,986 69,236 75,918
Operating Expenses 35,250 31,995 33,045 34,691 35,378
Net Underwriting Result (8,297) (25,813) (7,628) 4,743 (8,592)
Gross Outstanding Claims 225,545 263,563 261,902 249,892 283,154
Total Assets 328,712 359,110 358,048 343,067 361,290
Average Expense Ratio 19.30% 19.30% 18.30% 16.50% 15.30%
Solvency Margin 1.46 1.36 1.37 1.37 1.28
Reserves/GT Ratio $3.43 $3.61 $3.74 $4.13 $3.20
It looks to have been a quiet year at the American Club with the
Directors reporting that 2013 was a challenging year, which we take
to be an improvement on the highly challenging period reported
last year. The technical decit was halved to $11m, and a sound
investment return of $14m (6.7%) resulted in an increase in free
reserves of just over $3m. Claims in 2013 are expected to be slightly
down on the two previous years, although there were 14 losses in
excess of $1m, including a signicant wreck removal in South Korea
and a large salvage/SCOPIC casualty off Thailand. Tonnage increased
by 1.6m to 16.7GT.
The Club states that it has maintained its policy of product diversication,
but this is actually limited to its continued involvement in the Managers
xed premium P&I facility, Eagle Ocean Marine. The Club now writes a
20% line in a quota share arrangement with Lloyds underwriters for the
rst $25m, and Eagle Ocean also has excess reinsurance enabling it to
offer cover up to $100m for vessels up to 25,000GT.
The Club has managed to secure top place in one of our tables but,
sadly, it is the Average Expense Ratio one. An increase of 10% has
pushed the Clubs operating costs over $35m and its Ratio of 19.30%
(being the ratio of expenses, other than claims costs, to premium and
investment income) is now the highest in the International Group.
Another area of concern is the departure of a number of senior staff
who have either retired or moved on to other careers. This has
prompted the Club to decentralise its underwriting and business
development functions, which are now done on a regional basis
North America, Europe, China and Asia. The Club states that the
underwriting directors for each region have been given substantial
authority to manage their portfolios and to pursue new opportunities.
We worry that this is a dangerous route for any Club to take and it has
caused problems for other Clubs in the past.
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The Britannia Steam Ship
Insurance Association Limited
*Excluding Boudicca reserves, which
included in Reserves/GT Ratio below
Britanna steam ship
Britanna steam ship
Gross Tonnage
Owned 108,000,000
Chartered 23,000,000
Free reserves
2014 352,998,000*
2013 326,817,000*
2012 290,677,000*
2011 274,908,000*
2010 222,093,000*
Standard & Poors Rating
A (pi)
Managers
Tindall Riley (Britannia) Limited
Tonnage by Vessel Type
Tonnage by Area
Bulkers/OBO
Tankers (Crude)
Containers
Tankers (Other)
Cargo/Other
Asia
Scandinavia
Europe
Americas
Other
34%
19%
29%
12%
6%
53%
16%
22%
6%
3%
Year 2014 2013 2012 2011 2010
Calls/Premium 284,167 294,057 281,772 298,482 289,605
Reinsurance Cost 74,866 66,820 63,681 74,468 83,568
Net Claims (incurred) 203,516 200,594 209,634 201,818 220,308
Operating Expenses 26,811 29,317 29,389 27,877 25,530
Net Underwriting Result (21,026) (2,674) (20,932) (5,681) (39,801)
Gross Outstanding Claims 1,122,485 1,147,253 1,010,461 903,840 828,465
Total Assets 1,499,487 1,499,103 1,326,366 1,203,366 1,085,413
Average Expense Ratio 8.03% 8.49% 8.49% 8.09% 8.16%
Solvency Margin 1.34 1.31 1.31 1.33 1.31
Reserves/GT Ratio $4.37 $3.96 $4.15 $4.41 $3.84
Chairman Nigel Palmer reports another year of high claims for the
Club, and feels the trend will continue unless further steps are taken
to improve crew training. While attritional claims are down, 2013/14
suffered 40 claims excess of $1m, including two collision cases which
crept into the Pool. With 70% of the Clubs tonnage under ten years of
age, the Clubs performance appears to contradict the general view
that it is older vessels which cause all the problems.
Despite the high claims levels, the Clubs free reserves grew by $34
million (including the surplus of its dedicated reinsurer, Boudicca),
thanks to a strong investment return of 4.8% or $48 million. The equity
holding of 21% produced a very welcome return of 21.6%.
The Clubs owned tonnage reduced by 2.5 million GT to 108 million, and
chartered tonnage also suffered a small decline.
The Chairman is scathing of Standard Clubs now defunct plans to
issue US OPA COFRs, stating that the issue raises fundamental
questions of trust between the Clubs of the International Group and
a divided approach has the potential to undermine the ability of the
Group to speak as an inuential voice on behalf of shipowners...
Palmer also launches a strong defence of mutuality, reminding us of
its core strengths and values and bemoaning the fact that its benets
are sometimes too easily overlooked in favour of short-term nancial
saving. Is this just a reaction to owners who have left the Club, or does
it reect a deeper concern that some Clubs may not, in developing
new products, writing xed premium business and interpreting
liberally the International Group Agreement, be as loyal to the Group
as they should be?
Palmer further warns that P&I, although non-prot-making, is not a
charity and must be paid for; it is vital that underwriting is equitable
and reects the risk involved. We are hopeful this is a justication
for the clubs last two renewals and the 2015 general increase will
be modest.
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21
Managers
Lingard Limited

Gard P&I (Bermuda) Limited
Note: items marked * are Group gures and include all business lines, not just P&I.
Gard
Gard
Gross Tonnage
Owned 186,700,000
Chartered 57,500,000
Free reserves
2014 944,123,000*
2013 894,792,000*
2012 825,618,000*
2011 789,695,000*
2010 557,542,000
Standard & Poors Rating
A+
Tonnage by Vessel Type
Tonnage by Area
Tankers & Gas
Bulkers/OBO
Containers
Dry Cargo
Car Carriers
Passenger/Cruise/MOU/Other
Asia
Norway
Europe
Germany
Greece
Americas
18%
14%
4%
5%
24%
35%
9%
14%
15%
16%
21%
25%
Year 2014 2013 2012 2011 2010
Calls/Premium 585,606 529,973 504,812 463,098 447,598
Reinsurance Cost 141,308 124,994 90,641 86,344 69,899
Net Claims (incurred) 444,645 422,632 402,132 360,150 334,627
Operating Expenses 43,396 75,191 41,330 43,030 54,519
Net Underwriting Result (43,744) (92,844) (29,291) (26,426) (11,447)
Gross Outstanding Claims 1,375,264* 1,344,151* 1,370,242* 1,277,702* 872,238
Total Assets 2,722,301* 2,531,375* 2,494,244* 2,352,141* 1,359,147
Average Expense Ratio 11.30% 14.10% 13% 12.00% 11.80%
Solvency Margin 1.98* 1.88* 1.82* 1.84* 1.55
Reserves/GT Ratio $5.06* $5.13* $5.08* $5.46* $4.20
A new Chairman in Bengt Hermelin and a new CEO in Rolf Thore
Roppestad, but it is business as usual at the Gard with another good
year enabling the Club to reduce its deferred call for the fth year in
a row, with the 2013 call reduced from 25% to 15%. This is worth $35
million to the members, and all the gures in our Report are net of this
return, except for the combined ratio of 97% which is on an ETC basis.
Like Britannia, Chairman Hermelin takes a swipe at Standards failed
attempts to provide COFRs, stating that The International Groups
ability to inuence legislation going forward is dependent on the unity
of the Group Clubs... there should be debate... but hopefully one that
will result in a single, unied position which is then followed until it is
agreed to change.
At Group level, Gard achieved an overall net surplus of $69m, including
an investment return of 4.3% ($114m), and free reserves are now
getting very close to $1 billion. The P&I result was much improved, with
a technical decit of just $9m before the $35m rebate, and the year
was noticeable for its lack of major losses, with no claim over $10m
compared to six in the previous year. Entered tonnage grew by 7% to
187m GT.
It is all getting boringly but solidly predictable at the Gard, and it is safe
to assume there will be a general increase of 5% followed by a further
reduction in deferred call next year.
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Japan
The Japan Ship Owners Mutual
Protection & Indemnity Association
62%
17%
14%
2%
5%
Japan
Gross Tonnage
Owned 91,840,000
Chartered 11,360,000
Free reserves
2014 156,012,000
2013 157,546,000
2012 166,949,000
2011 157,827,000
2010 134,369,000
Standard & Poors Rating
BBB+
Managers
Self-Managed
56%
15%
11%
9%
9%
Tonnage by Vessel Type
Tonnage by Registry
Bulk carriers
Tankers
Car Carriers
Container Ships
General Cargo/Other
Panama
Others
Japan
Hong Kong
Liberia
Year 2014 2013 2012 2011 2010
Calls/Premium 237,738 244,631 251,773 280,927 230,981
Reinsurance Cost 56,264 44,545 46,228 49,652 43,368
Net Claims (incurred) 168,548 175,893 180,390 183,179 157,559
Operating Expenses 22,775 22,574 26,498 25,819 24,034
Net Underwriting Result (9,849) 1,619 (1,343) 22,277 6,020
Gross Outstanding Claims 391,879 367,927 373,358 359,429 303,986
Total Assets 561,647 560,360 557,471 534,169 446,497
Average Expense Ratio 5.73% 5.69% 6.18% 6.27% 6.56%
Solvency Margin 1.43 1.52 1.49 1.49 1.47
Reserves/GT Ratio $1.70 $1.71 $1.86 $1.72 $1.46
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New Chairman Koichi Muto recalls that the Club was founded in 1950
as the sole P&I Club in Japan, and has grown from 1.9m GT to 92m GT
over the 64 years. However, recent market liberalization now allows
competition from other Clubs and the Chairman reports that the Japan
Club has responded to this by seeking to improve its service levels
and, in particular, its loss prevention initiatives so that claims records
improve and the members will have full condence in the Club.
Director General Yoshikazu Minagawa then summarises the Clubs
accomplishments over the last year:
Increased loss prevention measures such as regular seminars have
resulted in a reduction in retained claims, and there has indeed
been a declining trend for the last four years.
Increased investment returns, with a 2.6% return producing $19m.
Development of a new nancial strategy to take account of the
weakening of the Yen.
The opening of the Clubs Singapore ofce.
The year saw an underwriting decit of $10m and, in dollar terms, free
reserves dipped slightly to $156m. It will be interesting to see if other
Clubs can make inroads in Japan, and whether the Japan Club will be
able to develop international tonnage via Singapore. Our impression
is that service levels are still somewhat short of those of other Group
Clubs, but local tonnage is very loyal and happy with the competitive
premiums offered, even if they come with some risk of unbudgeted
additional calls.
23
London Steamship Owners Mutual
Insurance Association Ltd
London Steamship
London Steamship
Gross Tonnage
Owned 43,300,000
Chartered 5,000,000
Free reserves
2014 160,644,000
2013 154,029,000
2012 144,669,000
2011 145,070,000
2010 141,426,000
Standard & Poors Rating
BBB (pi)
Managers
A Bilbrough & Co Ltd
Tonnage by Vessel Type
Tonnage by Area
Bulkers
LNG/LPG & Tankers
Container
Cargo
S. Europe
Far East
N. Europe
Other
57%
25%
16%
2%
46%
34%
16%
4%
Year 2014 2013 2012 2011 2010
Calls/Premium 106,895 101,951 109,190 113,224 121,011
Reinsurance Cost 20,754 22,175 21,216 22,549 20,292
Net Claims (incurred) 92,956 82,691 93,338 101,118 106,076
Operating Expenses 11,921 11,483 $11,367 11,021 11,103
Net Underwriting Result (18,736) (14,398) (16,731) (21,464) (16,460)
Gross Outstanding Claims 322,827 357,279 418,021 434,846 404,245
Total Assets 492,489 521,630 569,078 593,142 565,980
Average Expense Ratio 8.36% 9.63% 9.40% 8.70% 8.90%
Solvency Margin 1.53 1.46 1.36 1.36 1.40
Reserves/GT Ratio $3.71 $3.72 $3.53 $3.82 $3.81
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Chairman John Lyras reports a satisfactory overall result for the Club,
with free reserves up $6.6m due to a strong investment return of over
$24m (7%) and owned tonnage up 2m GT to 43.3m.
However, increased claims activity at the higher severity end of the Clubs
retention resulted in an overall increase of $10m in net claims, and the
continued effect of churn on premium income combined to produce
an underwriting loss of $18.7m, compared to $14.4m last year. With an
average vessel size of 42,300GT, the entered tonnage is equivalent to just
1024 ships and 60% of the tonnage is under ten years of age. The Club
simply cannot afford to lose its already small market share (4%), and we
imagine that the pressure on pricing for new vessels, especially on split
eets, is somewhat higher than with other Clubs and accounts for the
Clubs continuing problem of churn.
The London Club has a reputation for good service, and CEO Ian Gooch
reports that during the year new recruits were employed not only in
London but also in the Hong Kong and Piraeus ofces, and IT and loss
prevention services have also been enhanced.
The Chairman refers to developments during the year on the Prestige,
which sank off the coast of Spain in 2002 and is disappointed that charges
brought against the Spanish state ofcial responsible for the decision
to deny the ship access to a place of refuge and for ordering her out to
sea where she sank, were dismissed. He makes the point that, 12 years
on, other large casualties have suffered similar problems where efforts
to mitigate pollution or other risks have been hampered by a reluctance
of authorities to provide a suitable place of refuge. Lyras points out that
the continuing work being done by the International Group to engage
with authorities over wreck removal and place of refuge issues is a good
example of how the Group is able to act for the benet of its members.
However, he pointedly emphasizes that the effectiveness of the Groups
representation of its members is dependant on commitment to the
cohesion of the Group by the member-Clubs.
Perhaps the most telling comment in the Annual Report is the very last
one: there will undoubtedly be other work done on maintaining the
integrity of the Pool. A sad conrmation that integrity among the Clubs
has become an issue.
24
The North of England P&I
Association Limited
The North of England
The North of England
Gross Tonnage
Owned 130,000,000
Chartered 50,000,000
Free reserves
2014 312,274,000
2013 312,236,000
2012 314,013,000
2011 312,434,000
2010 240,262,000
Standard & Poors Rating
A
Managers
North Insurance Management Ltd
Tonnage by Vessel Type
Tonnage by Area
Bulkers
Tankers
Containers
Car Carriers
Other
Europe
Asia Pacic
Middle East
Americas
Scandinavia
Others
37%
28%
22%
5%
8%
42%
35%
6%
7%
9%
1%
Year 2014 2013 2012 2011 2010
Calls/Premium 383,534 365,347 346,348 314,243 285,051
Reinsurance Cost 77,885 70,788 55,432 59,738 47,619
Net Claims (incurred) 231,627 253,512 246,420 155,956 190,469
Operating Expenses 53,175 51,921 52,681 44,684 36,804
Net Underwriting Result 20,847 (10,874) (8,185) 53,865 10,159
Gross Outstanding Claims 964,222 880,655 814,450 696,008 772,236
Total Assets 1,361,357 1,249,306 1,167,710 1,030,154 1,028,994
Average Expense Ratio 12.50% 13.10% 12.60% 11.90% 11.40%
Solvency Margin 1.41 1.42 1.43 1.48 1.33
Reserves/GT Ratio $2.40 $2.46 $2.55 $2.98 $2.78
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North has turned so Skuld-like with its sound-bytes this year that we
have started to wonder whether more mergers are in the air. We start
with the historic and successful merger with Sunderland Marine.
We are then told The Club has a merger integration team working
to deliver further merger benets for the North Group, and there is
also an Operational Effectiveness initiative to improve efciency
and provide an engaging working environment. This includes a new
organisational structure, with a new Global Expertise Group and ve
geographical syndicates, and so many Directors that board meetings
will probably need to be held in St James Park.
Chairman Pratap Shirke reports a solid nancial performance with an
excellent underwriting surplus of $20m and an investment return of
$13m (1.94%). However, free reserves remained unchanged at $312m as
the Club this year had to make allowance in its Accounts for a pension
decit of $33m. We are told the fact that the pension decit and the
operational surplus are the same is pure coincidence. Owned tonnage
grew by 4% to 130 million, and the Chairman is condent the Club is
on track to full its strategic vision as the most cost-effective marine
insurance Group with the highest levels of service.
2013 did see the Club suffer the largest two claims in its history the
grounding of the Smart ($110m) and a dock damage claim involving
the Wu Yi San ($55m). However, it was a benign year for routine
claims and, overall, the result for net retained claims was lower than
anticipated and below the level of the two preceding years.
With the merger with Sunderland Marine nalised after 20th February,
we expect next years gures for the North Group to show a healthy
increase in free reserves, but will this result in a lower general
increase than the last two years?
25
The Shipowners Mutual Protection &
Indemnity Association (Luxembourg)
Harbour
Barges
Fishing
Ferries
Offshore
Dry
Tankers
Yachts
Shipowners mutual protection
Shipowners mutual protection
31%
22%
10%
44%
11%
24%
14%
13%
4%
4%
8%
8%
4%
2%
Tonnage by Vessel Type
Tonnage by Area
Europe
Americas
S.E Asia & Far East
Australia/NZ & Pacic
Africa/Rest of World
Middle East & India
Gross Tonnage
Owned 23,600,000
Chartered N/A
Free reserves
2014 298,555,000
2013 275,633,000
2012 234,760,000
2011 187,914,000
2010 135,040,000
Standard & Poors Rating
A
Managers
The Shipowners Protection Ltd
Year 2014 2013 2012 2011 2010
Calls/Premium 243,715 221,925 209,689 196,815 174,190
Reinsurance Cost 30,664 21,795 19,927 22,998 24,186
Net Claims (incurred) 158,462 146,871 118,172 107,150 117,790
Operating Expenses 52,255 44,321 43,030 40,510 34,409
Net Underwriting Result 2,334 8,938 28,560 26,157 (2,195)
Gross Outstanding Claims 414,065 384,939 317,177 316,965 321,456
Total Assets 779,090 719,969 603,184 552,268 497,018
Average Expense Ratio 18% 20% 20% 19 % 19%
Solvency Margin 1.88 1.87 1.90 1.74 1.55
Reserves/GT Ratio $12.65 $12.57 $11.85 $10.57 $7.94
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In his nal report, Chairman Donald MacLeod proudly recounts the
turnaround in the Clubs fortunes during his six-year tenure. Free
reserves have grown by 142%, from $124m to $299m, the average
combined ratio has been 90.6%, the membership has grown by 26%
and annual net earned premium has risen by 71.6%. MacLeod points
out this was all done without the need for unbudgeted calls, with
the Club operating on the principle that it should have a balanced
underwriting result with investment income used to bolster reserves
and not to subsidise rates.
The 2103/14 year result was a perfect example of this, with an
underwriting surplus of just $2.3m bolstered by an investment return
of $21.8m, resulting in free reserves rising by $23m to $299m. The
one downside is that operating costs rose by $8m to $52m, with
administration costs alone (i.e. excluding brokerage) up $5m compared
to the previous year. The Vancouver ofce has been closed due to lack
of business, but a new ofce has opened in Hong Kong. Overall staff
numbers are up from 120 to 140 but we do have issues at times with
the service of the London ofce, both in terms of speed and quality
of response on technical matters. The new underwriting IT system
is also pretty cumbersome and we understand the Club is looking at
improvements. Due to these service issues, we do not feel the Club
quite merits Cup nalist status.
Despite all this, we remain a rm supporter of a Club which is totally
averse to release calls, unbudgeted additional calls and large general
increases, and which has performed so well despite competition not
only from other Clubs but also the vast array of xed premium P&I
providers.
We shall miss Mr MacLeods warm smile and engaging personality. His
successor, Phil Orme, has a tough act to follow.
26
Assuranceforeningen Skuld
Note: For years marked * all gures are Group gures including all business lines, not just P&I.
Gross Tonnage
Owned 80,000,000
Chartered Not advised
Free reserves
2014 334,548,000
2013 308,425,000
2012 291,429,000
2011 266,436,000
2010 201,505,000
Standard & Poors Rating
A
Managers
Self-Managed
Assuranceforeningen Skuld
Assuranceforeningen Skuld
Tonnage by Vessel Type
Tonnage by Area
Tankers
Bulkers
Container
General Cargo
Other
Europe
Far East
Nordic
Americas
Other
Year 2014* 2013* 2012 2011 2010
Calls/Premium 379,391 317,936 299,971 272,429 255,386
Reinsurance Cost 56,557 40,244 38,482 32,312 26,507
Net Claims (incurred) 245,554 212,167 193,722 165,073 179,035
Operating Expenses 73,321 64,556 56,109 44,436 39,217
Net Underwriting Result 3,959 969 11,658 30,608 10,627
Gross Outstanding Claims 523,230 490,326 531,434 501,481 494,963
Total Assets 855,985 757,939 722,709 671,148 567,334
Average Expense Ratio 12.30% 12.30% 12.40% 12.10% 12.20%
Solvency Margin 1.64 1.55 1.36 1.34 1.15
Reserves/GT Ratio $4.18 $4.08 $4.17 $4.22 $3.54
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40%
10%
32%
11%
7%
29%
36%
24%
8% 3%
President Douglas Jacobsohn reports another strong year for Skuld,
with Group premium rising 19% to $379m, further diversication into
new products and geographical areas and a bottom line result of $29m
pushing free reserves up to a new record level of $335m. Despite the
lack of any serious casualties hitting the Pool, net claims were also at
an all time high of $246m, compared to the previous year of $212m, but
the Club managed yet another year of underwriting surplus at $4m. The
investment return was 5.4%.
Chairman Klaus Kjaerulff notes that an increasing number of Clubs
are pursuing diversication to ensure their nancial stability, but he
feels some clubs will likely seek to strengthen their position by joining
forces. He heaps praise on the Clubs staff, but we have to say we
see better claims service from others and during the current year the
London ofce has seen the departure of a number of senior staff. He
may also wish to review his marketing department which published the
below photograph of CEO-elect Stale Hansen pointing the Club full
astern rather than full steam ahead.
Douglas Jacobsohn refers to controlled growth as the Club seeks
to reach its goal of $500m premium income by 2015. However, 2015 is
fast-approaching and we are concerned that, in reality, staff are under
immense pressure to gain new business such that, at times, they go
beyond the boundaries that other Clubs and also brokers deem to be
acceptable. For this reason, Skuld only managed to make it to our
semi-nals.
27
the standard
the standard
25%
11%
3%
6%
9%
The Standard Club Ltd
Year 2014 2013 2012 2011 2010
Calls/Premium 336,100 294,100 286,200 278,100 250,291
Reinsurance Cost 82,900 62,900 65,500 68,200 48,114
Net Claims (incurred) 230,900 244,700 240,900 170,800 184,221
Operating Expenses 26,500 26,100 23,900 21,100 16,615
Net Underwriting Result (4,200) (39,600) (44,100) 18,000 1,341
Gross Outstanding Claims 986,900 1,005,400 860,700 660,300 558,068
Total Assets 1,395,800 1,429,900 1,261,600 1,049,900 890,683
Average Expense Ratio 10.90% 13.20% 13.40% 13.30% 13.30%
Solvency Margin 1.41 1.42 1.47 1.59 1.6
Reserves/GT Ratio $3.40 $3.45 $3.76 $4.10 $3.04
Gross Tonnage
Owned 108,500,000
Chartered 22,500,000
Free reserves
2014 368,500,000
2013 362,600,000
2012 352,600,000
2011 349,700,000
2010 242,567,000
Standard & Poors Rating
A
Managers
Charles Taylor & Co (Bermuda)
Tonnage by Vessel Type
Tonnage by Area
Tankers
Cargo/Container
Bulkers
Passenger & Ferries
Offshore
Other
Europe
Asia
USA
Rest of World
Canada
UK
12%
27%
43%
3%
9%
26%
26%
New Chairman Rod Joness rst report concentrates more on the
personnel changes at both Board and Management level rather than
the Clubs nancial performance, although he does feel that the Club
has performed very well in difcult conditions... and is well positioned
to prosper in an increasingly competitive market environment.
The underwriting result was vastly improved, with the combined ratio
down from 113% to 101% but the investment return was only 0.6%
something of a surprise as the Club has for a number of years been
returning some of the best results in the International Group, averaging
a 10% return for the four prior years. Owned tonnage grew by 3.5m GT,
but chartered tonnage is down from 30m to 22.5m GT.
The Club has seen a continuation of the claims trend whereby the
total incurred claims cost is concentrated in a relatively small number
of claims the largest 20 claims accounted for over two-thirds of
the overall claims cost for the year. There is concern at the regular
incidence of engine-room res leading to engine and electrical failures
and the subsequent loss of the ship, and explosions/res on container
ships involving improper stowage of dangerous goods have also
produced a number of large claims. The Club is actively engaging with
container ship operators in an attempt to reduce the frequency of
such claims.
The club decided to drop its controversial plan to offer US COFRs in the
light of strong opposition from the majority of Clubs in the International
Group. It does, though continue to look at further diversication
and we understand the managers will shortly be conrming their
establishment of a Lloyds syndicate, which is a positive development
and potentially of greater benet to the membership than their
sponsored covers such as hull and K&R.
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The Steamship Mutual Underwriting
Association (Bermuda) Ltd
Gross Tonnage
Owned 68,700,000
Chartered 45,000,000
Free reserves
2014 301,199,000
2013 286,207,000
2012 295,838,000
2011 303,307,000
2010 251,562,000
Standard & Poors Rating
A
Managers
Steamship Mutual Management
(Bermuda) Limited
steamship mutual
steamship mutual
15%
13%
3%
6%
24%
39%
7%
7%
9%
15%
30%
39%
Tonnage by Vessel Type
Tonnage by Area
Bulkers
Tankers
Container
Cruise/Ferry
General Cargo
Other
Far East
Europe
North America
Latin America
Other
Middle East/India
Year 2014 2013 2012 2011 2010
Calls/Premium 345,731 315,265 329,646 316,054 305,431
Reinsurance Cost 61,169 44,323 51,470 48,543 43,935
Net Claims (incurred) 232,450 266,261 274,194 205,983 202,855
Operating Expenses 42,823 38,456 44,922 40,417 37,543
Net Underwriting Result 9,289 (33,775) (40,940) 21,111 21,098
Gross Outstanding Claims 1,205,156 1,281,692 944,222 714,962 722,687
Total Assets 1,533,031 1,633,952 1,276,622 1,051,945 1,016,696
Average Expense Ratio 11.3% 12.40% 12.30% 12.00% 11.80%
Solvency Margin 1.27 1.27 1.35 1.47 1.41
Reserves/GT Ratio $4.38 $4.38 $4.73 $5.25 $4.77
After two tough years of underwriting losses and declining free
reserves, Chairman Heinrich Schoeller must be relieved to report a
much improved performance this year. A technical surplus of $9m plus
a small net investment return of $6m (1%) reecting the Clubs ultra-
conservative investment policy helped push free reserves back over
the $300m mark of three years ago. Owned entered tonnage grew by
3.3m GT to nearly 69 million, and chartered tonnage saw considerable
growth.
Claims within the Club retention of $9m were actually 9% higher than
for the previous year and also signicantly higher than most prior
years, with the biggest increase being on claims excess of $1.8m. The
Club also had two claims which hit the Pool.
Schoeller believes that different business models being pursued by
Clubs may be the cause of friction within the International Group,
citing the examples of the COFR issue reported elsewhere and the
recent discussions regarding the kinds of operations and the types of
vessels that should be permitted for Pooling. Somewhat optimistically
and showing rather more tolerance than Britannia and Gard, Schoeller
hopes that such differences will be handled in a spirit of mutual
respect and tolerance for alternative points of view.
While the Club has had a better year, its three-year average combined
ratio of 108% remains well above the objective of 100%. At the 2014
renewal, it achieved an 8.2% increase (including allowance for
increased deductibles) against its general increase of 10%. With the
lowest investment income in the Group last year and a measly average
return of 2.7% over the last ten years, we must assume similar premium
increases for 2015.
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The Swedish Club
* All classes of business
Note: items marked * are Group gures and include all business lines, not just P&I.
Free reserves*
2014 167,952,000
2013 150,971,000
2012 141,900,000
2011 151,200,000
2010 121,700,000
Standard & Poors Rating
BBB+
swedish club
swedish club
60%
40%
31%
20%
40%
6%
3%
Tonnage by Vessel Type
Tonnage by Area
Container
Tankers
Bulkers/General Cargo
Passenger
Other
Europe
Asia Pacic
Year 2014 2013 2012 2011 2010
Calls/Premium 99,646 91,742 91,356 85,280 78,742
Reinsurance Cost 32,035 24,354 19,038 16,290 17,321
Net Claims (incurred) 60,154 71,276 71,014 52,088 49,386
Operating Expenses 13,825 13,376 12,675 11,644 9,824
Net Underwriting Result (6,368) (17,264) (11,371) 5,258 2,211
Gross Outstanding Claims* 318,933 351,349 385,568 224,889 210,457
Total Assets* 547,368 562,829 584,741 425,095 371,959
Average Expense Ratio 12.10% 13.30% 13% 11.60% 11.40%
Solvency Margin* 1.72 1.60 1.52 1.89 1.77
Reserves /GT Ratio* $4.53 $4.34 $4.13 $4.89 $4.70
Chairman Lennart Simonsson appears pretty relaxed as he reports that
2013 was a calm year and a satisfactory one for the Club. He believes
that one of the most important decisions during the year was to allow
members free access to Maritime Resource Management (MRM)
training the single most powerful step we can take to address the
human dimension of accident prevention.
It is left to M.D. Lars Rhodin to review the gures, and 2013 was
certainly much better than the two prior years. Across all classes, the
net combined ratio was 94%. P&I claims were down over $10m, with
no claims on the Pool and the P&I technical decit reduced to just
over $6m from $17m. P&I owned tonnage grew by 2.3m GT to just over
37m, and there was good growth in the charterers book. Across the
Club as a whole, there was a healthy rise in free reserves from $151m
to a record $168m. Rhodin concludes that the Club is maintaining its
steady course. We believe in the inherent value of diversication
and in taking rm action on loss prevention... Shipowner liabilities can
only increase in a world intolerant of marine accidents. In this climate
we are sure that the mutual approach to risk-sharing is our greatest
benet to shipowners.
We agree with Mr Rhodin, but remain concerned with the Clubs low
market share and limited geographical spread. The other Scandinavian
Clubs now have a strong presence in London and we would suggest it
may be time for the Swedish Club to follow suit.
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Gross Tonnage
Owned 37,100,000
Chartered 18,000,000
Managers
Self-Managed
30
The United Kingdom Mutual Steam Ship
Assurance Association (Bermuda) Limited
* Exclude 98.34m hybrid capital
Free reserves*
2014 430,004,000
2013 394,056,000
2012 386,459,000
2011 378,993,000
2010 310,940,000
Standard & Poors Rating
A
the standard
the standard
38%
14%
2%
2%
4%
40%
9%
38%
53%
Year 2014 2013 2012 2011 2010
Calls/Premium 396,281 360,181 360,540 364,791 447,183
Reinsurance Cost 93,502 73,190 70,685 70,218 75,935
Net Claims (incurred) 268,906 258,679 243,287 250,428 319,964
Operating Expenses 39,876 41,545 42,239 40,621 44,113
Net Underwriting Result (6,003) (13,233) 4,329 3,524 7,171
Gross Outstanding Claims 1,066,134 1,046,420 1,109,910 1,105,013 1,131,010
Total Assets 1,624,107 1,563,442 1,621,371 1,609,705 1,562,143
Average Expense Ratio 9.35% 9.47% 9.46% 9.16% 9.37%
Solvency Margin 1.52 1.49 1.46 1.46 1.38
Reserves /GT Ratio $3.47* $3.28* $3.45* $3.61* $2.96*
Tonnage by Vessel Type
Tonnage by Area
Tankers/Gas
Bulkers
Container
Passenger/Ferry
Car Carrier
Other
Europe/M.East/Africa
Asia Pacic
Americas
New Chairman Alan Olivier feels very privileged to have become
Chairman of the Club at a turning point in its fortunes, stating that over
the past ve years the Club has been able to rebuild its capital base,
bring discipline to its underwriting and improve its service proposition.
He feels the Club is now signicantly closer to its goal of being the
leading shipowner controlled Club, and we do not disagree with him.
A combined ratio of 102% and an investment return of 4.5% pushed
free reserves up to a new high of $528m, including hybrid capital of
$98m. Owned tonnage grew by 4m to 124m GT and chartered tonnage
remains strong at around 80m GT. Net claims are projected to be the
highest since 2007 and 25% higher than the average of the last ve
years. While the increase was offset in 2013 by an improvement on
back years claims, it looks like we can expect another sizeable general
increase for 2015 to reect the Clubs commitment to disciplined nancial
management. At the 2014 renewal, a premium increase of 7% was
achieved against the general increase of 10%.
We are pleased that the Club has sought to give some explanation of
its capital requirements, albeit on a limited basis. It has explained that
the target is to hold sufcient capital (free reserves plus hybrid) to meet
regulatory and external rating agency requirements plus suitable buffers
to avoid the need for unbudgeted calls following shock events. The
Club states it has set its buffer above the regulatory capital requirement
such that it can cope with a loss equivalent to a 1 in 20 event and still
have sufcient regulatory capital, and this broadly equates to holding
capital equivalent to the AA/AAA range on the S&P capital model. The
International Group Pool and reinsurance programmes, plus the Clubs
own extensive retention reinsurance help to limit the range of potential
outcomes for any particular year. We especially like the nal comment
that if the Clubs capital were to exceed the needs of regulators and
rating agencies, then a return of premium to members would be
considered.
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Gross Tonnage
Owned 124,000,000
Chartered 80,000,000
Managers
Thomas Miller
UK P&I CLUB
31
The West of England Shipowners Mutual
Insurance Association (Luxembourg)
west of england
west of england
28%
16%
12%
3%
2%
39%
6%
6%
38%
50%
Free reserves
2014 216,196,000
2013 197,421,000
2012 179,356,000
2011 182,664,000
2010 169,109,000
Standard & Poors Rating
BBB
Year 2014 2013 2012 2011 2010
Calls/Premium 203,311 195,483 211,551 243,167 239,589
Reinsurance Cost 36,369 29,187 33,008 39,831 45,641
Net Claims (incurred) 133,485 135,168 157,595 204,473 214,471
Operating Expenses 34,854 35,264 36,492 35,532 35,157
Net Underwriting Result (1,397) (4,136) (15,544) (36,669) (55,680)
Gross Outstanding Claims 549,484 595,797 671,025 731,343 703,243
Total Assets 810,755 894,939 968,947 981,200 928,021
Average Expense Ratio 14.24% 15.43% 14.75% 13.66% 13.79%
Solvency Margin 1.48 1.50 1.44 1.34 1.32
Reserves /GT Ratio $3.78 $3.75 $3.55 $3.73 $3.19
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Tonnage by Vessel Type
Tonnage by Area
Bulkers
Tankers
Containers
Cargo/Reefers
Ferries/Passenger
Other
Europe
Asia
Americas
Other
Chairman Matheos Los reports another positive year as the West
revival continues. The combined ratio was just the wrong side of
positive at 100.80%, and an investment return of $20 million (3.4%)
resulted in a 10% increase in free reserves to $216m, although the
return does include GB3.3m relating to the revaluation of the Clubs
London ofce. The claims picture looks very stable, with the Club
seeing a signicant shortening of the claims tail, due to a reduced
exposure to personal injury claims, the result of derisking in 2011
when a number of US ship owners and cruise operators were not
renewed. The Club also continues to benet from a low contribution to
the International Group Pool, with its 2014 provisional percentage now
under 6%.
The progressive strengthening of the Club has been recognized by the
market, and led to an increase of around 5m in entered tonnage. M.D.
Peter Spendlove hastens to add that the Clubs strategy remains to
maintain a high quality Membership and at the 2014 renewal the Club
turned down $10 million of new business which did not t the strategy.
Sadly, he then spoils the good news by insisting that premiums must
continue to rise to meet the current pressures of increased regulation
and maintain acceptable credit ratings. The Clubs free reserves have
grown by nearly $50m over the last ve years, or from $3.19 to $3.78
per GT. We can fully understand the Clubs frustration that S&P has
failed to recognize the improvement in the Clubs fortunes, but we do
think the membership should be given a clearer indication of the level
of reserves the Club feels it needs for regulatory compliance, an A
rating and, most importantly, to ensure a suitable buffer against the
risk of additional calls. Vague indications that further capitalisation is
required are not sufcient for ship owners who have suffered so much
over the last ve years.
Gross Tonnage
Owned 57,200,000
Chartered 18,000,000
Managers
Self Managed
Tyser & Co. Ltd. of Beaufort House, 15 St Botolph Street, London, EC3A 7EE is an Independent Lloyds broker. We are authorised and regulated by the Financial Services Authority
(FSA). Our permitted business is arranging general insurance contracts. Our FSA Register number is 308648. These details can be checked on the FSAs Register by visiting the
FSAs website - http://www.fsa.gov.uk/pages/register or by contacting the FSA on 0845 606 1234.
Tyser & Co Limited
Tel: +44 (0)20 3037 8000
Fax: +44 (0)20 3037 8010
Beaufort House
15 St Botolph Street
London
EC3A 7EE
United Kingdom
www.tysers.com