contents...us$ 397 million in 2016, which is actually down -3.56% on 2015, but still accounts for...

Commercial P&I Market Review, October 2017 32 Commercial P&I Market Review, October 2017

01. COMMERCIAL P&I MARKET

REVIEW 2017

Welcome from the Executive Director ... 06

The World of P&I According to AJG ..... 08

Executive Summary ........................... 11

Fixed Premium P&I Insurance Explained . 20

Non-IG P&I Market Overview .............. 22

Review of the Last 12 Months ............ 23

02. MARKET FACTS & FIGURES

Introduction to Facts & Figures ............ 27

British Marine ................................... 28

Carina ............................................. 30

Eagle Ocean Marine .......................... 32

Hanseatic Underwriters...................... 34

Hydor AS ......................................... 36

Ingosstrakh Insurance Co. .................. 38

Lodestar Ltd ..................................... 40

Navigators P&I .................................. 42

Osprey Underwriting Agency Ltd ......... 44

RaetsMarine BV ................................ 46

Rosgosstrakh Ltd ............................... 48

NON-IG MUTUAL MARKET

FACTS & FIGURES

Korean Shipowners Mutual P&I .......... 50

NON-IG CHARTERERS FACTS & FIGURES

Charterama BV ................................. 52

Charterers P&I Club ........................... 54

Norwegian Hull Club ......................... 56

03. INDUSTRY STATISTICS

OWNERS MARKET

Introduction ...................................... 59

P&I Owned Premium Income Development ......................... 60

P&I Owned GT Development .............. 62

P&I Owned Average P&I Rate Per GT Development .......................... 64 Market Share Development ................ 65

CHARTERERS MARKET

P&I Charterers & Traders Premium Income Development ........... 66

P&I Charterers & Traders Number of Vessels Insured Development .......... 68

P&I Charterers & Traders Average Premium Per Vessel Development ....... 69

NON-IG MUTUAL MARKET

Non-IG Mutual P&I

Premium Income Development ........... 70

Non-IG Mutual P&I GT Development ... 71

Non-IG Mutual P&I Average

P&I Rate Per GT Development ............ 71

COMMERCIAL MARKET

TOTAL PREMIUM INCOME

Rating Agency Analysis ...................... 73

04. MAJOR LIMITING CONVENTIONS

AND STATUTES AFFECTING P&I RISKS

Developments in the past 12 months .. 75

05. CONTACTS

Marine Division Contacts.................... 88

Contents

Wherever and whenever there is an issue of risk we’re there for our clients – from individuals to small businesses to international conglomerates. Our people, our depth of technical expertise and our global reach is critical in delivering unrivalled coverage, risk management and placement expertise.

We work seamlessly across countries and international territories. Where we do encounter difficulties and complexities we meet them head on. We dismantle barriers never letting them get in the way.

We work tirelessly to provide solutions that drive value and competitive advantage for the benefit of all our clients and we liberate our people to do what they do best: promoting and protecting our clients’ interests. We just do not give up; whether it’s sourcing cover for the thatched cottage in England; cyber risks across European borders; complex coverage for the international supermarket chain; marine cargo in Australia; political risk coverage in developing economies; energy cover in extreme environments; or helping our banking partners with their comprehensive homeowner offer.

Family values have been core to our culture since our company was founded and this drives the way in which we, Arthur J. Gallagher, look after our clients. Since 1927 we have built our business for today. For tomorrow, we continue to invest in our business.

Founded by Arthur Gallagher in Chicago in 1927, Arthur J. Gallagher & Co. has grown to be one of the largest, most successful insurance brokerage and risk management companies in the world. With extraordinary reach and depth across international borders, our parent group employs over 21,500 people and its global network provides service in more than 150 countries.

Outside the US, we use the brand name Arthur J. Gallagher.


The Arthur J. Gallagher “Commercial P&I Market Review” continues to be the most comprehensive fixed market review of its kind and compliments our mutual IG Club “Annual Pre-Renewal P&I Review” offering, which will be published later this autumn.

We closely monitor and analyse the P&I market, as it continues to evolve with its ever changing products, service, security, strength and flexibility. Our view at Arthur J. Gallagher is that the “Non-IG market” is an important part of the maritime insurance industry, offering products and services to the small ship sector, where in previous years IG-P&I Clubs have in the past lacked enthusiasm to participate in this risk profile.

As part of the markets evolution, we note however that more of the IG-Club managers have developed new fixed P&I facilities and moved into the commercial market to diversify their product range, in order to increase revenue streams to enhance their free-reserves further.

With the shipping market still continuing to struggle through this prolonged depressed

trading environment, the commercial P&I markets may offer an opportunity for a segment of the world’s small ship operators to reduce their operational expenditure, which this review will offer more detail on. The “AJG Commercial P&I Market Review” will focus on the leading fixed premium, non-IG mutual and charterers liability facilities, which are approved by Arthur J. Gallagher.

Arthur J. Gallagher P&I remains at the forefront as industry leaders, this is something we are extremely proud of and demonstrates our unrivalled value added service and commitment to our clients and partners alike.

Yours sincerely,

Malcolm Godfrey Executive Director Marine Division, Speciality Risks

Arthur J. Gallagher is one of the leading global marine insurance brokers in the P&I industry sector. One of our key principles is transferring all pertinent market statistics, information and views on the various P&I insurers to our clients and business partners, which is essential to remain successful this competitive market environment.

Welcome to ourAnnual CommercialP&I Market Review

MALCOLM GODFREYEXECUTIVE DIRECTOR


Commercial P&I Market

Non-IG Mutual P&I Club

International Group P&I Club

USA, New YorkAmerican Club UK, London

Britannia P&I ClubLondon P&I ClubShipowners P&I ClubStandard ClubSteamship Mutual P&IThe UK ClubWest of England

UK, NewcastleNorth of England

Norway, OsloSkuld P&I

Sweden, GothenburgSwedish Club

Japan, TokyoJapan P&I Club

Korea, SeoulKorea P&I Club

China, BeijingChina P&I Club

Norway, ArendalGard AS

USA, New YorkEagle Ocean Marine

Greece, AthensAigaion Insurance Co. SA

UK, LondonBritish Marine (QBE Group)CarinaLodestar LtdNavigators P&IOsprey Underwriting AgencyCharterers P&I Club

Norway, BergenNorwegian Hull Club

Norway, OsloHydor AS

Russia, MoscowIngosstrakhRogosstrakh Ltd

Germany, HamburgHanseatic Underwriters

Netherlands, RotterdamRaetsMarine BVCharterama BV

The world of P&I according to AJG


Last year the sentiment in the market was very much a “We are at War!” reaction, however, twelve months later the commercial P&I market carries on into 2017 without any casualties to report and everyone appears to be sitting tight in the trenches. If we can compare the commercial P&I market scenario to “trench warfare” then we don’t expect to see too much change over the next twelve months either. Not exciting you might say? Well when looking at the data reported by the fixed markets covered in this report, we were surprised to see what appears to be a +1% upward spike in the average rate per GT. What happened? Is the market changing? Is this the beginning of the hard market cycle maybe?

We at Gallagher have covered the commercial P&I markets tracking back to 2008. During this time we have seen the rates per GT fall consistently over this period. The market had become very predictable to budget and benchmark across the market, as we identify which markets were being particularly aggressive in a policy year, opening their doors to new business at extremely competitive

levels. “Name your price” became a normal function of the market. There are winners and losers in 2016, which we will expand upon in the following pages.

What does appear to be prevailing in this market is that we are starting to see the end result of the “new market entrant storm cycle”, it looks like we are entering into a relative period of what appears to be calm on the surface; however, behind the scenes the markets are tactfully positioning themselves for the next market cycle. A number of markets have been “dumping” large portions of their portfolios, stating “unsustainability” or “de-risking tonnage profiles”, when most of the market bares little or no risk, could market reinsurers slowly be putting pressure on certain markets to clean up their act?

In short the following illustrations cover some of the key points from the 2016 policy year, tonnage and premiums have fallen and for the first time in eight years we have seen the first upward spike in what appears to be a hardening market, or is this just a figment of our imagination?

The non-IG commercial market totals at US$ 397 million in 2016, which is actually down -3.56% on 2015, but still accounts for approximately 11% if the combined International Group (IG) and non-IG market place.

“We have seen the first upward spike in what appears to be a hardening market, or is this just a figment of our imagination?”

Executive Summary

ALEX VULLODIVISIONAL DIRECTOR

Commercial P&I Market 2016


# Market 2015 P&I owned income

(USD’000S)

2015 Change # Market 2016 P&I owned income

(USD’000S)

Results (USD’000S)

1 British Marine US$ 105,000 1 British Marine US$ 105,000 No Change

2 RaetsMarine US$ 52,250 2 RaetsMarine US$ 42,000 -US$ 9,750

3 Lodestar US$ 29,000 3 Lodestar US$ 29,000 No Change

4 Osprey US$ 25,000 4 Hanseatic US$ 21,050 +US$ 424

5 Hanseatic US$ 20,626 5 Navigators US$ 21,000 +US$ 2,250

6 Navigators US$ 18,750 6 Osprey US$ 20,000 -US$ 5,000

7 Ingosstrakh US$ 16,000 7 Hydor AS US$ 16,000 +US$ 1,000

8 Hydor AS US$ 15,000 8 Ingosstrakh US$ 15,850 -US$ 150

9 Carina US$ 12,300 9 Carina US$ 12,100 -US$ 200

10 Eagle Ocean US$ 6,747 10 Eagle Ocean US$ 8,336 +US$ 1,589

11 Rosgosstrakh US$ 5,200 11 Rosgosstrakh US$ 4,800 -US$ 480

The soft market cycle continues for its eighth consecutive year, where underwriters balance business retention and growth in a market that is full to capacity. In 2016 the average rate per GT appeared to show an increase by +1%, compared to the previous year -6.3%. We have seen that this “increase” was actually artificial due to a number of markets seeing a significant reduction in GT (between -18%to -28%). Taking this further into consideration the average rate per GT actually fell by approximately -1.5% in 2016.

The chart below indicates the annual average rate change per ton. This provides an overview of the market cycle, demonstrating that business continues to be either won at a lower premium or business that is being renewed at a cheaper premium compared to the previous policy year.

“In 2016 the average rate per GT appeared to show an increase by +1%”

Premium development USD (‘000s)

Twelve month market development by owned P&I premium income (US$ ‘000)

Commercial P&I market highlights 2016

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

60,000

50,000

45,000

40,000

35,000

30,000

25,000

0

Average rate per GT vs owned GT

(USD Per Ton) Tonnage (‘000s)

20

08

20

12

20

10

20

14

20

09

20

13

20

11

20

15

20

16

Average Rate per GT Total Owned GT

$350,000

$300,000

$250,000

$200,000

$150,000

$100,000

$50,000

$0

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Commercial market cyclical development

Are we seeing a hardening market?

The commercial P&I market observed a +1% rise in the average rate per GT in 2016. Are we seeing the signs of a hardening fixed P&I market?

2016 premiums are actually down by some -3.35% in 2016, where the total owned P&I fixed market premium stood at $295 million, which is -$10.2 Million down on the 2015 policy year. The owned GT across this sector was also down by a slightly larger margin percentage at -4.3% or 2.1 million GT (2016 GT: 48 Million GT). So what we are really seeing is an artificial spike, albeit very modest rates rise. There is an explanation.

The Owners P&I market premiums have been steadily increasing since 2008 ($214 million) to 2015 ($305 million), where 2016 has seen this reduce to $295 million. On the whole 8 of the 11 markets saw their average rate per GT reduce between -0.49% (RaetsMarine) up to -9.28% (Navigators). Another contributing

factor to the “+1%” rate rise is vastly due to Carina and Rosgosstrakh reporting their average rate per GT increase by a volatile +26.21% and +15.31% respectively. Did this mean those carriers charged increases in 2016? No, is the simple answer, their GT portfolios took the biggest hit reporting a loss of -22% and -28% respectively, over a 12 month period. This alone has distorted the average rate per ton figures. Take these two markets out of the equation; the 2016 policy year saw the average rate per GT actually reduce by -1.55%. Another market that has taken a big hit on tonnage is RaetsMarine, who also saw a large drop in GT in the region of -18%. The rest of the market reported tonnage increases between 3% to 9%, with Navigators seeing the biggest increase by +23.46%.

Has the market changed in 2016?

The soft market hasn’t really changed, perhaps what we are starting to see is the slowing down of big reductions, this could be a result of the “new entrants” now entering into the “intermediate” category, meaning now is the time to focus on underwriting profitability and business retention, rather than growth.

New entrants like the London Club, who are offering fixed premium terms, are being aggressive feeding the “soft” environment. All markets still fight for their respective share and business retention; some existing markets are starting to become more aggressive than others which are good for the buyer, as this keeps premiums low and continue to increase commercial pressures on these markets. We have not reached the point of no return yet, as the market is still evolving from the new entrant phase, therefore we expect to see the average rate per GT continue to reduce in 2017 and 2018, albeit moderately.

-4.3%Reduced tonnage by 2.1 million gross tons

+3.56%Total Market Premiums reduced by US$14.6m

US$ 397MTotal non-IG P&I Market Spending (2016)

-6.33%Market average reduction (2016)

US$ 6.095Average rate per GT

Market cycle

Percentage

Increase Territory

Reduction Territory

20162015201420132012201120102009

6%

4%

2%

0%

-2%

-4%

-6%

-8%

-10%

The red line demonstrates that average rate per GT, taking the “artificial spike” out of the equation.


The 2016 policy year saw almost 50% of the market move in the premium income rankings. The biggest move was Osprey (TMS) moving down from 4th place to 6th, both Hanseatic and Navigators both moved up one place to 4th and 5th respectively. Ingosstrakh moved down as well, from 7th to 8th with Hydor taking 7th place. The largest facility, British Marine saw no change in premium income written, however GT rose by +7.69%. Navigators grew by a substantial +12% in 2016; however in premium figures this is only a modest US$ 2.25 million, this was one of two facilities to see double digit growth in 2016.

The other market to see growth was Eagle Ocean Marin and the highest reported at 23.55% or US$ 1.5 million. Notable reductions in premium were observed by RaetsMarine at –US$9.7 million and Osprey at -US$5 million (twice as much as 2015). The total owned P&I fixed market premium in 2016 was US$ 295 million, which is down 3.35% from 2015.

“The top four markets (by income) fixed premium providers make up 66%(-3% on 2015) of the marketplace”

2016 Business environment

The last five years have shown the total non IG mutual market premium income hover around US$ 400 million per annum. Comparing this to the International Group (IG) mutual market $3.67 Billion combined income, the commercial markets covered in this review make up around 10.8% of the total global P&I premium spend. Go back to 2008 the commercial market stood at US$258 million,

where we have witnessed its growth by some +US$ 138 million or +54%. Over an eight year period the growth appears to be relatively expediential, however, the growth has plateaued around US$ 400million since 2012. The new entrants since 2008 have increased by 10 markets, which have re-shaped the market, at the expense of the established market players. The driving force in the market

is still “price sensitivity” and this will remain the case for the foreseeable future. Premium rating levels are being driven ever lower by shipowners and their brokers, with underwriters seeming intent on building their book of business regardless of cost, under-cutting existing insurers irrespective of records. All markets are guilty of this practice as the chase for income and profit continues.

Owned market development indicator by premium income

2015 2016

$120,000

$100,000

$80,000

$60,000

$40,000

$20,000

$0

Premium income development 2016 vs 2015

British Marine RaetsMarine Lodestar Osprey Hanseatic Underwriters

Navigators Ingosstrakh Insurance Co

Hydor AS Carina Eagle Ocean Marine

Rosgosstrakh Ltd

The commercial market average owned P&I rate for 2016 stands at US$ 6.095 per GT. In 2015, Navigators maintains the highest rate per GT level at US$ 8.40 (-9.28% on 2015), however this has fallen from US$ 9.259 since 2015. The Navigators fixed premium average rate increased steadily from years 2011 to 2013 and has then started to fall from 2013 to 2016 respectively. The main factor in 2016, for the -9.28% reduction in the average rate was due to the increase in GT being +23.46%,

this combined with their premium increasing by 12% (year to year) pushed down their average rate per ton. Ingosstrakh, RaetsMarine, Carina and Rosgosstrakh have the lowest rate per GT levels, which range between US$ 3.462 to US$ 3.310 per GT, where this range is up by an average of +9.05% compared to 2015, and are therefore still perceived to underwrite at a more competitive premium level.

Owned rate per GT development

2015 2016

12,000

10,000

8,000

6,000

4,000

2,000

0

Rate per GT development 2016 Vs 2015

Navigators Eagle Ocean Marine

British Marine Ingosstrakh Rosgosstrakh Ltd

2016 Average

Hydor AS Hanseatic Underwriters

CarinaLodestar RaetsMarine

2017 Predictions (commercial owned markets)

The premium, tonnage and average rate per GT trend lines suggest that we are entering into a “plateau phase”, however, it is really too early to tell. What we do see is that the annual average rates move at approximately -2.85% per annum, over a five year period, whereas looking back over eight years the average movement was -3.15%, therefore the “average” appears to be slowing down. Tonnage growth on the other hand has grown by +44% over eight years or only + 16% over the last five years. Total premiums have only grown by +1.52% over the same period. Our conclusion behind this apparent “slow down” is due to the lack of new entrants (since 2013) driving the market as aggressively, compared to policy years 2008 to 2014 (new entrant phase), now that those “new entrants” namely Eagle Ocean Marine, Hydor, Rosgosstrakh, Carina and Lodestar have all taken their share of the market and are becoming mature portfolios. Ordinarily as markets mature you would expect to see prices stabilise – or the rate of fall decline – but to a large extent the soft market conditions seen in the P&I sector have obviated the need the halt the decline in prices, as acceptable underwriting results are created not so much by correct technical pricing as a continuing drop off in claim incidence. Thus the maturing market has not had the pressure to push up their cheap early

market penetrative pricing as benign claims allowed it to be sustainable. The reductions seen in the preceding years thus did not need to be remedied drastically across the board but we are seeing particular instances of specific underperforming ultra-cheap business being “chucked out”, as opposed to a wholesale rise in rates. Throwing out this cheap underperforming business (which was acceptable in the early days of the facility) has pushed up the visible rate per ton, but only because that underperforming business was so cheap and “kicking it out” pushes up the average rate on the business that is left, even though it might be still falling. In comparison the IG did not enter the soft phase as early as the commercial market, since it was already a mature market and there were zero new entrants. The IG Clubs were still looking for general increases in the 7%’s as recently as 2014-15 and so entered the falling rates phase later (the effective decline in 2016-17 was 9.9%, having adjusted out the effect of RP’s). The two markets are “out of synch” in this way and so the IG rate decline cycle started later and will no doubt end later. Also the small ship sector remains only a small part of the IG (other than Shipowners P&I Club) and so the rate shifts for small vessels are masked by the larger big ship rate shifts.

So the apparent much lower premium falls in the commercial market can be consistent with the bigger ones seen in the IG as the markets are out of phase with different pricing drivers- rates are not so much claims experience driven in the commercial sector which tend to feature capacity driven rates. As the capacity has plateau’d in the last couple of years, rates will stabilise, but for the IG where claims remain the key driver, premium per ton now falls at a faster rate. What is very interesting to observe and we plan to follow this carefully, is the volatile movements seen by the likes of Osprey and RaetsMarine shedding significant chunks (approx. -20% 2015 to 2016) of their portfolios, this volatility does not suggest a steady “de-risking” of unsustainable or problematic business, this seems to be a rather more reactionary measure. P&I is generally speaking viewed as long terms business relationship, due to the long tail nature of claims, therefore when markets appear to be “dumping” parts of a portfolio, we often question the strategic reasons or merits for this. For more specific information please see the “market says” in section 2 for individual market commentary here.


2016 appears to show a massive downturn in the average premium per vessel chart; however, the figures are heavily distorted by the Norwegian Hull Club (NHC) submission once again (same as 2015). In 2015 the average premium per vessel was in the region of US$ 11,439 per vessel per annum, which equates to 30 day voyage of US$ 940. In 2016 NHC saw a massive upturn in number of vessels insured by some +473% (from 1,204 vessels to 6,900 vessels) significantly reducing their average premium by -83.5%, therefore distorting the total market figures. If you remove NHC from the collected figures then we would see the 2016 average premium per vessel fell by -7.09%.

The total number of chartered vessels on risk has increased by 5,600 vessels chartered in 2016 to a total of around 52,000 vessels, which Is up +12.3% from 2015. The level of ships on risk has been stable for the last 7 years, at an average growth rate of 4.23% per annum.

The total chartered specialist premium income was reported at US$ 71.4 million in 2016, which is down -4.96% from 2015, however, this is -4.59% down from 2012.

The Charterers Club reported a +15.38% increase in chartered activity (number of vessels on risk), who still remain the leading non-IG specialist charterers liability underwriter by income at US$ 29 million in 2016. RaetsMarine and Hanseatic saw the biggest reduction in premium of -10.25% and -10.73% respectively. Charterama reported no change in premium for the third consecutive year; however, their written tonnage was down -9.09% in 2016.

Charterer & traders

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

55,000

50,000

45,000

40,000

35,000

30,000

0

Average premium per VSL vs no. VSL on risk

No. Vessels on Risk No. Vessels on Risk

20122010 20142009 20132011 20162015

Average premium per vessel Number of vessels insured

Premium development USD (‘000s)

$80,000

$70,000

$60,000

$50,000

$40,000

$30,000

$20,000

$10,000

$0 2008 2009 2010 2011 2012 2013 2014 2016

“The 2016 average premium per vessel fell by -7.09%”

2015

Expectations for 2017 - Has the market hit a glass ceiling?

We have seen the wake from “new entrant storm” pass by, this has not been the tsunami of destruction we first expected. The market has grown and everyone appears to have benefited one way or another, without any casualties.

The market appears to have plateaued in 2016, but as previously mentioned in this report, it is still really too early to tell. From a day to day trading perspective business still transfers frequently with a “win some, lose some” approach by underwriters, nevertheless the price war still exists and the commercial pressures are very much strong in this market, however, as we reported last year this “approach” is very much a normal function of the market. There is no “bottom line” despite trying to implement underwriting discipline and therefore our clients expect reductions, which we at AJG achieve one way or another.

AJG expect to see the market continue in its current trajectory with rates reducing between 1.5%-3% in 2017. AJG would expect rates not to be pushed back up other than by

significantly increased levels of claims, we may see a similar artificial rate rise due to reactionary measures taken by several facilities as we have observed in 2016, where tonnage is reduced by a larger proportion of premium, creating an uplift in the average rate per ton.

The law of supply and demand of capacity appears to be suspended at the moment and market exits will not happen to restore premium equilibrium. Supply is hence inelastic and unresponsive to demand. This trend is perhaps typical of a depressed shipping market, where lulls in trade keep claims at low levels, and so cheap premiums are a function of a depressed market. When and if the shipping industry recovers, then claims will rise and thus rates might turn upwards, but this is a delayed, not an immediate consequence, we do not any such upturn occurring in the next two to three years.

We have in previous years commented on the billion dollar league, with NHC being the latest in 2016 to offer US$ 1 billion limits (the eight fixed premium markets offering a

USD 1 billion limit of liability) and whether they had the ability to make a dent in the IG Club small ship business. In addition some of these facilities also offered a bank guarantee to entice clients to move on the back of an insurer securing their release call obligations. The IG 20th February 2017 renewal wasn’t a year for much movement between the Clubs, let alone business transferring out of the IG Club system, therefore it remains to be seen whether such schemes will become more prevalent in the years to come, given the continuing soft IG mutual P&I market expected in 2018.

“We have seen the wake from “new entrant cycle” pass by, this has not been the tsunami of destruction first expected”

A gap in the P&I marketplace

Since the South of England collapse in 2011, a credible alternative has not yet formed nor has any of the existing fixed markets actually made inroads into the big ship/ over age sector. Despite many operators of

overage tonnage having preferred to scrap tonnage, instead of laying-up or trading, there is still an opportunity for a market player to fill this, even on restricted terms, who could take advantage of the lack of market

availability. Who will be the first non-IG market to diversify into this segment?


Fixed premium P&I insurance explained

What is fixed premium insurance?

Fixed premium P&I insurance indemnifies ship owners, operators and charterers for third party liabilities arising from a fortuitous event or a marine peril. Third party risks include a carrier’s liability to a cargo owner for damage to cargo, a ship’s liability after a collision, environmental pollution, the ship’s liability to its crew, fines and war risks etc. The term “fixed premium” means exactly that, as the terms and conditions offered by a commercial insurance company, do not expose clients to potential excess supplementary calls, unlike IG Group Clubs.

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

Do IG P&I clubs provide fixed premium insurance?

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

A number of P&I Clubs, such as American, Gard, Skuld, SOP and Steamship Mutual also have fixed P&I premium facilities in place for smaller inland craft and U.S. yachts. AJG will focus on these facilities in our “AJG International Group Club P&I Review 2013” which will be published towards the end of this year. All of the IG Clubs provide alternative fixed insurance products, such as Charterers’ Liability Insurance and other marine related products, which do not fall under the conventional IG Group P&I product or IG group reinsurance programme.

Differences between commercial P&I markets and IG group club P&I insurance?

General Increases – The fixed premium market does not adopt the annual general increase philosophy, which is a tradition practiced amongst most of the IG P&I Clubs. Renewals are instead underwritten on the assureds’ individual merits and loss record, although there may be increases sought on the basis of exposure, operating costs or the overall performance of the insurers portfolio.

Annual Mandatory Requirements – Over the last few years we have seen many P&I Clubs’ insert annual mandatory uplifts/ requirements, which are often non-negotiable, such as deductible increases etc. This is a practice which the commercial market does not follow.

Prospects For Supplementary Or Excess Calls – IG Group Clubs have the power to make excess supplementary calls if there is a need to raise funds, which are non-negotiable. The non-mutual commercial insurance companies do not have this capability.

Release Calls – The Commercial Market gives clients freedom to change insurer without having to release themselves from future liabilities to supplementary calls or excess supplementary calls, which is inherent within the IG Club rules.

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

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

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

Underwriting For Profit – IG Group Clubs are focused on “not for profit service”, whereas a commercial insurance company can be more profit focused, which is an important factor to consider, when handling claims to ensure that the claimant is indemnified at an appropriate level. This is where a strong broker like AJG will add value!

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

Limits Of Liability – Without access to the International Group Pool, fixed premium coverage will be limited to a specific limit of liability, however clients may still be exposed to catastrophes, which could potentially exceed smaller limits. Choosing the appropriate level of cover is something that AJG can help you with.

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

Certificates Of Financial Responsibility (COFR) A requirement under the US OPA 90 Act (United States Oil Pollution Act), where any vessel over 300 GT requires a valid COFR and COFR guarantee cover in place. Guarantee coverage is provided by several COFR guarantee companies, which require letters of undertaking by an International Group P&I Club, most of the fixed premium facilities are not approved by these guarantee companies. Therefore it is important to check this prior to trading to U.S. waters.

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

There are three “facility types” that offer fixed premium P&I insurance, as follows:

The International Group Of P&I Clubs

All of the International Group of P&I Clubs offer alternative fixed premium solutions for their clients. These may include non-pooled insurance products such as charterer’s liabilities, offshore P&I, contractual liabilities, specialist operations etc., however, some of the IG P&I Club managers can provide fixed premium P&I covers aimed at smaller tonnages on a limited liability basis.

Insurance Companies

Insurance companies are business entities that generally look at multiple lines of insurance, be it marine or non-marine related risks. Insurance companies that provide marine insurances typically can provide hull and machinery, cargo, ports and terminals, kidnap and ransom covers etc. some of these companies also provide fixed cost P&I insurance. In the past some of the demutualised P&I facilities and managing general agents have been purchased by independent insurance companies.

Managing General Agents (MGA)

An MGA is an individual or business entity appointed by an insurance company to conduct and arrange insurance contracts on their behalf. An MGA generally acts as a fronting company for the insurer, as well as providing the insured with evidence of cover within the defined underwriting authority. MGA’s also service policies and most importantly handle claims. Traditionally MGA’s were formed where insurance companies wanted to expand their markets, but did not have their own resources or technical knowledge to open and staff offices, therefore utilising the services of an MGA.

The following table identifies the current “facilities” that are able to provide fixed premium P&I insurance:

The International Group Of P&I Clubs

Gard Offshore

Japan Club Naiko (Coastal) Class

North of England and Sunderland Marine

Shipowners P&I Club

Skuld P&I Club

Standard P&I Club

Steamship Yacht Facility

Swedish Club Offshore

West of England P&I Club

Insurance Companies

British Marine (a brand of QBE Europe)

Navigators P&I (Navigators)

Ingosstrakh Insurance Co.

Raetsmarine BV (Amlin Europe)

Rosgosstrakh Ltd

Korean P&I Club (Mutual)

Norwegian Hull Club (Mutual)

Managing General Agents (MGA)

Carina (Lloyds of London)

Charterama BV (Royal Sun Alliance)

Charterers P&I Club (Munich Re)

Eagle Ocean Marine (American Club)

Hanseatic P&I (Lloyds of London)

Hydor AS (Brit Syndicate)

Lodestar Marine Ltd (Royal Sun Alliance)

Osprey (Thomas Miller Specialty)

P&I market facility variations

Fixed premium P&I providers


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

Non-IG market development (years 2009 – 2016)

Commercial P&I market news – review of the last 12 months

Established Market (10Yrs +)

Intermediate (5-10Yrs) New Entrant (<5Yrs) Speculative Market Exit

British Marine (QBE) (Est. 1876)

Norwegian Hull Club (Est. 2008)

Lodestar Marine Ltd (RSA) (Est. 2012

West of England Fixed Premium P&I

Terra Nova Insurance Co. (2006)

Ingosstrakh (Est. 1974)

Charterama BV (RSA) (Est. 2009)

Carina – Tindal Riley (Est. 2013)

Hydor & Standard Club Merger?

Axa Corporate Solutions (2008)

China P&I Club (Est. 1984)

Hydor(Brit Syndicate) (Est. 2009)

Skuld P&I Club (Fixed) (Est. 2013)

Inter Coastal Shipowners BV (2011)

Charterers P&I Club (Munich Re) (Est. 1986)

Eagle Ocean Marine (Est. 2010)

North Group (Sunderland Marine Merger) (Est. 2014)

South of England Mutual (2011)

Osprey (Est. 1991) (Thomas Miller Specialty Est. 2015)

Rosgosstrakh P&I (Est. 2010)

Standard Club Fixed Facility (Est. 2014)

Ceylon P&I Club (2012)

Raetsmarine BV (Amlin) (Est. 1993) *Rebranded MS Amlin P&I in 2018*

London P&I Club Fixed (Est. 2015)

HEMPIRA (2014, due to consolidation with Aigaion)

Korea P&I Club (Est. 2000)

BE&O (2016)

Navigators P&I (Est. 2004)

Hanseatic P&I (Est. 2005)

2016

October Britannia further reduce the deferred call for P&I on the 2014 –15 policy year from 37.5% to 35 and reduces the deferred call on the 2015 –16 policy year to 40%;

Standard announce a 5% reduction in the Estimated Total Premium for 2016 –17 by way of a credit against future premium instalments due later in the year;

Steamship advise a return of premium in respect of the 2014 –15 policy year of 10%;

November The UK Club announce a mutual premium discount of 3% in respect of policy year 2015 –16;

North of England allow a 5% return of mutual premium in respect of the 2016 –17 policy year by way of credits against future instalments due;

Skuld confirm that the 2.5% mutual premium credit in respect of the 2015 –16 is granted, and also advised that the 2.5% credit will be continued in respect of 2016 –17;

The Japan Club announce that it will reduce the deferred call on the 2014 –15 policy year from 40% to 20%;

North of England open an office in Shanghai;

Standard & Poors raise its rating for West of England from BBB+ to A-, outlook stable;

December General Increase season ends with all clubs announcing a 0% general increase and, as noted above, several opting to return premiums to members;

2017

January NHC: Limits of USD 1 Billion are now available.

Amendments to the Marine Labour Convention come into force requiring owners to display financial security certificates in respect liability for outstanding wages, repatriation and compensation for crew death / disability;

Skuld complete the acquisition of 100% of SMA/Gerling Norway, now to be rebranded as Skuld Marine Agency;

February Group excess reinsurance programme renew with further reductions across all vessel categories including passenger vessels. Individual Club retentions remain at $10 million and Hydra simplify and increase its participation on the first excess layer somewhat;

No US reinsurers are included on either the group programme or the Hydra reinsurance programme, and so the fall-back cover is no longer required;

The London Club restructure its corporate governance process and forms a smaller Board of Directors to deal with the increasing load of statutory and regulatory matters. Three senior members of the management committee are to be on this Board;

Minor amendments made to the TOPIA and STOPIA agreements;

The American Club celebrate its 100th anniversary;

March West of England announce that Tom Bowsher will succeed Peter Spendlove as CEO of West of England Insurance Services (Luxembourg) SA effective September 2017;

April Hanseatic: XL Catlin (XLC2003), Sompo Canopius (CNP4444) and Hamilton (HAM3334) three established and well regarded Lloyd’s Syndicates has joined our security consortium of class-leading, 100% Lloyds A+ rated insurance cover with effect of 01st of April 2017

The Swedish Club are to apply a 4% premium discount on the 2017–18 policy year by way of an allowance against the 3rd instalment of the mutual premium for that year;

May Navigators: launched our new European company Navigators International Insurance Company (NIIC), providing us with the platform to expand our portfolio in more European countries

Gard forego the entirety of the 25% deferred call on the 2016 –17 policy year at the cost of $90 million in call income;

Britannia announce a $20 million total capital distribution to mutual members with Class 3 entries as at 9 May, 2017;

West of England open a branch office in Singapore;

June The first Solvency & Financial Condition Reports required under the Solvency II regulations, for the applicable clubs, start to be released to the public;

July The first Solvency & Financial Condition Reports required under the Solvency II regulations, for the applicable clubs, start to be released to the public;

August The japan Club announce that it will reduce the deferred call on the 2015 –16 policy year from 40% to 30%;

September The Swedish Club announce six monthly figures to 30 June, 2017: a $19 million increase in Free Reserves to $213.8 million featuring an underwriting surplus of $6 million;

The Shipowners Club announce six monthly figures to 30 June, 2017: a $25 million increase in Free Reserves to $319 million, featuring an underwriting surplus of $0.7 million;

2018

January RaetsMarine will be MS Amlin P&I as from 1st January 2018. Rebrand to MS Amlin P&I

Commericial P&I market today

More capacity and more competition than ever before

The commercial P&I market has more than doubled in size since 2009, with seventeen non-IG P&I fixed premium and charterer’s liability specialist markets competing for business. With the over-supply of choice, we at AJG have observed P&I fixed rates reducing year on year, providing owners, operators and traders with an opportunity to reduce operating expenditure annually. In the last three years the market has seen more of the IG-P&I Clubs “awaken” in their attempts to diversify into this market sector, to increase revenues and free-reserves. In response to this change in appetite, the well-established commercial market facilities claim not to be intimidated by this change in stance, however they generally see it as an opportunity for the shipping community to become more aware of alternative P&I products and markets available.

The commercial market is still aimed at the smaller vessel operators, short-trade vessels, principally operating in coastal or inland waters typically within a tonnage range below 10,000 GT. Market facilities are available for vessels up to 40,000 gross tons (higher GT caps and limits are also available depending on the facility). For charterer’s liabilities, there are no vessel type or size restrictions among the specialist charterer’s liability facilities. Limits up to USD 1 Billion are available, however typically the larger limit of choice is USD 500 million, where the majority of assureds are usually insured below USD 50 Million. All fixed premium facilities target ship owners, operators, charterers and traders emanating from all geographical areas (subject to EU/US Sanctions), however certain facilities tend to shy away from passenger, cruise and U.S. flagged, trans-Atlantic and trans-Pacific business. Coverage for smaller over-age and non-IACS classed tonnage is also available from the majority of fixed premium facilities.

Why choose fixed premium?

We at Arthur J Gallagher believe that some of the key advantages of insuring with a fixed premium insurer are that they can offer certainty of cost and lower, more accessible limits of liability, with no liabilities for unbudgeted supplementary calls or annual general increases. Not all of the alternative non-IG facilities offer fixed premium covers, some are mutual. In addition to this there are also exclusive charterer’s liability specialist insurers, which cater for charterers and traders. The fixed premium P&I market has continued to evolve considerably over the last five years, with more new entrants than exits from this industry sector. This is perhaps to be expected given the IG Group system’s workings and the competitive nature of the commercial market.


Commercial P&I market overview

Facility Carrier Premium Income 2016 (US$) Tonnage/ Vessels Insured Average Rate Per Gt/

Per Vessel

British MarineQBE Insurance (Europe) Ltd S&P: A+

$105,000,000 13,000,000 GT $8,077 per GT

CarinaLloyds of London S&P: A+

$12,100,000 3,080,000 GT $3.93 per GT

Charterama BvRoyal Sun Alliance S&P: A

$9,750,000 10,000 Vessels $975 per vessel

Charterers P&IGreat Lakes/ Munich Re S&P: AA-

$29,000,000 15,000 Vessels $1,933 per vessel

Eagle Ocean MarineAmerican Club S&P: BBB-

$8,336,000 1,841,000 GT $4.53 per GT

Hanseatic P&IInsurance Consortium – See Page 34. S&P: Various A Rated

$21,050,000 3,150,000 GT $6.68 per GT

Hydor A/SLloyds of London (Brit Syndicate 2987) S&P: A+

$16,000,000 1,956,000 GT $8.18 per GT

IngosstrakhIngosstrakh S&P: BBB-

$15,850,000 4,783,000 GT $3.31 per GT

Korean P&I ClubMutual Insurance Company AMB: A-

$30,857,000 24,425,000 GT $1.26 per GT

Lodestar LtdRoyal Sun Alliance S&P: A

$29,000,000 4,200,000 GT $6,905 per GT

Navigators P&INavigators Insurance Co. S&P: A

$21,000,000 2,500,000 $8.40 per GT

Norwegian Hull ClubNorwegian Hull Club S&P: A

$8,000,000 6,900 Vessels $1,159 per vessel

OspreyLloyds of London S&P: A+

$20,000,000 2,900 Vessels $6,896.55 per vessel

Raetsmarine BvAmlin Europe N.V. S&P: A+

$42,500,00012,750,000 GT 20,000 Vessels

$3.93 per GT

Rosgosstrakh LtdRosgosstrakh Ltd Local Rating: BB-/RU AA

$4,800,000 1,242,000 GT $3.46 per GT

Maximum Limit Max Size Vessel Cover Admendments in 2016 Location

US$ 1 Billion No Cap. However focus on small & medium GT - London, UK

US$ 500 Million <5,000 GT - London, UK

US$ 350 Million No limit - Rotterdam, NI

US$ 500 Million No limit - London, UK

US$ 500 Million <12,500 GT - New York, USA

US$ 500 Million<30,000 GT Bulkers <20,000 GT Tankers

- Hamburg, Germany

US$ 1 Billion <25,000 GT - Bergen, Norway

US$ 1 Billion <10,000 GT - Moscow, Russia

US$ 1 Billion No limit - Seoul, Korea

US$ 1 Billion<40,000 GT Non-Tanker <10,000 GT Tanker

- London, UK

US$ 1 Billion <10,000 GT - London, UK

US$ 500 Million No Limit - Oslo, Norway

US$ 500 Million<25,000 GT – Non-Tank <10,000 GT - Tankers

- London, UK

US$ 1 Billion <40,000 GT - Rotterdam, Nl

US$ 500 MillionTankers <8,500 GT All others <25,000 GT

- Moscow, Russia


Reinsurance Carrier

The underlying security or insurance company providing the market capacity.

Standard and Poor’s (S&P) Rating

Arthur J. Gallagher operates a market security policy which sets a minimum standard for insurance markets which can be included on its acceptable market security list. A number of criteria are utilised to evaluate the financial condition of these markets and one of the criteria used is the ratings allocated by either Standard & Poor’s (S&P) or A M Best. The AJG (UK) security policy sets a minimum rating level of A- from these agencies as an indicator of acceptable security. See page 73 for more information on this policy. The specified rating attached to each facility is a credit rating based on S&P’s independent opinion regarding the ability of an issuer, corporation or association to meet its financial obligations. Such ratings are provided by organisations such as S&P and AM Best, also known as credit rating agencies. Each organisation applies its own merits in measuring credit and use a rating scale to publish their individual findings. Ratings are expressed as a letter grade for example AAA being the highest level.

Maximum Limit of Liability AvailableIt is very common to see a limit of liability in insurance contracts, which stipulate limitations on the maximum amount payable under the contract. Further, the cost of defence, supplementary payments, and punitive damages may or may not be paid in addition to the limits. Separate limits often apply to claims for pollution and/or passenger or seamen claims. An annual aggregate limit may also be offered, which puts a maximum on the amount an insurer must pay in any one policy period.

Vessel Type/ Size (GT) Cap

This is the maximum size (gross ton) of vessel that can be insured by the facility.

Facility Location(s)

The primary business location of the facility and various support and claims offices available. Local claims liaison offices are important to ensure that clients in different time zones can access claims or loss prevention assistance in a timely manner.

Geographical Spread of Business

This is an indicator to show where business revenues derive from a geographical overview.

Type of Entered Vessel

This indicator demonstrates what type of vessel a facility tends to write.

Annual Premium Income, Gross Tonnage and Premium Per GT Development Indicators

AJG analyses three key performance indicators over a twelve month period to determine a financial year result. Historical information can be found in the industry statistic pages 59-73.

The information contained in the Arthur J. Gallagher P&I facts and figures pages has been compiled by the various insurance providers contained in this report. As part of our assessment in choosing an appropriate fixed premium insurer(s) for our clients, amongst other key factors such as claims service, pricing, flexibility etc. AJG also considers the following parameters as essential indicators in the selection process.

Introduction Market Facts & Figures


Premium Income (USD)2015 PY: 105,000,000 2016 PY: 105,000,000

Gross Tonnage (GT)2015 PY: 12,500,000 2016 PY: 12,000,000

Average Rate Per GT (PGT)2015 PY: US$ 8.40 2016 PY: US$ 8.07

Established in 1876, British Marine is a specialist hull & machinery, protection and indemnity and legal expenses insurer for small to medium sized vessels.

At the turn of the 21st Century British Marine was de-mutualised and more recently in 2005 the privately held fixed premium insurer was successfully acquired by the QBE Group. With effect from 31st March 2010, all of British Marine’s assets and liabilities, including its current and past contracts of insurance and reinsurance were transferred to QBE Insurance (Europe) Limited. The “British Marine” brand name has now become a trading name for QBE.

Today British Marine provides fixed cost P&I insurance solutions, as well as H&M and charterer’s liability insurance products, offering P&I limits up to USD 1 Billion. The insurer typically writes vessels up to 10,000 GT, with 90% of their portfolio consisting of medium size merchant vessels and the balance of the portfolio being made up of fishing vessels and super yachts. On the Charterer’s Liability side, limits for P&I are available up to USD 100 million with Charterer’s Damage to Hull

being limited up to USD 50 million. There is however a guideline tonnage maximum level of 30,000 GT.

British Marine says

“As a part of the global QBE Insurance Group, British Marine has strength, depth and longevity on its side with 2015 and 2016 showing solid years of modest growth. British Marine are pleased to report that 2017 appears to be running in a similar vein, with a successful 20th February 2017; maintaining a historically high retention, alongside acquiring new assureds through our ever developing key broker relationships. Our P&I Asia branch is likewise expanding its footprint in the region. Notwithstanding the above, competition is becoming more aggressive in the fixed premium P&I market. This combined with the difficulties that the wider shipping market has experienced, has meant increasing challenges for the commercial P&I market as a whole for the past few years.

Underwriting and claims service remains at the core of the product we offer. We continue

to focus on underwriting profit and regularly review the balance and focus of our core book in order to deliver our strategic plan. We continuously work to adapt our covers as required by our customers and support them with quality underwriting and claims teams, backed by the financial strength and A+ security of the QBE group”.

– 4% –3.9%

British Marine www.britishmarine.com

Reinsurance Carrier: QBE Insurance (Europe) Ltd. Standard and Poor’s Rating: A+. Maximum Limit Offered: USD 1 BillionVessel Type/ Size Cap: Up to 10,000 GT and Charterers up to 30,000 GT. Facility Location: London, United Kingdom

0%

Twelve Month Development Performance Indicators

Business Portfolio Spread (2016)

22% Northern Europe

32% Far East

15% Southern Europe

4% North America

3% Australia

13% Middle East

7% South America

4% Africa


2016

22% General Cargo

23% Others

1% Dredgers

14% Tugs & Barges

9% Fishing

6% Tankers

5% Yachts

20% Bulkers


2016

2008 2008

2008

2012 2012

2012

2010 2010

2010

2014 2014

2014

2009 2009

2009

2013 2013

2013

2011 2011

2011

2015 2016 2015 2016

2015 2016

140,000,000

130,000,000

120,000,000

110,000,000

100,000,000

90,000,000

80,000,000

0

10.00

9.50

9.00

8.50

8.00

0

P&I Premium Income Average Rate Per GT

Tonnage Development

14,000,000

12,000,000

10,000,000

8,000,000

6,000,000

4,000,000

2,000,000

0

Owned P&I Premium Income (USD)

Entered Gross Tonnage (USD)

Policy Year: 2008 2009 2010 2011 2012 2013 2014 2015 2016

P&I Premium Income 93,007,720 125,000,000 133,500,000 125,000,000 106,000,000 100,000,000 97,500,000 105,000,000 85,000,000

Policy Year: 2008 2009 2010 2011 2012 2013 2014 2015 2016

Gross Tonnage 11,000,000 13,500,000 13,520,000 12,600,000 12,000,000 11,000,000 10,000,000 12,500,000 9,200,000

P&I FD&DCharterers /DTH

War

100%

80%

60%

40%

20%

0%SOL to Cargo

H&M Other Risks

Ports & Terminals


Carina is one of the most recent fixed premium new entrants starting in the early part of 2013.

The facility is managed by Tindall Riley Marine (UK) Limited (who are the managers of the Britannia P&I Club), trading as Carina Managers. This facility offers fixed premium P&I coverage for Owners and Charterers of smaller vessels ranging up to 5,000 gross tons, operating in domestic or inland waters, worldwide. Policy limits of up to USD 500 million are available for Owners, whereas Charterers will be able to purchase limits up to USD 50 million.

The focus of the facility targets small ship sector operators only. Legal Defence Cover is also available together with additional ancillary covers that may be required. Carina will benefit from Tindall Riley Marine Limited’s vast experience in underwriting, claims and support services. Carina’s polices are backed by Lloyd’s of London syndicates, which hold an S&P A+ rating.

Carina says:

“Carina is managed by Tindall Riley & Co Limited trading as Carina Managers, and continues to operate as a coverholder under a binding authority agreement with various Lloyd’s underwriters all of which are rated A+ by S&P. Carina is a fixed-premium facility providing P&I cover for Owners and Charterers of ships of up to 5,000 g.t. or up to 6,500 g.t. if part of a fleet. Over the past 12 months, the facility has replaced a book of business with a lower amount of better performing ships.

We have continued to see strong growth within Europe and S. America and are currently looking at a number of new opportunities in the Asian market. We continue to offer a combined package for yacht owners; offering P&I, hull and machinery, personal accident and fine art cover. The vast majority of shipowners insured by Carina trade regionally including inland waterways. Carina continues to market itself as the natural home for owners of small ships seeking P&I and ancillary insurance solutions”.

Carinawww.carinapandi.com

Reinsurance Carrier: Lloyd’s of London. Standard and Poor’s Rating: A+. Maximum Limit Offered: Up to USD 500 MillionVessel Type/ Size Cap: Up to 5,000 GT. Facility Location: London, United Kingdom

21% Northern Europe

39% Far East

18% South America

20% Russia & Ukraine

2% Southern Europe


2016

7% General Cargo

15% Tankers

5% Passenger

3% Fishing

6% Tug

58% Barges

6% Others


2016

Premium Income (USD)2015 PY: 12,300,0002016 PY: 12,100,000

Gross Tonnage (GT)2015 PY: 3,950,0002016 PY: 3,080,000

Average Rate Per GT (PGT)2015 PY: US$ 3.112016 PY: US$ 3.93 +26.3%–1.6% – 22%



2013

2013

20132014

2014

201420162015

20162015

2015 2016

15,000,000

12,000,000

9,000,000

6,000,000

3,000,000

0

5,000,000

4,000,000

3,000,000

2,000,000

1,000,000

0

4.00

3.50

3.00

2.50

2.00

0


P&I Premium Income

Gross Tonnage

Average Rate Per GT

Policy Year: 2013 2014 2015 2016

Gross Tonnage 2,000,000 3,000,000 3,950,000 3,080,000

Premium Income Development (USD)

Policy Year: 2013 2014 2015 2016

P&I Premium Income 7,250,000 10,000,000 12,300,000 12,100,000


War

100%

80%

60%

40%

20%

0%SOL to Cargo

H&M Other Risks

Ports & Terminals


Eagle Ocean Agencies, Inc. is an affiliated company of The Shipowners Claims Bureau, Inc., who are the managers of the American P&I Club, and Atlantic Marine Associates, Inc., which is a general marine adjusting and claims handling company.

In 2010, the Directors of the American P&I Club formed a separate fixed premium facility, namely Eagle Ocean Marine, offering Protection and Indemnity and Freight, Demurrage and Defence insurance solutions. The facility is primarily focused on operators of smaller ships, below 12,500 gross tons, operating in regional waters, with policy limits being available up to $500 million for P&I and $2 million for FD&D. P&I coverage is available to operators on a worldwide basis; however coverage is not available to operators based in the U.S.A. or trading exclusively in U.S. waters (this is however dealt with by Eagle Ocean Agencies the sister company of SCB). At present the facility is more Far East focused, with 70% of their portfolio emanating from this region.

The agency re-structured its insurance and reinsurance arrangements, with American

Steamship Owners Mutual Protection and Indemnity Association, Inc. providing the primary security. This in turn will allow Eagle Ocean to put up American Club security guarantees up to its primary limits, as well as providing American Club blue cards.

Eagle Ocean Marine says

“The fixed premium P&I market continues to evolve and grow as new entrants re-shape the market environment. This growth comes at the expense of the established market “players” who have seen their income diminish over a five year period. As the fixed premium market continues to expand the ratings environment remains soft. Premium rates are being driven ever lower by shipowners and brokers, with underwriters seeming intent on building their book of business regardless of cost, under-cutting existing insurers irrespective of record. This trend is expected to continue into the foreseeable future. For ship owners, charterers and operators this means increased choice, buying power, certainty of cash flow and the ability to save money by opting to place their P&I cover in the fixed premium market. For insurers this

will mean more pressure being brought to bear on the fine balance between commercial reality and prudent, sustainable underwriting. EOM’s philosophy from the outset has been conservative underwriting combined with the best quality of service. By standing firm in a softening market and focussing on value over price, EOM has been able to enhance the strength and reputation of its product and indeed the American Club. EOM has been able to bring in a book of business that is sensibly priced, well serviced and demonstrably profitable. With the American Club providing support and expertise, EOM is uniquely placed within the fixed premium market. As the sophistication of emerging markets (where many fixed facilities have found success) continues to develop and premium levels begin to stabilise, the spotlight is anticipated to shift away from pricing as owners look for better value and reliability from their P&I product. Responsible and effective service, qualities which EOM has demonstrated through its handling of claims to date, will be the key to survival in the long term”.

Eagle Ocean Marinewww.eagleoceanmarine.com

Reinsurance Carrier: American P&I Club. Standard and Poor’s Rating: BBB-. Maximum Limit Offered: Up to USD 500 MillionVessel Type/ Size Cap: Up to 25,000 GT. Facility Location: New York, United States of America

45% South East Asia

35% Far East Asia

3% Rest of The World

1% Indian Sub Continent

4% Middle East

10% Europe


2016

15% Tankers

53% General Cargo

30% Small Craft

2% Others


2016

Premium Income (USD)2015 PY: 6,747,000 2016 PY: 8,336,000


Average Rate Per GT (PGT)2015 PY: US$ 4.772016 PY: US$ 4.53+30.1%+23.5%


2010 20102011 20112012 20122013 20132014 20152015 2016 2014 2016

10,000,000

8,000,000

6,000,000

4,000,000

2,000,000

0

10.00

8.00

6.00

4.00

2.00

0


2010 2011 2012 2013 2014 2015 2016

2,000,000

1,750,000

1,500,000

1,250,000

1,000,000

750,000

500,000

250,000

0

Tonnage Development

-5%




Policy Year: 2010 2011 2012 2013 2014 2015 2016

P&I Premium Income 605,173 4,932,392 6,014,902 6,089,280 5,747,204 6,538,297 8,336,297

P&I Claims Incurred 1,420 3,562,665 5,332,818 1,267,980 1,709,985 2,551,701 1,922,526

Policy Year: 2010 2011 2012 2013 2014 2015 2016

Gross Tonnage 68,076 631,551 914,533 917,963 1,248,644 1,468,118 1,841,526


War

100%

80%

60%

40%

20%

0%SOL to Cargo

H&M Other Risks

Ports & Terminals

Total claims


Hanseatic P&I celebrate its 10th anniversary this year. The insurance consortium was originally supported by five German insurance companies but has developed substantially in recent years and as of April 2015 the primary USD50m layer became a 100% Lloyd’s placement. The facility writes up to a limit of USD500m with A+ or AA security throughout.

The consortium is managed under the brand name Hanseatic Underwriters by Zeller Associates Management Services GmbH of Hamburg. Hanseatic P&I provide ship owners’ and charterers’ liability as well as inland craft P&I cover. The consortium also provides FD&D legal expenses insurance, either as an additional or a separate cover, under the brand name “Hanseatic Defence”. The core risk appetite of Hanseatic P&I is small and medium size general cargo and container vessels, as well as liquid cargo and dry bulk. Additionally Hanseatic has expertise in traditional, offshore and specialist vessels of any type. The underwriting philosophy at Hanseatic was originally focused on German and Northern European interests and

expanded its operation with regional offices in London and Shanghai. At present, Hanseatic P&I core business emanates from all parts of Europe, Far East, Middle East, Africa, Australia and South America.

Hanseatic says:

“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 of new business in written premium of over 10% in 2016. The underwriting result has also developed quite well under the actual market environment. 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. Consequently we are delighted to announce that with XL Catlin (XLC2003), Sompo Canopius (CNP4444) and Hamilton (HAM3334) three established and well regarded Lloyd’s Syndicates has joined our security consortium of class-leading, 100% Lloyds A+ rated insurance cover with effect of 01st of April 2017.

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”.

Hanseatic Underwriterswww.hanseatic_pandi.com

Reinsurance Carrier: Allianz Global Corporate & Speciality AG and Lloyds of London. Standard and Poor’s Rating: AA or A+. Maximum Limit Offered: Up to USD 500 Million. Vessel Type/ Size Cap: 30,000 GT for Bulk Carriers and 20,000 GT for Tankers. Facility Location: Hamburg, Germany

39% Northern Europe9% South America

2% Africa

14% Far East

7% Middle East

29% Southern Europe


2016

3% Others

3% Offshore

53% General Cargo

9% Bulkers

2% Tankers

10% Tugs & Barges

12% Containers

2% Dredgers

6% Fishing


2016



War

100%

80%

60%

40%

20%

0%


2008 2008

2008

2012 2012

2012

2010 2010

2010

2014 2014

2015

2009 2009

2009

2013 2013

20142013

2011 2011

2011

2015 2016 2015 2016

2016

25,000,000

20,000,000

15,000,000

10,000,000

5,000,000

0

9.00

8.00

7.00

6.00

5.00

0

4,000,000

3,000,000

2,000,000

1,000,000

0


Tonnage Development

SOL to Cargo

H&M

Premium Income (US$)2015 PY: 20,626,0002016 PY: 21,050,000


Average Rate Per GT (PGT)2015 PY: US$ 6.8072016 PY: US$ 6.68+3.9%+2% –1.86%


Charterers Liability Income (USD)

Gross Tonnage (USD)

Policy Year: 2008 2009 2010 2011 2012 2013 2014 2015 2016


P&I Claims Incurred 3,900,000 6,200,000 8,900,000 8,700,000 10,780,000 6,540,000 7,550,000 6,350,000 8,112,450

Surplus/Deficit 2,568,000 3,208,000 3,448,000 4,572,000 5,768,000 8,832,000 8,759,500 11,800,880 10,622,050

Policy Year: 2008 2009 2010 2011 2012 2013 2014 2015 2016

Charterers Premium Income

1,200,000 850,000 1,176,000 1,264,000 1,576,000 1,464,000 1,768,500 1,650,080 1,473,500

Charterers Claims Incurred 1,800,000 550,000 200,000 450,000 370,000 654,000 355,000 312,000 412,000

Surplus/Deficit -600,000 300,000 976,000 814,000 1,206,000 810,000 1,413,500 1,338,080 1,061,500

Policy Year: 2008 2009 2010 2011 2012 2013 2014 2015 2016

Gross Tonnage 1,400,000 1,600,000 1,900,000 2,100,000 2,500,000 2,700,000 2,850,000 3,030,000 3,090,000

Other Risks

Ports & Terminals

Total claims


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

Hydor is licensed and regulated by the Financial Supervisory Authority (FSA) of Norway.

Through Lloyd’s of London the Brit Syndicate 2987 holds security ratings from Standard & Poor’s A+ (Strong). The fixed premium facility looks at vessels up to 25,000 GT, providing limits up to USD 1 billion for P&I and Charterer’s Liabilities. Whilst Hydor is an underwriting agent for the Brit Syndicate, the claims service is provided by C Solutions Limited, which is a legal and claims consultancy staffed by lawyers from the major UK shipping law firms, former P&I Club Senior Managers, Master Mariners and Engineers. C Solutions have been authorised by Hydor to handle all claims exclusively.

Hydor says

“Hydor offers Owners P&I, Charterers P&I, FDD, H&M, War and LOH. Our main security is Markel and AmTrust. Maximum cover limit is USD 1 BN. Our aim is to be complimentary to IG and attract those who wants an alternative with 1st class service and security outside the IG. We have grown our staff from 4 to 8 and are increasing our focus on using cross selling opportunities between H&M and P&I. We are working to strengthen our position as a leading provider of marine insurance in the small to medium size segment.”

Hydor ASwww.hydor.no

Reinsurance Carrier: Brit Syndicate 2987 – Lloyds of London. Standard and Poor’s Rating: A+. Maximum Limit Offered: USD 1 Billion.Vessel Type/ Size Cap: Up to 25,000 GT, Unlimited for Charterers Liability. Facility Location: Oslo, Norway

59% Northern Europe

7% Southern Europe

2% Africa

12% Russia

1% Middle East

15% Far East

4% South America

18% Containers


2016

20% Fishing

27% General Cargo

4% Bulkers

16% Offshore

3% Tankers

7% Others

3% Tugs & Barges

2% Dredgers


2016


2011

2011

2012

2012

2013

2013

2014

2014

2015 2016

2015 2016

10.00

8.00

6.00

4.00

2.00

0

2,500,000

2,000,000

1,500,000

1,000,000

500,000

0


Average Rate Per GT

Tonnage Development



Average Rate Per GT (PGT)2015 PY: US$ 8.4032016 PY: US$ 8.18+9.58%+6.67% –2.66%

2011 2012 2013 2014 2015 2016

18,000,000

15,000,000

12,000,000

9,000,000

6,000,000

3,000,000

0

P&I Premium Income



Policy Year: 2011 2012 2013 2014 2015 2016

P&I Premium Income 2,000,000 5,000,000 9,000,000 14,000,000 15,000,000 16,000,000

P&I Claims Incurred 250,000 750,000 6,000,000 5,000,000 5,000,000 9,000,000

Surplus/Deficit 1,750,000 4,250,000 3,000,000 9,000,000 9,000,000 7,000,000

Policy Year: 2011 2012 2013 2014 2015 2016

Gross Tonnage 1,000,000 1,200,000 1,300,000 1,657,000 1,785,000 1,956,000


War

100%

80%

60%

40%

20%

0%SOL to Cargo

H&M Other Risks

Ports & Terminals

Total claims


Ingosstrakh Insurance Co. is a private federal level Insurance Company, which was founded in 1947, based in Moscow, Russia. The facility offers P&I, FD&D, H&M and other marine related insurance solutions.

The insurer has an international portfolio, however it holds a leading share of the Russian P&I Market giving particular preference to ship owners from Russia, CIS and East European Countries. The facility offers limits up to USD 1 Billion for P&I and US$ 1 Million for FD&D.

Ingosstrakh covers in excess of 1,000 units, handling a large range of vessels from smaller inland and costal craft, to larger ocean going vessels in excess of 20,000 GT. The company is rated BBB- by Standard & Poor’s and a National Scale rating of ruAA++.

Inggosstrakh says

“Ingosstrakh markets itself or through its branches, associated companies and representative offices abroad or through brokers having long-term business relations with Ingosstrakh endeavoring to focus on quality services.

As for underwriting itself, Ingosstrakh writes business through its Moscow headquarters only.

Ingosstrakh is quite cautious with new business. There are no intention to make any serious steps in new markets which Ingosstrakh is not familiar with. The company prefers to take new business from very reliable and trustful sources”.

Ingosstrakh Insurance Companywww.ingos.ru

Reinsurance Carrier: Lloyd’s of London. Standard and Poor’s Rating: BBB-. Maximum Limit Offered: Up to USD 1 BillionVessel Type/ Size Cap: No Limit, but 97% of vessels covered are below 10,001 GT. Facility Location: Moscow, Russia

2% Northern Europe

2% South America

1% Middle East

4% Southern Europe

31% Far East60%

Russia


2016

20% General Cargo

7% Fishing

32% Tugs & Barges

25% Others

10% Tankers

1% Yachts

3% Bulkers

2% Containers


2016



2008

2008

2012

2012

2010

2010

2014

2014

2009

2009

2013

2013

2011

2011

2015 2016

2015 2016

10.00

8.00

6.00

4.00

2.00

0

10,000,000

8,000,000

6,000,000

4,000,000

2,000,000

0

Average Rate Per GT

Tonnage Development



Average Rate Per GT (PGT)2015 PY: US$ 3.4782016 PY: US$ 3.310 +3.9%–0.9% – 4.8%

2008 2009 2011 20122010 2013 2014 2015 2016

30,000,000

27,000,000

24,000,000

21,000,000

18,000,000

15,000,000

12,000,000

0

P&I Premium Income



Policy Year: 2008 2009 2010 2011 2012 2013 2014 2015 2016

P&I Premium Income

25,400,000 27,250,000 23,000,000 19,228,453 23,523,685 21,800,000 16,500,000 16,000,000 15,850,000


Policy Year: 2008 2009 2010 2011 2012 2013 2014 2015 2016

Gross Tonnage 7,895,016 5,879,400 6,024,524 4,730,800 5,001,155 5,001,155 4,200,000 4,600,000 4,783,000


War

100%

80%

60%

40%

20%

0%SOL to Cargo

H&M Other Risks

Ports & Terminals

Total claims


Lodestar Marine Limited (Lodestar) was established in 2012, providing fixed premium P&I insurance solutions. Lodestar is a partnership, backed by Tawa Plc, part of Groupe Artémis, a family owned Investment Company with consolidated assets in excess of Euro 27 Billion.

Lodestar comprises of a team of experienced underwriters and claims executives plus in-house surveyors, supported by further administration staff based in Gloucester, under contract with Pro Insurance Solutions Limited. The facility will write Fixed Premium P&I risks, with limits up to USD 500 Million in co-operation with RSA and other “A” rated insurers who will provide security. Typical vessels insured by Lodestar will not exceed 10,000 gross tons.

A global network of over 250 Correspondents has been established. In the event of a claim, security can be provided by either a letter of undertaking or bank guarantee. Furthermore, Lodestar is in the process of finalising Flag State approval for the issuance of Blue Cards with acceptance already received from a number of Authorities including United Kingdom, Netherlands, Hong Kong and Australia etc. Lodestar is authorised and regulated by the FSA as an appointed representative of Pro Insurance Solutions Limited.

Lodestar says

“Lodestar celebrated its 5th year of operation in September 2017. In collaboration with RSA we have worked hard to maintain our position as a leading fixed premium P&I provider focusing on market share maintenance rather than growth in what remains difficult conditions. Our client retention level of over 85% suggests that we continue to offer good value for money and the level of service we supply is often cited as a reason that owners choose to work with us.

Our diversification program by vessel type is still a work in progress but we have seen increases in number of vessels insured beyond the staple diet of General Cargo. We are fast becoming the “go to” insurer for vessels of a specialist nature given our understanding of contractual requirements and broad ranging ancillary cover packages offering amongst other heads of cover Specialist Operations and Contractual liability.

Attritional claims are modest however we have experienced a couple of incidents of significant nature which really put our claims team to the test. Whilst we’d have preferred to have avoided such incidents they have given us the opportunity to demonstrate our strength in depth, speed of service and cemented

our reputation as a company that deals with claims rather than run away from them!

RSA’s support continues unabated and we hope to offer more Lodestar/RSA products over the course of the next 12 months.”

Lodestar Ltdwww.lodestar-marine.com

Reinsurance Carrier: Royal Sun Alliance Group. Standard and Poor’s Rating: A. Maximum Limit Offered: USD 1 BillionVessel Type/ Size Cap: Up to 40,000 for non-tanker vessels and up to 10,000 GT for tankers. Facility Location: London, United Kingdom

20% Southern Europe

2% Australia2% North America

5% Africa

20% South America

10% Middle East

26% Far East

15% Northern Europe


2016

2% Dredgers

28% Dry Cargo

12% Others

5% Yachts

8% Fishing

29% Tugs & Barges

12% Offshore

4% Tankers


2016


5,000,000

4,000,000

3,000,000

2,000,000

1,000,000

0

P&I Premium Income Average rate per GT

Tonnage DevelopmentBusiness Portfolio Spread

Premium Income (US$)2015 PY: 29,000,000 2016 PY: 29,000,000


Average Rate Per GT (PGT)2015 PY: US$ 7.16 2016 PY: US$ 6.91+3.78%0% -3.64%


War

100%

80%

60%

40%

20%

0%SOL to Cargo

H&M Other Risks

Ports & Terminals

2008 20122010 20142009 20132011 2015 2016



Policy Year: 2008 2009 2010 2011 2012 2013 2014 2015 2016

P&I Premium Income

- - - - 16,500,000 25,000,000 30,000,000 29,000,000 29,000,000

Policy Year: 2008 2009 2010 2011 2012 2013 2014 2015 2016

Gross Tonnage - - - - 1,777,512 2,756,154 3,500,518 4,047,773 4,200,000

2012 2013 2014 2015 2016

10.00

9.00

8.00

7.00

6.00

5.00

0

35,000,000

30,000,000

25,000,000

20,000,000

15,000,000

10,000,000

5,000,000

02012 2013 2014 2015 2016


18% Central & South America

6% Middle East

13% North America

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

Today Navigators P&I, based in London, offers fixed-cost Protection & Indemnity cover to vessels in coastal, short-sea and limited Ocean trades. The facility offers limits up to USD 1 billion and looks to insure vessels up to 10,000 gross tons. Navigators underwriting profile looks at all types of vessels, excluding passenger vessels and those with U.S. Flag, cover is also available on a worldwide trading basis, excluding U.S. waters. In addition to Owner’s P&I, Navigators can also offer contractual liabilities as an extension of the main P&I coverage. Charterer’s Liability is also available to vessels below 10,000 GT. Furthermore, in addition also offers coverage for bunker convention and MLC 2006 risks. Navigators have office locations in US, London, Antwerp, Stockholm, Copenhagen and Lloyds representative offices in Shanghai and Rio. More recently Navigators have opened office locations in Rotterdam and Milan and also looking to shortly expand in

Paris and Dubai. Furthermore, as part of the company’s expansion strategy Navigators is in the process of establishing a separate European Insurance Company in London enabling the acceptance of business from any EU country.

Navigators says

“It has been a significant year for Navigators as we continue to develop the P&I division. We now have the 3 new Underwriters embedded into the team, and they have opened up new contacts, clients and regions for us. Our existing book has undergone a transformation and it is a significant fact that our new business is now overtaking our renewing business which is in line with our strategic growth strategy. We have made positive inroads into regions where we had not previously been a key player, and our GWP is steadily growing, which is impressive in such a competitive market place, but not to the detriment of quality with profitable business remaining our key focus. We continue to review our current portfolio to ensure it meets our quality criteria. During the year we have rewritten our Policy Terms to not only

update them, but bring them in line with the Insurance Act, and this has been well received by the market. In May 2016 we launched our new European company Navigators International Insurance Company (NIIC), providing us with the platform to expand our portfolio in more European countries. We have also added to our product range a Legal Services and Defence cover, a charterers facility, Demolition Voyage cover, Specialist operations/ Contractual covers all of which enhance the existing product offerings, and we constantly look for more opportunities to serve brokers and their clients. It has been a busy year, and Navigators is very much ‘on the up’ which is demonstrated by the significant rise in enquiries as our reputation grows and more and more compliments are received by clients in relation to our claims handling and underwriting capabilities. It is definitely an exciting time to be a part of Navigators”.

Navigators P&I www.navpandi.com

Reinsurance Carrier: Navigators Insurance Company. Standard and Poor’s Rating: A. Maximum Limit Offered: Up to US$ 1 BillionVessel Type/ Size Cap: Up to 10,000 GT. Facility Location: London, United Kingdom

11% Indian sub

2% Greece

5% Africa

8% Turkey

28% Asia Pacific

3% China 9%

Other 7% Europe


2016

24% Barge & Supply

5% Tanker

26% General Cargo

15% Fishing

5% Bulk carrier

16% Tug


2016


P&I

100%

80%

60%

40%

20%

0%

Business Portfolio Spread

11.50

11.00

10.50

10.00

9.50

0

3,000,000

2,500,000

2,000,000

1,500,000

1,000,000

0


Tonnage Development



Average Rate Per GT (PGT)2015 PY: US$ 9.25 2016 PY: US$ 8.40+23.4%+12% -9.18%

2008 2009 2011 20122010 2013 2014 2015 2016

30,000,000

25,000,000

20,000,000

15,000,000

10,000,000

0

2008 20122010 20142009 20132011 2015 2016

2008 20122010 20142009 20132011 2015 2016



Policy Year: 2008 2009 2010 2011 2012 2013 2014 2015 2016

P&I Premium Income

28,200,000 25,000,000 24,000,000 22,500,000 22,000,000 21,430,000 20,000,000 18,750,000 21,000,000

Policy Year: 2008 2009 2010 2011 2012 2013 2014 2015 2016

Gross Tonnage 2,450,000 2,300,000 2,100,000 2,200,000 2,100,000 2,000,000 1,900,000 2,025,000 2,500,000


Established in 1991, Osprey Underwriting Agency is a specialist P&I fixed premium insurance provider and is the oldest P&I fixed premium insurer in London.

The Agency was purchased by Thomas Miller Group in December 2015 and now forms the commercial insurance platform of Thomas Miller Group, trading as Thomas Miller Specialty. The Agency provides insurance services to small to medium sized marine businesses. For ship owners this includes a variety of vessel types and operations, with a portfolio of tugs, barges, harbour craft, passenger vessels, fishing vessels, offshore support and all other types of cabotage and small vessels. The Agency can cater for vessels of up to 25,000 GT, engaged in the carriage of dry cargoes, as a part of a fleet, and up to 10,000 GT for all other vessel types. Osprey is actively looking to expand its non-US book of business with a focus on Asia and South America, whilst maintaining its leading position as providers of U.S. Primary P&I Insurance.

Osprey says

“Over the last twelve months we have continued our diversification and development of non US business, successfully growing this part of our portfolio in accordance with the Thomas Miller business plan. At the same time we have concentrated on ensuring that the US business is being carefully reviewed, noting an ongoing downturn in the number of operational vessels owing to the depressed oil and gas sector.

The market remains challenging with no reduction in capacity offering cover and resulting in fierce competition for business. Our focus is on continuing to develop a positive portfolio of clients who will benefit from the exemplary claims service we are able to provide, upholding the philosophy and ethos of the Thomas Miller Group.

The company is continuing to evolve and will seek to develop a further range of products to complement the existing business. At the same time many internal changes such as a modernised computer system will ensure the highest standards of client service are maintained.

Osprey Underwriting Agency Ltd www.special-risks.co.uk

Reinsurance Carrier: Lloyds of London (various syndicates). Standard and Poor’s Rating: A+. Maximum Limit Offered: Up to US$ 500 Million (U.S. Business US$ 1 Million). Vessel Type/ Size Cap: Up to 25,000 GT (dry bulk) and 10,000 GT all other vessel types. Facility Location: London, United Kingdom

16% Asia/

Middle East

15% South America

2% Other32% North America


2016

20% Tugs & Barges

29% Others

18% Passenger/ Pleasure

2% General Cargo

18% Fishing

13% Offshore


2016


45,000,000

40,000,000

35,000,000

30,000,000

25,000,000

0

20,000

18,000

16,000

14,000

12,000

0

3,500

3,000

2,500

2,000

1,500

1,000

0

P&I Premium Income Average Premium Per Vessel

Volume Of Business Underwritten (Vessels On Risk)

P&I H&MOther Risks

100%

80%

60%

40%

20%

0%


35% Europe


No. Vessels Insured2015 PY: 1,425 2016 PY: 2,900

Average Premium Per VSL (PV)2015 PY: US$ 13.095 2016 PY: US$ 6.869+103%-20% -47.5%

2008 2009 2011 20122010 2013 2014 2015 2016

2008 20122010 20142009 20132011 2015 2016

2008 20122010 20142009 20132011 2015 2016


Volume of Business Underwritten (USD)

Policy Year: 2008 2009 2010 2011 2012 2013 2014 2015 2016

P&I Premium Income

31,000,000 36,000,000 40,500,000 41,100,000 38,400,000 30,000,000 27,500,000 25,000,000 20,000,000

Policy Year: 2008 2009 2010 2011 2012 2013 2014 2015 2016

No.Vessels 2,350 2,660 2,849 3,095 2,450 1,800 2,100 1,425 2,900


RaetsMarine BV was founded in 1993, initially writing charterers liability insurance.

RaetsMarine BV were independent underwriting agents of Amlin Corporate Insurance BV before they were absorbed by Amlin Europe N.V. in 2013. In 2016, Amlin was acquired by Mitsui Sumitomo Insurance Company, as a wholly owned subsidiary of MS&AD Insurance Group Holdings. RaetsMarine continue to operate as specialist fixed premium insurer. In this new capacity, RaetsMarine continues to be responsible for P&I, FD&D, Charterers Liability insurances. The “Owners P&I” facility targets small to medium sized vessels, up to 40,000 GT, as well as supply vessels, fishing boats, tugs and barges and other specialist units. For Charterers Liability, RaetsMarine has no restrictions on vessel type, size, age or territory.

The facility currently serves over 1,000 charterers, including traders, operators, NVOCC’s and others chartering vessels, offering limits up to US$ 500 Million (for both owned and chartered business).

RaetsMarine says

“RaetsMarine will be MS Amlin P&I as from 1st January 2018. MS Amlin is a division of MS&AD Insurance Group, one of the world’s top 10 leading specialist insurers. We are now rebranding to MS Amlin P&I. It is a smooth transition in which the same people continue to deliver the same great service throughout the life cycle of a policy. Knowing our Clients, knowing their business, the speed of handling matters and service, providing innovative solutions to complex situations and a hands on approach in our claims handling remain core values. This enables us to offer our

Clients with a seamless cover for their marine adventure and will keep the insurance cost of our Clients low. A continuous downward pressure on premium levels persists due to surplus of available insurance capacity and difficult market circumstances for our Clients. Also the regulatory environment continuous to be increasingly more complex. We however remain to have a positive outlook on the market. Our Shipowners’ P&I portfolio is more and more moving into non cargo carrying vessels. With our experience and strong expertise in this field we feel that in this market we can better differentiate ourselves from our competitors. Providing our Clients with the best experience remains our main priority. We are proud to be part of MS Amlin and with our global network and global licenses framework we are a solid and sustainable partner for our Clients.”

RaetsMarine www.raetsmarine.com

Reinsurance Carrier: Mitsui Sumitomo Insurance Company. Standard and Poor’s Rating: A+. Maximum Limit Offered: Up to USD 1 Billion. Vessel Type/ Size Cap: Up to 40,000 GT. Unlimited for Charterers Liability. Facility Location: Rotterdam, Netherlands.

2008 20122010 20142009 20132011 2016

6.00

5.00

4.00

3.00

2.00

0

Average Rate Per GT (USD PGT)




Average Rate Per GT (PGT)2015 PY: US$ 3.3492016 PY: US$ 3.333– 18.27%– 18.6% – 0.49%

20122010 20142009 20132011 20162015

25,000

20,000

15,000

10,000

5,000

0

Vessels On Risk (CL only, No. of Vessels)

1,400.00

1,300.00

1,200.00

1,100.00

1,000.00

0

Average Premium Per VsL (USD)

20122010 20142009 20132011 201620122010 20142008 2009 20132011 20162015

30,000,000

25,000,000

20,000,000

15,000,000

10,000,000

5,000,000

0

CL Premium Income (USD)

10% Middle East

29% Asia Pacific

3% Africa

2% Russia & CIS

8% South America

45% Europe

3% North America


2016

8% Others

21%

General Cargo

2% Yachts

3.5% Tankers0.5% Containers

31% Tugs & Barges

3% Offshore

1% Dredgers

3% Fishing

8% Passenger Ship

19% Bulkers


2016

Tonnage Development (SO only)Business Portfolio Spread (2016)

P&

I

FD&

D

Cha

rter

ers

/DTH

Oth

er

Ris

ks

Port

&

Term

inal

s

SOL

to

Car

go

War

H&

M

100%

80%

60%

40%

20%

0%

P&I Premium Income (SO only)

20

08

20

08

20

12

20

12

20

10

20

10

20

14

20

14

20

09

20

09

20

13

20

13

20

11

20

11

20

16

20

16

20

15

20

15

60,000,000

50,000,000

40,000,000

30,000,000

20,000,000

10,000,000

0

18,000,000

15,000,000

12,000,000

9,000,000

6,000,000

3,000,000

0

2015

2015


Charterers Premium Income (USD)

Entered Gross Tonnage (SO only)

No. Charterer Vessels Insured (USD)

Policy Year: 2008 2009 2010 2011 2012 2013 2014 2015 2016



Surplus/Deficit 17,046,477 24,425,427 24,109,163 25,933,225 31,107,383 33,785,677 30,861,810 36,164,432 25,273,502

Policy Year: 2008 2009 2010 2011 2012 2013 2014 2015 2016



Surplus/Deficit 13,201,992 15,821,383 13,338,378 15,671,817 15,855,029 17,142,068 18,773,270 14,004,265 18,733,547

Policy Year: 2008 2009 2010 2011 2012 2013 2014 2015 2016

Gross Tonnage 5,298,502 12,178,942 11,390,104 16,262,048 15,806,600 15,366,000 15,500,000 15,600,000 12,750,000

Policy Year: 2009 2010 2011 2012 2013 2014 2015 2016

No. vessels 18,061 22,371 23,783 23,000 21,000 21,500 21,000 20,000

Total claims


Successor of Soviet State Insurance Company Gosstrakh established in 1921. Rosgosstrakh today is a private company and a major insurance provider in the Russian market.

43 million individual and 240 000 corporate clients are served by RGS with 4 000 offices and 100 000 personnel. RGS has exceptionally strong assets in the region of US$ 2.8 billion with charter capital of US$ 160 million. RGS P&I represents fixed premium facility targeting small to medium sized vessels, up to 25 000 GT with worldwide trading. The US$ 500 million capacity is placed with reinsurers at Lloyds. RGS has a growing P&I portfolio of predominantly Russian and FSU Clients. The current P&I book of RGS represents over 1,800 units generating US$ 6.2 million P&I premium. RGS also provides cover for Charterer`s Liability, FD&D, marine hull, cargo and other marine related insurance solutions.

Rosgosstrakh says

“Being the largest insurance company in Russia with the network of more than 80 branches and 3 000 representative offices all over the country, Rosgosstrakh works in close cooperation with shipping companies of Russian and CIS origin.

During 2016 the Company’s legal form was changed from LLC to PJSC, however the “marine” strategy and the underwriting approach remain the same.

We target mostly small-tonnage coastal, river-sea and inland trading vessels aiming to build long-lasting relationship with our clients.

Rosgosstrakh is an active member of the Russian Chamber of Shipping and the Russian Union of Marine Insurers which helps us to keep abreast of the industry needs and trends”.

Rosgosstrakh Ltd www.rgs.ru

Reinsurance Carrier: Reinsurance Treaty. Standard and Poor’s Rating: BB-/RuAA (P&I Reinsurance Treaty A+). Maximum Limit Offered: Up to USD 500 Million. Vessel Type/ Size Cap: Tankers up to 8,500 GT and All other vessels up to 25,000 GT. Facility Location: Moscow, Russia.

1% Northern Europe

1% Far East

3% Middle East

4% Southern Europe

89% Russia

2% North & South America


2016

20% Tankers

1% Yachts

12% Fishing

21% Others

1% Bulkers

2% Dredgers

14% Tugs & Barges

29% General Cargo


2016

– 28.2% +15.3% – 7.6%


2008

2008

2012

2012

2010

2010

2014

2014

2009

2009

2013

2013

2011

2011

20162015

20162015

4.50

4.00

3.50

3.00

2.50

0

2,500,000

2,000,000

1,500,000

1,000,000

500,000

0

Average Rate Per GT

Tonnage Development


Entered Gross Tonnage



Average Rate Per GT (PGT)2015 PY: US$ 3.0022016 PY: US$ 3.462


2008 2009 2011 20122010 2013 2014 2015 2016

7,000,000

6,000,000

5,000,000

4,000,000

3,000,000

2,000,000

1,000,000

0

P&I Premium Income

Policy Year: 2008 2009 2010 2011 2012 2013 2014 2015 2016

P&I Premium Income

744,480 1,943,532 3,286,643 3,885,055 4,008,499 4,800,000 6,200,000 5,200,000 4,800,000

P&I Claims Incurred 101,532 274,745 195,519 2,090,796 975,731 1,366,700 1,207,000 420,175 499,600

Surplus/Deficit 642,948 1,668,787 3,091,124 1,794,259 3,032,768 3,433,300 4,993,000 4,779,825 4,300,400

Policy Year: 2008 2009 2010 2011 2012 2013 2014 2015 2016

Gross Tonnage 235,258 562,170 1,038,500 1,055,019 1,002,000 1,424,486 2,044,800 1,732,000 1,242,300


War

100%

80%

60%

40%

20%

0%SOL to Cargo

H&M Other Risks

Ports & Terminals

Total claims


The Korea Shipowners Mutual P&I Association was established in 2000, offeringfixed premium P&I solutions, as well as other marine related insurances.

KPI operates as a mutual organisation (not for profit), covering in excess of 996 vessels, commanding a collective market share of 22.7 Million GT, with a premium income of approximately US$ 31.5 million (based on 2015 results). The facility offers P&I limits of liability up to US$ 1 Billion, backed by reinsurers from Lloyd’s of London, Korean Re and Kuwait Re.

KPI targets a large tonnage range of merchant vessels ranging up to 100,000 GT for dry cargo vessels and up to 10,000 GT for tanker tonnages. The majority of their portfolio consists of Korean Members, which makes up 93% of the Club.

Korean P&I club says

“We target a broad tonnage range of merchant vessels ranging up to 100,000GT for dry cargo vessels and up to 10,000GT for tankers. Capebulkers are acceptable, whilst big tankers and Cruise vessels are not.

Most of entered vessels are operated by shipping companies based in Korea, however we are gradually expanding our business area to UAE, Vietnam, Indonesia, Singapore, Brunei, China, etc.

We have very strong claim team of 14 claims handlers. The Club enjoys reputation of its professionalism and efficiency of handling claims.

Letter of Undertaking, Convention blue cards and MLC certificate issued by Korea P&I Club is widely acceptable over the world.”

Korean P&I Clubwww.kpiclub.or.kr

Reinsurance Carrier: Lloyds of London, Korean Re and Kuwait Re. Standard and Poor’s Rating: A- (excellent). Maximum Limit Offered: USD 1 Billion. Vessel Type/ Size Cap: No Limit. Facility Location: Seoul, Korea

10% Middle East 90% Far East


2016

24% Bulkers

30% General Cargo

4% Fishing

9% Others

12% Containers

6% Passengers

15% Tankers


2016


Business Portfolio Spread*

2008

2008

2008 2012

2012

2012 2010

2010

2010 2014

2014

2014 2009

2009

2009 2013

2013

2013 2011

2011

2011 20162015

2016

2016

2015

2015

3.5

3.00

2.50

2.00

1.50

1.00

0

25,000,000

20,000,000

15,000,000

10,000,000

5,000,000

0

35,000,000

30,000,000

25,000,000

20,000,000

15,000,000

10,000,000

5,000,000

0

P&I Premium Income* Average Rate Per GT*

Tonnage Development*

*As of 20th Feb of each year



Average Rate Per GT (PGT)2015 PY: US$ 1.392016 PY: US$ 1.26+ 7.27%– 2.3% – 8.92%

Owned P&I Premium Income* (USD)

Entered Gross Tonnage*

Policy Year: 2008 2009 2010 2011 2012 2013 2014 2015 2016

P&I Premium Income

11,808,000 19,066,000 25,055,000 30,184,000 30,205,000 31,127,000 31,812,000 31,582,000 30,857,000


Surplus/Deficit 5,522,000 8,894,000 15,571,000 8,738,896 14,025,000 13,455,000 7,983,000 17,371,000 11,065,484

Policy Year: 2008 2009 2010 2011 2012 2013 2014 2015 2016

Gross Tonnage 4,996,000 7,338,000 8,685,000 10,007,000 11,043,000 18,192,000 21,090,000 22,770,000 24,425,000


War

100%

80%

60%

40%

20%

0%SOL to Cargo

H&M Other Risks

Ports & Terminals

Total claims


+10 +101%

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

Charterama BV is backed by its primary carrier Royal Sun Alliance, who holds an A Standard and Poor’s rating. The facility specialises in Charterers’ Liability, Damage to Hull and FD&D coverage, offering limits up to US$ 350 Million and US$ 2 Million for FD&D, additional covers, such as War and Bunkers insurance are also available. The facility has grown tremendously from a premium income of US$ 3 Million in 2009, to US$ 10 Million in 2016. More recently in April 2014, Charterama BV opened a new office in Hong Kong, to expand their network and support services in Asia where 12% of the agencies portfolio current emanates from.

Charterama says

“The market seems to remain soft and very competitive. We pride ourselves of being recognized by quality clients and because we are not a large corporate or P&I Club, our clients are actually treated as clients. In view of maintaining our high service standards we have hired a senior claims director in our Hong Kong office and we expanded our underwriting team”.

Charterama BVwww.charterama.com

Reinsurance Carrier: Royal Sun Alliance. Standard and Poor’s Rating: A. Maximum Limit Offered: Up to USD 350 Million.Vessel Type/ Size Cap: No restrictions. Facility Location: Rotterdam, Netherlands

79% Europe

1% Others1% Middle East

5% North America

14% Far East


2016

-9.09%

1% Others

45% Bulkers

28% General Cargo

21% Tankers

3% Tugs & Barges

2% Containers


2016

+/-0%


2012 2012

2012

2010 2010

2010

2014 2014

2014

2009 2009

2009

2013 2013

2013

2011 2011

2011

2015 2016 2015 2016

2015 2016

15,000,000

12,000,000

9,000,000

6,000,000

3,000,000

0

1,400

1,200

1,000

800

400

200

0

12,000

10,000

8,000

6,000

4,000

2,000

0


P&I Premium Income Average Premium Per Vessel VSL

Vessels On Risk


Number of Vessels Insured2015 PY: 11,000 2016 PY: 10,000

Average Premium Per VSL2015 PY: US$ 886 2016 PY: US$ 975


No. Vessels Insured (USD)

Policy Year: 2009 2010 2011 2012 2013 2014 2015 2016


3,000,000 5,000,000 6,000,000 8,000,000 9,000,000 9,500,000 9,750,000 9,750,000

Policy Year: 2009 2010 2011 2012 2013 2014 2015 2016

No. Vessels 2,500 4,000 5,800 8,300 9,000 9,500 10,000 10,000


War

100%

80%

60%

40%

20%

0%SOL to Cargo

H&M Other Risks

Ports & Terminals


The Charterers P&I club was founded in 1986, as a mutual insurance company, specialising in charterers liability insurance and defence coverage.

In 1999 the Club was demutualised and an underwriting agency was formed, backed by Lloyds of London security, offering fixed premium charterers liability and other marine related products. In 2009 the agency switched its security to Great Lakes Munich Re Group, which holds an S&P AA- rating. Michael Else & Co., are the managers of the Club and provide all underwriting and claims support, though its global correspondent network. The facility provides limits of liability up to USD 500 million for charterer’s liability and up to USD 2 million for FD&D. The agency employs experience maritime lawyers and commercial claims handlers, with offices in London, Shanghai and a claims handling office in Dubai. In the late part of 2013, the managers of the Charterers P&I Club set up a strategic hub in Dubai as Sextant Marine to service the overseas markets more efficiently.

Character P&I club says

“The underlying freight, commodity and insurance markets remain challenging for clients. We have been investing in our claims team over the last few years to ensure that when required our clients have access to outstanding internal resource for their claims and disputes.”

Charterers P&I Clubwww.exclusivelyforcharterers.com

Reinsurance Carrier: Munich Re. Standard and Poor’s Rating: AA-. Maximum Limit Offered: Up to USD 500 MillionVessel Type/ Size Cap: No restrictions. Facility Location: London, United Kingdom

30% Northern Europe

45% India/Asia

4% North America

3% Africa

12% Australia/New Zealand

6% Middle East


2016

75% Bulkers

16% Liner

3% Others

6% Tankers


2016

+15.3% -14.5%-1.7%


Charterers/DTH FD&D

100%

80%

60%

40%

20%

0%

30,000,000

29,000,000

28,000,000

27,000,000

26,000,000

25,000,000

0

2,600

2,500

2,400

2,300

2,200

2,100

0

16,000

15,000

14,000

13,000

12,000

11,000

0



Vessels On Risk



Average Premium Per VSL2015 PY: US$ 2,262 2016 PY: US$ 1,933

2008 20122010 20142009 20132011 20162015


Number of Vessels Insured (USD)

Policy Year: 2008 2009 2010 2011 2012 2013 2014 2015 2016


25,500,000 28,000,000 27,000,000 25,500,000 27,200,000 28,200,000 28,500,000 29,500,000 29,000,000

Policy Year: 2008 2009 2010 2011 2012 2013 2014 2015 2016

No. Vessels - 11,000 11,500 11,000 12,000 12,500 12,200 13,000 15,000

20122010 20142009 20132011 2015 2016

20122010 20142009 20132011 2015 2016


In 2008 the Club commenced underwriting Charterer’s Liability risks, today their portfolio commands a premium income of around US$ 8.5 Million, with approximately 150 charterers & traders clients.

The Clubs’ charterer’s facility offers limits up to US$ 1 Billion for traditional Charterer’s P&I and Damage to Hull.

FD&D for charterers is also available in addition to the Clubs extensive marine insurance product range. The Norwegian Hull Club has a large share of the Norwegian ocean hull market and ranks amongst the largest pure marine underwriters in the world.

NORWEGIAN HULL CLUB SAYS

“We focus on quality clients with same philosophy as Norwegian Hull Club’s all product lines. Our Charterers Liability portfolio has developed very positive during the last 2 years and now consist predominantly of Commodity Traders, Operators, Producers and Industrial companies and traditional Charterers.

NHC does not have volume focus. Sustainable and disciplined underwriting is imperative. Our Club is a mutual and a pure risk carrier – not an agency. We are here to serve our clients both in a good market and in a challenging shipping market and is a long-term strategic partner to our chartering clients.

The Charterers liability team is very experienced and has extensive Claims, legal and loss prevention expertise. We understand our client’s needs.

NHC has a very strong financially solidity which is to the benefit of our clients. The club insures more than 10,500 vessels which gives synergies, experience and benefits to all our clients”.

Norwegian Hull Clubwww.norclub-no

Reinsurance Carrier: Lloyd’s of London. Standard and Poor’s Rating: A. Maximum Limit Offered: Up to USD 1 BillionVessel Type/ Size Cap: No restrictions. Facility Location: Oslo, Norway.

46% Asia-Pacific

1% Middle East

3% North America

37% Europe

13% South America


2016

72% Bulkers

17% General Cargo

11% Others


2016


15,000,000

12,000,000

9,000,000

6,000,000

3,000,000

0

9,000

8,000

6,000

4,000

2,000

0

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0


Vessels On Risk

H&M WarOther Risks Charterers/DTH

100%

80%

60%

40%

20%

0%


+473% -79.9%-5.8%



Average Premium Per VSL2015 PY: US$ 5,780 2016 PY: US$ 1,159

2008 20122010 20142009 20132011 20162015 2008 20122010 20142009 20132011 20162015

2008 20122010 20142009 20132011 20162015


Number of Vessels Insured (USD)

Policy Year: 2008 2009 2010 2011 2012 2013 2014 2015 2016


4,800,000 8,700,000 9,500,000 11,000,000 11,500,000 10,000,000 9,000,000 8,500,000 8,000,000

Policy Year: 2008 2009 2010 2011 2012 2013 2014 2015 2016

No. Vessels 890 1,340 1,630 1,880 1,960 1,496 1,557 1,204 6,900


By contrast, analysing the various commercial markets is a more difficult task due to individual markets willingness to release accurate premium, GT and claims figures. Furthermore, markets may also supply information with inconsistent data, as any declared information may also include other marine lines, such as H&M, war and charterers liability etc.

Examining and comparing industry statistics on the various International Group Club’s is relatively easy due to the transparent and consistent nature in which the Clubs report on account.

IntroductionIndustry Statistics


P&I Owned

Premium Income Development (USD ‘000)

Market Variance On 2015 Policy Year By Premium Income (USD)

Market Share by Premium Income (2016)

2015 2016

120,000

100,000

80,000

60,000

40,000

20,000

0British Marine Hanseatic

UnderwritersLodestar Ingosstrakh

Insurance CoEagle Ocean

MarineRaetsMarine Navigators CarinaOsprey Hydor AS Rosgosstrakh

Ltd

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0

Owned Market Development Timeline 2008 –2016

British Marine

2008 20122010 20142009 20132011 2015 2016

Hanseatic Underwriters

Lodestar Ingosstrakh Insurance Co

Eagle Ocean Marine

RaetsMarine Navigators CarinaOsprey Hydor AS Rosgosstrakh Ltd

Insurer 2008 2009 2010 2011 2012 2013 2014 2015 2016 Variance on 2015

PY

5 Year Cumulative

Result

British Marine $93,000 $125,000 $133,500 $125,000 $106,000 $100,000 $97,500 $105,000 $105,000 0.00% -0.95%

RaetsMarine $28,600 $35,500 $36,400 $51,700 $50,000 $52,000 $52,500 $52,250 $42,500 -18.66% -17.65%

Lodestar – – – – $16,500 $25,000 $30,000 $29,000 $29,000 0.00% 43.10%

Osprey $31,000 $36,000 $40,500 $41,100 $38,400 $30,000 $27,500 $25,000 $20,000 -20.00% -92.00%

Hanseatic Underwriters $7,700 $11,200 $14,700 $15,800 $19,700 $18,300 $19,500 $20,626 $21,050 2.06% 6.41%

Navigators $28,200 $25,000 $24,000 $22,500 $22,000 $21,430 $20,000 $18,750 $21,000 12.00% -4.76%

Ingosstrakh Insurance Co $25,400 $27,250 $23,000 $19,228 $23,523 $21,800 $16,500 $16,000 $15,850 -0.94% -48.41%

Hydor AS – – – $2,000 $5,000 $9,000 $14,000 $15,000 $16,000 6.67% 68.75%

Carina – – – – – $7,250 $10,000 $12,300 $12,100 -1.63% –

Eagle Ocean Marine – – $605 $4,932 $6,014 $6,089 $5,747 $6,747 $8,336 23.55% 27.86%

Rosgosstrakh Ltd $744 $1,943 $3,286 $3,885 $4,008 $4,800 $6,200 $5,200 $4,800 -7.69% 16.50%

Total $214,644 $261,893 $275,991 $286,145 $291,145 $295,669 $299,447 $305,873 $295,636 -3.35% 1.52%

Average $30,663 $37,413 $34,499 $31,794 $29,115 $26,879 $27,222 $27,807 $26,876 – -8.33%

330,000

310,000

290,000

270,000

250,000

230,000

210,000

0


2008 20122010 20142009 20132011 2015 2016

British Marine

Rosgosstrakh Ltd

Eagle Ocean Marine

RaetsMarine

Osprey


Navigators

Ingosstrakh Insurance Co

Hydor AS

Carina

Lodestar


Market Variance on 2015 Policy Year by Gross Tonnage

Market Share by Gross Tonnage (2016)

RaetsMarine CarinaIngosstrakh Insurance Co

Navigators Eagle Ocean Marine

British Marine Hanseatic Underwriters

Hydor ASLodestar

2015 2016

Rosgosstrakh Ltd

RaetsMarine

Eagle Ocean Marine

British Marine

Lodestar

Carina


Rosgosstrakh Ltd

Hydor AS

Navigators

Ingosstrakh Insurance Co

Gt Development (GT ‘000)


PY

5 Year Cumulative

Result

RaetsMarine 5,298 12,178 11,390 16,262 15,806 15,366 15,500 15,600 12,750 -18.27% -23.97%

British Marine 11,000 13,500 13,520 12,600 12,000 11,000 10,600 12,500 13,000 4.00% 7.69%

Ingosstrakh Insurance Co 7,895 5,879 6,024 4,730 5,001 5,001 4,200 4,600 4,783 3.98% -4.56%

Lodestar - - - - 1,777 2,756 3,500 4,047 4,200 3.78% -

Carina - - - - - 2,000 3,000 3,950 3,080 -22.03% -

Hanseatic Underwriters 1,400 1,600 1,900 2,100 2,400 2,700 2,850 3,030 3,150 3.96% 23.81%

Navigators 2,450 2,300 2,100 2,200 2,100 2,000 1,900 2,025 2,500 23.46% 16.00%

Rosgosstrakh Ltd 235 562 1,038 1,055 1,118 1,424 2,044 1,732 1,242 -28.29% 9.98%

Hydor AS - - - 1,000 1,200 1,300 1,657 1,785 1,956 9.58% 38.65%

Eagle Ocean Marine - - 68 618 888 907 1,225 1,414 1,841 30.20% 51.77%

Total 28,278 36,019 36,040 40,565 42,290 44,454 46,476 50,683 48,502 -4.30% 16.56%

Average 4,713 6,003 5,149 5,071 4,699 4,445 4,648 5,068 4,850 -0.05%

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

55,000

50,000

45,000

40,000

35,000

30,000

25,000

20,000

0

Gross Tonnage Development Average Rate Per GT Vs Owned GT

2008 20122010 20142009 20132011 2015 2016

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

55,000

50,000

45,000

40,000

35,000

30,000

25,000

20,000

0

(Average Rate Per GT) (Gross Tonnage Development)

2008 2009 2011 20132010 2012 2014 2015 2016

Rate Per GT Development GT Development


Average P&I Rate Per GT Development (USD Per GT)


PY

5 Year Cumulative

Result

Navigators $11,510 $10,870 $11,429 $10,227 $10,476 $10,715 $10,526 $9,259 $8,400 -9.28% -24.72%

Hydor AS – – – $2,000 $4,167 $6,923 $8,449 $8,403 $8,180 -2.66% 49.06%

British Marine $8,455 $9,259 $9,874 $9,921 $8,833 $9,091 $9,198 $8,400 $8,077 -3.85% -9.37%

Lodestar – – – – $9,285 $9,071 $8,571 $7,166 $6,905 -3.64% -34.48%

Hanseatic $5,500 $7,000 $7,737 $7,524 $8,208 $6,778 $6,842 $6,807 $6,680 -1.87% -22.88%

Eagle Ocean Marine – – $8,897 $7,981 $6,773 $6,713 $4,691 $4,772 $4,530 -5.06% -49.50%

Ingosstrakh $3,217 $4,635 $3,818 $4,065 $4,704 $4,359 $3,929 $3,478 $3,310 -4.84% -42.10%

RaetsMarine $5,398 $2,915 $3,196 $3,179 $3,163 $3,384 $3,387 $3,349 $3,333 -0.49% 5.09%

Carina – – – – – $3,625 $3,333 $3,114 $3,930 26.21% –

Rosgosstrakh Ltd $3,166 $3,457 $3,166 $3,682 $3,585 $3,371 $3,033 $3,002 $3,462 15.31% -3.55%

Total $7,590 $7,271 $7,658 $7,054 $6,884 $6,651 $6,443 $6,035 $6,095 1.00% -12.95%

Variance -4.21% 5.32% -7.89% -2.40% -3.39% -3.13% -6.33% 1.00% 340.43%

Average Rate Per GT Development (Last 12 Months)

RaetsMarine CarinaIngosstrakh Insurance Co

Rosgosstrakh Ltd

Eagle Ocean Marine

British Marine Hanseatic Underwriters

Hydor AS Lodestar

2015 2016

Navigators

10,000

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

2016 Average

8,000

7,500

7,000

6,500

6,000

5,500

0

Average Rate Per GT Development (USD)

2008 20122009 20132010 20142011 20162015

6%

4%

2%

0

-2%

-4%

-6%

-8%

-10%

Owners P&I Market Cycle

20122009 20132010 20142011 20162015

The red line demonstrates that average rate per GT, taking the “artificial spike” out of the equation.


35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

Charterers Market Development Timeline 2008 –2015

Market Share By Premium Income (USD) Market Share By Number Of Vessels Insured

20122010 20142009 20132011 2015

Charterama BV


RaetsMarine BV

Charterers P&I Club

Norwegian Hull Club

Charterama BV Charterama BVHanseatic Underwriters

Norwegian Hull Club

Norwegian Hull Club

RaetsMarine BV

RaetsMarine BV

Charterers P&I Club

Charterers P&I Club

P&I Charterers & TradersPremium Income Development (USD ‘000)

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

Market Variance on 2015 Policy Year by Premium Income (USD)

Charterama BV RaetsMarine BVCharterers P&I Club Norwegian Hull Club Hanseatic Underwriters

2015 2016


PY

5 Year Cumulative

Result

Charterama BV $0 $3,000 $5,000 $6,000 $8,000 $9,000 $9,750 $9,750 $9,750 0.00% 38.46%

Charterers P&I Club $25,000 $28,000 $27,000 $25,500 $27,200 $28,200 $28,300 $29,400 $29,000 -1.36% 13.27%

RaetsMarine BV $0 $24,500 $26,000 $25,700 $27,000 $25,500 $26,000 $25,850 $23,200 -10.25% 0.58%

Norwegian Hull Club $4,800 $8,700 $9,500 $11,000 $11,500 $11,000 $9,000 $8,500 $8,000 -5.88% -29.41%

Hanseatic Underwriters $1,200 $850 $900 $950 $1,000 $1,200 $1,350 $1,650 $1,473 -10.73% 42.42%

Total $31,000 $65,050 $68,400 $69,150 $74,700 $74,900 $74,400 $75,150 $71,423 -4.96% -4.59%

Average 109.84% 5.15% 1.10% 8.03% 0.27% -0.67% 1.01% -4.96% 261.83%

78,000

76,000

74,000

72,000

70,000

68,000

66,000

0


2010 201420122011 2015 20162013

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

55,000

50,000

45,000

40,000

35,000

30,000

Premium Income Development Per GT Vs Number of Vessels On Risk(USD Per Vessel) No. Vessels on Risk

2009 2011 20132010 2012 2014 2015 2016

Average premium per vessel Number of vessels on risk


Number of Vessels Insured Development Average Premium Per Vessel Development

Number Of Vessels Insured Development Average Premium Per Vessel Development (USD) Average Premium Per Vessel Development (Last 12 Months)

Market Variance on 2014 Policy Year by Number of Vessels Insured 2015 2016 2015 2016


PY

5 Year Cumulative

Result

Charterama BV 2,500 4,000 5,800 8,300 10,000 10,500 11,000 10,000 -9.09% 47.27%

Charterers P&I Club 11,000 11,500 11,000 12,000 12,500 12,500 13,000 15,000 15.38% 15.38%

RaetsMarine BV 18,061 22,371 23,783 23,783 21,000 21,000 21,000 20,000 -4.76% -13.25%

Norwegian Hull Club 890 1,340 1,630 1,880 1,960 1,496 1,557 1,204 6,900 473.09% -56.15%

Hanseatic Underwriters - - - - - - - - -

Total 890 32,901 39,501 42,463 46,043 44,996 45,557 46,204 51,900 12.33% 0.081

Average 3596.74% 20.06% 7.50% 8.43% -2.27% 1.25% 1.42% 12.33% -4.280


PY

5 Year Cumulative

Result

Charterama BV - $1,200 $1,250 $1,034 $964 $900 $929 $886 $975 10.00% 1.14%

Charterers P&I Club - $2,545 $2,348 $2,318 $2,267 $2,256 $2,264 $2,262 $1,933 -14.51% -17.24%

RaetsMarine BV - $1,357 $1,162 $1,081 $1,135 $1,214 $1,238 $1,231 $1,160 -5.76% 2.13%

Norwegian Hull Club $5,393 $6,493 $5,828 $5,851 $5,867 $7,353 $5,780 $7,060 $1,159 -83.58% -406.06%

Hanseatic Underwriters - - - - - - - - - - -

Total $5,393 $11,595 $10,588 $10,284 $10,233 $11,723 $10,211 $11,439 $5,228 -54.30% -95.746%

Average 53.48% -9.50% -2.96% -0.50% 12.71% -14.81% 10.73% -118.81%

2009 201320112010 2014 2015 20162012 2009 201320112010 2014 2015 20162012

30,000

25,000

20,000

15,000

10,000

5,000

0

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0Charterama BV Charterama BVRaetsMarine

BVRaetsMarine

BVCharterers P&I Club

Charterers P&I Club

Norwegian Hull Club

Norwegian Hull Club

HanseaticUnderwriters


50,000

48,000

46,000

44,000

42,000

40,000

38,000

36,000

34,000

32,000

0

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0


Non-IG Mutual P&I

Premium Income Development (USD ‘000)

GT Development

Average P&I Rate Per GT Development


Gross Tonnage Development

Average Rate Per GT Development (USD)

Market Variance on 2011 Policy Year by Premium Income (USD)

Market Variance on 2011 Policy Year by Gross Tonnage

Average Rate Per GT Development (Last 12 Months)

Korean P&I Club

Korean P&I Club

Korean P&I Club

2015 2016

2015 2016

2015 2016


PY

5 Year Cumulative

Result

Korean P&I Club $13,248 $19,509 $26,002 $28,894 $29,653 $31,127 $32,323 $31,582 $30,857 -2.30% 6.36%

Total $13,248 $19,509 $26,002 $28,894 $29,653 $31,127 $32,323 $31,582 $30,857 -2.30% 3.90%

Average 47.26% 33.28% 11.12% 2.63% 4.97% 3.84% -2.29% -2.30%


PY

5 Year Cumulative

Result

Korean P&I Club 4,996 7,338 8,685 10,007 11,833 18,192 21,090 22,770 24,425 7.27% 51.55%

Total 4,996 7,338 8,685 10,007 11,833 18,192 21,090 22,770 24,425 7.97% 51.55%

Average 47% 18% 15% 18% 54% 16% 8% 7%


PY

5 Year Cumulative

Result

Korean P&I Club $2,652 $2,659 $2,994 $2,887 $2,506 $1,711 $1,533 $1,387 $1,263 -8.92% -98.36%

Total $2,652 $2,659 $2,994 $2,887 $2,506 $1,711 $1,533 $1,387 $1,263 -8.92% -98.36%

Average 0.26% 12.61% -3.56% -13.21% -31.72% -10.43% -9.50% -8.92%2008 2009 2010 2011 2012 2013 2014 2015 2016

35,000

30,000

25,000

20,000

15,000

10,000

0

31,800

31,600

31,400

31,200

31,000

30,600

30,400

0

2008 2009 2010 2011 2012 2013 2014 2015 2016

29,000

24,000

19,000

14,000

9,000

4,000

0

2009 2010 2011 2012 2013 2014 2015 2016

3,500

3,000

2,500

2,000

1,500

1,000

0

25,000

24,500

24,000

23,500

23,000

22,500

22,000

21,500

0

1,550

1,500

1,400

1,350

1,300

1,250

1,200

0


Commercial Market Total Premium Income

Annual Market Income (USD Per GT)

Total Fixed Call Premium Income 2008 – 2016

Rating agency analysisArthur J Gallagher (UK) Ltd (“AJG (UK)”) operates a market security policy which sets a minimum standard for insurance markets which can be included on its acceptable market security list

A number of criteria are utilised to evaluate the financial condition of these markets and one of the criteria used is the ratings allocated by either Standard & Poor’s (S&P) or A M Best. The AJG (UK) security policy sets a minimum rating level of A- from these agencies as an indicator of acceptable security.

Accordingly where a security fails to meet the minimum criteria, we would direct your attention to your P&I Insurers financial strength rating, where and when it falls below an S&P or AM Best A- rating and where this

security no longer qualifies for inclusion on the AJG (UK) market security list; requesting that you advise us if you wish us to attempt to source an alternative market. In some cases it may be possible to arrange P&I cover with an S&P or AM Best ‘A’ rated carrier on similar terms.

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

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

Key

AA: “Very Strong” financial security characteristics.

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

B: “Weak” financial security characteristics. Adverse business conditions will likely impart the ability to meet financial commitments.

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

BBB: “Good” financial security characteristics, but is more likely to be affected by adverse business conditions than are higher rated insurers.

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

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

‘Pi’ ratings are based on public data only; others are based on a periodic review by S&P analysts. + or - Signs show relative standing within the major rating category.


PY

5 Year Cumulative

Result

Total Commercial market Premium Income $258,892 $346,452 $370,393 $384,189 $395,498 $401,696 $406,170 $412,605 $397,916 -3.56% 34.94%

2008 2010 2012 20142009 2011 2013 2015 2016

420,000

410,000

390,000

370,000

350,000

330,000

310,000

290,000

270,000

250,000

0

P&I Current Rating P&I Facility Current Ratings

British Marine A+ Ingosstrakh BBB-

Carina A+ Korean P&I Club Unrated by S&P

Charterama BV A Lodestar Ltd A

Charterers P&I Club AA- Navigators P&I A

Eagle Ocean Marine BBB- Norwegian Hull Club A

Hanseatic P&I A Osprey A+

Hellenic P&I Unrated By S&P Raetsmarine BV A+

Hydor As A+ Rosgosstrakh Ltd BB-


Maritime Labour Convention (“MLC”)

The MLC came into force on 20 August 2013. Most liabilities under the MLC fell under normal Club cover, but there were two issues that required subsequent resolution. Both of these matters were put to bed in January 2017.

The first of these was the question of the issuance of financial security certificates for crew death and long term disability. These risks were already covered under a standard P&I entry and so the resolution of the matter was comparatively straight forward.

Less straight forward was the question of the issuance of financial security certificates for outstanding wages and repatriation costs following abandonment. The risk was not a part of normal P&I cover.

This was resolved by including these abandonment risks in an MLC Extension Clause, which has been introduced by all Clubs. This is a non-pooled risk and the Clubs have arranged reinsurance excess of their individual retention (currently $10 million). The limit of this reinsurance is $190 million on a per fleet basis.

It has been reported that an unintended consequence of this change, together with the right to direct action in the financial security certificates, is that the Clubs are becoming embroiled in crew wage disputes!

Sanctions

Following the easing of sanctions against Iran via the JCPOA last year, trade with Iran has become easier; although, the change in the US Presidency may well result in a return to a hardening of sanctions against Iran and, indeed, North Korea.

The ban on the involvement by US domiciled insurers and reinsurers in transactions involving Iran remains. Last year, the International Group had arranged a back up reinsurance programme to act as a stop gap should US domiciled reinsurers in the group program be unable to pay claims. However, US domiciled reinsurers have now been removed for the Group excess of Loss program for 2017 – 18, and so this fall back cover has not been renewed.

Pollution

The Clubs finally reached an agreement with the IOPC Funds over a mechanism to enable the Clubs to make interim payments to pollution victims. This follows the “Nissos Amorgos” case, which threatened the Clubs taking full advantage of the CLC limitation regime.

The TOPIA/STOPIA regime, which was introduced 10 years ago, was reviewed and found to have allowed a broadly acceptable split of liability between tanker owners and receivers of oil. The agreement was renewed subject to a few administrative changes.

Finally, the Spanish courts, in the “Prestige” case have cut through the shipowners (and therefore their insurers) right to limitation under international conventions. This could have significant implications for the future but, at the moment, the case is still ongoing.

Brexit

Following the referendum vote for the UK to leave the EU in June 2016, the UK government triggered Article 50 on 29 March, 2017. This began the formal 2 year process of the UK withdrawal negotiations from the EU.

Whilst the outcome of these negotiations are still far from clear, there are strong indications that the UK will seek a “hard Brexit”, which would likely encompass the loss of passporting rights for UK businesses.

Consequently, those UK based Clubs who do not have an establishment inside the EU will need to, again, consider their operational structure, their regulatory environment, and their governance systems to enable them to continue to freely trade with EU member states.

Developments in the Past 12 Months


1. Convention on Limitation of Liability for Maritime Claims (LLMC), 1976 (in force 1 Dec 1986)

This convention applies to all vessels involved in incidents in signatory states, except such incidents to which the Civil Liability Convention (See Section 2) applies. In effect it replaced the 1957 Brussels Convention.

At 31 July 2017, it has been ratified by 54 states, covering 55.63% of world tonnage.

The right to limit losses under this convention is lost if the incident involves a personal act or omission, carried out intentionally or recklessly, and with the knowledge that loss would result.

Liability under the convention is calculated in accordance with the following formulae (note that, at 31 July 2017, SDR 1 = approximately US$1.41):

Vessel Size Formula

500 GT or less Minimum SDR 333,000

501 – 3,000 GT Add SDR 500 per GT to the above sum

3,001 – 30,000 GT Add SDR 333 per GT to the above aggregate


70,001 GT or more Add SDR 167 per GT to the above aggregate

Example

25,000 GT SDR 8,909,000

75,000 GT SDR 21,409,000

Vessel Size Formula

500 GT or less Minimum SDR 167,000

501 – 30,000 GT Add SDR 167 per GT to the above sum



Example

25,000 GT SDR 4,258,500

75,000 GT SDR 10,508,500

1A. 1996 protocol to the 1976 LLMC (in force 13 May 2004)

This amends the limits of compensation payable and has been adopted by 53 states encompassing 58.9% of world tonnage at 31 July 2017. Until 8 June 2015 (see below) these limits were as follows:

Vessel Size Formula

2,000 GT or less Minimum SDR 2,000,000

2,001–30,000 GT Add SDR 800 per GT to the above sum

30,001–70,000 GT Add SDR 600 per GT to the above aggregate


Example

25,000 GT SDR 20,400,000

75,000 GT SDR 50,400,000

Vessel Size Formula


2,001 – 30,000 GT Add SDR 400 per GT to the above sum

30,001 –70,000 GT Add SDR 300 per GT to the above aggregate


Example

25,000 GT SDR 10,200,000

75,000 GT SDR 25,200,000

1B. 2012 amendments to the 1996 protocol (in force 8 June 2015)

This further amended the limits of compensation payable. It was dealt with via the tacit acceptance system, whereby it was deemed acceptable to all contracting states after 18 months following notification, and

entered into force after a further 18 months: it thus came into force on 8 June 2015. The increased limits are 51% higher and are now as follows:

1B.1 Personal injury / Loss of Life 1B.2 Property

2.1 Liability under CLC (1992 protocol) 2.2 Liability under CLC as amended in 2000 (in force 1 November 2003)

Vessel Size Formula


2,001 – 30,000 GT Add SDR 1,208 per GT to the above sum

30,001– 70,000 GT Add SDR 906 per GT to the above aggregate


Example

25,000 GT SDR 30,804,000

75,000 GT SDR 76,104,000

Vessel Size Formula


2,001 – 30,000 GT Add SDR 604 per GT to the above sum



Example

25,000 GT SDR 15,402,000

75,000 GT SDR 38,052,000

2. International Convention on Civil Liability for Oil Pollution Damage (CLC), 1969 (in force 19 Jun 1975); Protocol to CLC, 1992 (in force 30 May 1996)

The Civil Liability Convention covers those who suffer oil pollution damage resulting from maritime casualties involving oil-carrying ships. The Convention places the liability for such damage on the owner of the ship from which the polluting oil escaped or was discharged.

The original Convention has been largely replaced by the 1992 Protocol, which has been adopted by 137 states, encompassing 97.69% of world shipping as at 31 July, 2017. 34 states encompassing 2.58% of world shipping remain under the original 1969 regime. Liability is strict, and insurance is compulsory.

Liability under the convention is calculated in accordance with the following formulae (2.1).

Following the spill resulting from the loss of the “Erika”, the limits were increased under an amendment, without objection, in 2000 as follows (2.1):

Vessel Size Formula


5,001 GT or more Add SDR 420 per GT to the above sum

Maximum SDR 59,700,000 (equivalent to 140,000 GT)

Example

25,000 GT SDR 11,400,000 See earlier comment regarding the mechanics of the calculation

75,000 GT SDR 32,400,000

Vessel Size Formula


5,001 GT or more Add SDR 631 per GT to the above sum

Maximum SDR 89,770,000 (equivalent to 140,000 GT)

Example

25,000 GT SDR 17,130,000

75,000 GT SDR 48,680,000

1.1 Personal Injury / Loss of Life 1.2 Property

1A.1 Personal Injury / Loss of Life 1A.2 Property


3. International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage (FUND), 1992 Protocol (in force 30 May 1996)

The purpose of this Fund is to provide compensation for pollution damage to the extent that the protection afforded by the 1969 Civil Liability Convention is inadequate. It is also intended to give relief to shipowners in respect of the additional financial burden imposed on them by the 1969 Civil Liability Convention, with such relief being subject to conditions designed to ensure compliance with safety at sea and other conventions.

The Fund is financed by receivers of persistent oil cargoes in signatory states, via a governmental levy. It is managed by an inter-governmental organisation, the IOPC Funds.

The original 1971 Fund was denunciated in 2002, when the number of contracting states fell below 25, being effectively replaced by the 1992 Fund that entered into force in 1996. Subsequently, the limits in the 1992 Fund were increased by amendment in 2000, effective November 2003.

115 states had adopted the 1992 Protocol at 31 July, 2017, covering 95.05% of the world fleet.

The 2000 protocol increased this maximum sum to SDR 203 million via a tacit approval procedure, inclusive of the primary contribution under the 1992 CLC Protocol.

4. Supplementary Fund, 2003 (in force 3 Mar 2005)

The aim of this Fund is to supplement the compensation available under the 1992 Civil Liability and Fund Conventions with an additional third tier of compensation. The Protocol is optional and participation is open to all States that are party to the 1992 Fund Convention. 31 states had adopted the 2003 protocol at 31 July, 2017, covering 17.39% of the world fleet.

As with the 1992 Fund, the Supplementary Fund is financed by levies on receivers of persistent oil cargoes.

The total amount of compensation payable for any one incident will be limited to a combined total of SDR750 million, inclusive of the amount of compensation paid under the existing CLC/Fund Convention system.

5. Tanker Oil Pollution Indemnification Agreements.

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

Under STOPIA, owners of small tankers, of 29,548 GT or less, indemnify the 1992 Fund for the difference between their 1992 CLC liability and SDR 20 million.

Under TOPIA, all tanker owners indemnify the 2003 Supplementary Fund in respect of 50% of any claim falling on that fund.

These agreements were reviewed at their 10 year anniversary date with no revisions being made to the financial obligations imposed.

6. US Oil Pollution Act (OPA), 1990

The USA is not party to any of the above pollution related conventions, instead there are specific statutes that affect any vessels discharging oil, oil products or oil by-products in US waters.

The main one of these is OPA 1990, which imposes strict liability – the only defence being

acts of war, acts of God, or that the loss was caused solely by the actions of a third party.

The US Coast Guard periodically reviews the limits of liability under OPA 1990 and increases it in line with US CPI inflation.

The tables below show the most recent two changes in liability limits.

6.1 Amended Limits of Liability under OPA 1990 between 5 February 2010 and 20 December 2015

6.2 Amended Limits of Liability under OPA 1990 with effect from 21 December 2015

Vessel Size Formula

Single Hull Tanker: 3,000 GT or less US$3,200 per GT with minimum US$6,408,000

Single Hull Tanker: 3,000 GT or more US$3,200 per GT with minimum US$23,496,000

Double Hull Tanker: 3,000 GT or less US$2,000 per GT with minimum US$4,272,000

Double Hull Tanker: 3,000 GT or more US$2,000 per GT with minimum US$ 17,088,000

Other Vessels US$1,000 per GT with minimum US$854,400

Example

25,000 GT Single: US$ 80,000,000 Double: US$50,000,000

75,000 GT Single: US$240,000,000 Double: US$150,000,000

Vessel Size Formula

Single Hull Tanker: 3,000 GT or less US$3,500 per GT with minimum US$7,048,800

Single Hull Tanker: 3,000 GT or more US$3,500 per GT with minimum US$25,865,000

Double Hull Tanker: 3,000 GT or less US$2,200 per GT with minimum US$4,699,200

Double Hull Tanker: 3,000 GT or more US$2,200 per GT with minimum US$18,796,800

Other Vessels US$1,100 per GT with minimum US$939,800

Example



Deepwater Port, unless established under Reg 33 U.S.C. 2704(d)(2)

US$633,850,000 (2010: US$373,800,000)

LOOP US$96,366,000 (2010: US$87,606,000)

The US has also established an Oil Spill Liability Trust Fund (“OSLTF”) administered by the National Pollution Funds Center, which supports OPA 90 and is funded by a tax on oil produced and imported into the USA.

The OSLTF responds where a responsible party denies liability or fails to meet that liability or where the first level of liability is insufficient to fund all claims. It can provide up to $1 billion for any one oil pollution incident.


7. US Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 1980

This legislation is focussed on “hazardous substances”, however there are circumstances where both CERCLA and OPA could apply to an incident involving a shipowner, operator, bareboat charterer etc. Club cover is discretionary with regards to CERCLA related claims.

Limits of liability are as follows:

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

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

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

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

Example

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

8. Athens Convention relating to the Carriage of Passengers and their Luggage by Sea (PAL), 1974 (in force 30 Apr 1989) & 2002 Protocol thereto (in force 23 April 2014)

The Convention consolidated and harmonised two earlier Brussels conventions dealing with passengers and luggage, which were adopted in 1961 and 1967 respectively. It establishes a regime of liability for damage suffered by passengers carried on a seagoing vessel. It declares a carrier liable for damage or loss suffered by a passenger, if the incident causing the damage occurred in the course of the carriage, and was due to the fault or neglect of the carrier.

However, unless the carrier acted with intent to cause such damage, or recklessly and with knowledge that such damage would probably

result, it can limit its liability. For the death of, or personal injury to, a passenger, this limit of liability is set at SDR 46,666 per passenger.

Liability is, however, further limited for losses arising from acts of terrorism to the practically insurable amount. As of 2006, this amount is SDR 250,000 per passenger with an aggregate limit of SDR 340 million.

Subsequent to the ratification of this convention (by 25 states to date, covering 32.19% of the world’s fleet), the limitation amount has become more and more inadequate. A 1990 protocol increasing the limit to SDR 175,000 was not adopted

(now ratified by only 3 minor states) and has been superseded by the 2002 protocol.

Through 31 July 2017, 28 contracting states, including the European Union, representing 44.41% of world tonnage have acceded to this protocol.

Notwithstanding the above, the principle provisions of this protocol came into effect within the European Union and the European Economic Area via the EU Passenger Liability Regulation #329/2009 on 31 December 2012.

8.1 Limits under 2002 Protocol to PAL

Type of Loss Limit

Strict Liability Passenger Personal Injury / Death SDR 250,000 per passenger

Operator Negligence Passenger Personal Injury / Death SDR 400,000 per passenger

Loss or Damage to Cabin Luggage SDR 2,250 per passenger

Loss or Damage to Vehicle and Luggage therein SDR 12,700 per vehicle

Loss or damage to Other Luggage SDR 3,375 per passenger

9. International Convention on Civil Liability for Bunker Oil Pollution Damage, (BUNKERS) 2001 (in force 21 Nov 2008)

The Bunker Convention reached its required criteria of 18 states’ ratification in November, 2007, and by 31 July, 2017, had 85 acceptances covering 92.51% of the world fleet.

The Convention covers pollution caused by spills of oil carried as fuel on board the vessel. The limits are the same as those imposed under LLMC 1976 as amended by the 1996 Protocol.

10. ILO Maritime Labour Convention (MLC) 2006 (in force 20 August 2013)

30 countries were required to ratify the Maritime Labour Convention for it to start the 12 month countdown to coming into force. On 20th August, 2012, the 30th country signed up, being the Russian Federation. Accordingly, the MLC came into force in August 2013.

At 18 January, 2017, the MLC was in force/applicable in 63 states, and it has been ratified/accepted in a further 11 states, but is not yet in force. In the majority of these 11 states, “in force status” is expected within the next 12 months. In 2007, the European Union authorized its member states to ratify the Convention by the end of 2010, but in certain EU states, including Romania and Portugal, ratification is still incomplete. Declarations of acceptance have yet to be received from China, India and the USA.

The Convention is kept under continuous review by a tripartite committee including representatives of shipowners, seafarers and governments. Following the initial committee meetings, various amendments were agreed to the liability (relating to repatriation and unpaid wages) and financial security rules, which came into force 0n 18 January, 2017.

Whilst most liabilities under MLC are typically covered by P&I insurance, the amendments to the financial security requirements include, inter alia, up to 4 months unpaid crew wages following abandonment which, whilst not a traditional P&I risk, have been included from the in force date. This is a non poolable risk, with individual clubs retaining the first $10 million, and reinsurance in place for $190m to $10m on a per fleet basis


11. International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea (HNS), 1996 and Protocol, 2010 (not yet in force)

The original 1996 HNS Protocol established a two tier compensation regime for amounts up to SDR250 million, and has still only been ratified by 14 states 0r 13.83% of world fleet by 31 July, 2017.

A Focus Group was established in 2007 in order to address administrative concerns of the ratifying states – particularly in respect of the operations of the 2nd tier of compensation, and the difficulty in establishing how much HNS was received in any country.

A revised 2010 protocol, based on the findings of the above focus group, was adopted in April 2010, with Norway (1.39% of world fleet) being the first and only state to have ratified the convention at 31 July, 2017.

Under the 2010 protocol the total compensation remains the same, but the shipowner’s maximum liability for an incident involving packaged HNS is increased from SDR 100 million to SDR 115 million. Thereafter compensation would be paid by a second tier HNS Fund, financed by cargo receivers. The shipowners liability for bulk HNS remains unchanged at SDR 100 million.

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

11.1 Limits of Liability under HNS 1996

Vessel Size Formula – bulk HNS Formula – packaged HNS

2,000 GT or less Minimum SDR 10,000,000 Minimum SDR 11,500,000

2,001-50,000 GT Add SDR 1,500 per GT to the above Add SDR 1,725 per GT to the above

50,001 GT or more Add SDR 360 per GT to the above aggregate Add SDR 414 per GT to the above aggregate

Maximum SDR 100 million SDR 115 million

Example

25,000 GT SDR 44,500,000 SDR 51,175,000

75,000 GT SDR 91,000,000 SDR 104,650,000

12. Nairobi International Convention on the Removal of Wrecks (NAIROBI WRC) 2007 (in force 14 April 2015)

The Convention provides a sound legal basis for coastal states to remove, or have removed, from their coastlines, wrecks that pose a hazard to the safety of navigation or to the marine and coastal environments, or both. It makes shipowners financially liable, and requires them to take out insurance or provide other financial security to cover the costs of

wreck removal. It also provides states with a right of direct action against insurers.

The Convention has been adopted by 37 states, representing 71.27% of the world fleet, at 31 July, 2017. However, not all of these states have extended the operation of the convention to their territorial waters.

13. UN Convention for the International Carriage of Goods Wholly or Partly by Sea (ROTTERDAM RULES) 2009 (not yet in force)

In 1996, in order to harmonise liability regimes, the United Nations Commission on International Trade Law (UNCITRAL) began a review of laws in the area of the international carriage of goods by sea. An additional aim was to update the regimes to reflect more modern transportation systems. This resulted in the “Rotterdam Rules”, which became open for signature in September, 2009, and will enter into force 12 months after 20 states have ratified it.

By 30 November, 2012, 24 nations have signed the Rules, including major shipping nations such as Greece, Norway and the United States: collectively these signatories account for 25% of world trade.

The Convention will come into force 1 year after ratification by the 20th UN Member state. Whilst 24 have signed the Convention, only 3 states (Congo, Spain and Togo with no new additions in the past 3 years) have ratified it at 31 July, 2017. There appears to be little intention for any of the major trading nations to ratify the Rules.

The European Parliament has recommended member states to move speedily towards ratification, but lethargy continues to be the watchword, and no significant progress is expected to be made by European nations either.

The Rotterdam Rules plan to erode some of the traditional defences available to sea carriers, for example the elimination of the nautical fault defence. The obligation of due diligence has been extended to apply throughout the duration of the voyage, and limits of liability per package, or unit of weight, have been significantly increased, beyond Hague-Visby and Hamburg Rules limits.

The table below contrasts the liability under the various regimes:

13.1 Contrasting liability under “Rules”

“Rule” Limitation of Liability Liability for Delay

Hague (1934) £ 100 per package/unit N/A

Hague Visby (1968) Higher of SDR 2 per kg or SDR 667 per package

Hamburg (1978) Higher of SDR 2.50 per kg or SDR 835 per package/shipping unit

2.5 times freight on goods delayed subject to an upper limit if lost

Rotterdam (2009) Higher of SDR 3 per kg or SDR 875 per package/shipping unit

2.5 times freight on goods delayed not to exceed limit under rules

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


Use existing one

MARINE

AJGINTERNATIONAL.COMArthur J. Gallagher (Specialty) is a trading name of Arthur J. Gallagher (UK) Limited which is authorised and regulated by the Financial Conduct Authority. Registered Office:

The Walbrook Building, 25 Walbrook, London EC4N 8AW. Registered in England and Wales. Company Number: 1193013. www.ajginternational.com

Demolition Risk(Hull & Machinery)

Ship Repairers Liability(Marine Liability)

Yachts(Hull & Machinery)

Marina Operators Liability (Marine Liability)

Physical Loss & Damage to Containers (Cargo & StockThroughput)

Port Authorities(Ports & Terminals)

D&O & E&O for Ship Managers, Marine Surveyors (Marine Liability)

Strikes & Terrorism (War Risks)

Pharmaceuticals,Commodity Business, Frozen & Chilled Goods (Cargo & StockThroughput)

Cargo & Stock Throughput

Ports & Terminals

War Risks

Charterers Liability &Damage to Hull (Protection & Indemnity)

Protection & Indemnity

Marine Liability

Terminal Operators(Ports & Terminals)

Stevedores(Ports & Terminals)

Piracy, Kidnap & Ransom(War Risks)

Hull & Machinery

P&I Offshore & MOU Cover(Protection & Indemnity)

Freight Demurrage & Defence Cover (Protection & Indemnity)


Alex Vullo Divisional Director +44 (0)207 204 1891 [email protected]

Bård Poulsson Divisional Director +971 4 450 2531 [email protected]

Charles Gibbs Divisional Director +44 (0)207 234 4717 [email protected]

Chris Taylor Divisional Director +44 (0)207 560 3337 [email protected]

David Waller Divisional Director +44 (0)207 560 3898 [email protected]

Deniz Nagatay Divisional Director +44 (0)207 234 4719 [email protected]

Edward Remnant Divisional Director +44 (0)207 204 6033 [email protected]

John Glover Divisional Director +44 (0)207 204 8319 [email protected]

Katrina Davis Divisional Director +44 (0)207 234 4716 [email protected]

Malcolm Peckett Divisional Director +44 (0)207 204 6193 [email protected]

Mike Ingham Divisional Director +44 (0)207 204 1864 [email protected]

Nick Paice Divisional Director +44 (0)207 204 6254 [email protected]

Nick Peters Divisional Director +971 4 450 2530 [email protected]

Nicola Ellis Divisional Director +44 (0)207 204 1892 [email protected]

Patrick Wilmot Divisional Director +44 (0)207 560 3655 [email protected]

Richard Landers Divisional Director +44 (0)207 204 1890 [email protected]

Richard Sturgeon Divisional Director +44 (0)207 204 1887 [email protected]

Simon Mauduit Divisional Director +44 (0)207 204 6203 [email protected]

Sophia Quentin Divisional Director +44 (0)207 560 3657 [email protected]

Tim Sullivan Divisional Director +44 (0)207 204 6295 [email protected]

Wayne Godfrey Divisional Director +44 (0)207 204 1841 [email protected]

William Baynham Divisional Director +44 (0)207 560 3456 [email protected]

Haris Lagios Broker +44 (0)207 204 6211 [email protected]

Jack Cooper Broker +44 20 7204 8535 [email protected]

Michael Hutchins Marine Claims Broker +44 (0)203 425 3406 [email protected]

Amanda Gray Account Executive +44 (0)203 425 3289 [email protected]

Amanda Morrison Account Executive +44 20 7204 6210 [email protected]

Ben Payne Account Executive +44 (0)207 560 3525 [email protected]

Brian Webster Account Executive +44 (0)207 560 3037 [email protected]

Clare Stewart Account Executive +44 (0)207 560 3388 [email protected]

George Saunders Account Executive +44 (0)207 560 3058 [email protected]

Lauren Osman Account Executive +44 (0)207 204 1885 [email protected]

Olly Madley Account Executive +44 (0)207 234 4228 [email protected]

Rebecca Eagles Account Executive +44 (0)207 204 1863 [email protected]

Vincenzo Corsaro Account Executive +44 (0)207 560 3457 [email protected]

Quizell Lawrence Senior Technician +44 (0)207 234 493 [email protected]

Joe Hassan Technician +44 (0)207 234 4734 [email protected]

Michelle Field Personal Assistant to Jonathan Suckling +44 (0)207 560 3948 [email protected]

Milli Sharma Operations Manager +44 (0)20 7204 8321 [email protected]

London Marine Division Broker / Account Executive / Technician

Malcolm Godfrey Executive Director +44 (0)207 204 1883 [email protected]

Alex Vullo Divisional Director +44 (0)207 204 1891 [email protected]

Nicola Ellis Divisional Director +44 (0)207 204 1892 [email protected]

Wayne Godfrey Divisional Director +44 (0)207 204 1841 [email protected]

William Baynham Divisional Director +44 (0)207 560 3456 [email protected]

Nick Roblin Associate Director +44 (0)207 234 4983 [email protected]

Wendy Needham Associate Director +44 (0)207 204 1854 [email protected]

Lauren Osman Account Executive +44 (0)207 204 1885 [email protected]

Vincenzo Corsaro Account Executive +44 (0)207 560 3457 [email protected]

Jonathan Suckling Managing Director +44 (0)207 204 6091 [email protected]

Andrew James Executive Director +44 (0)207 204 6059 [email protected]

Christopher Kearns Executive Director +44 (0)207 560 3037 [email protected]

Malcolm Godfrey Executive Director +44 (0)207 204 1883 [email protected]

Matthew McCabe Executive Director +44 (0)207 204 6200 [email protected]

Paul Brandram Executive Director +44 (0)207 560 3336 [email protected]

Peter Wilmot Executive Director +44 (0)207 204 1829 [email protected]

William Kinnear Executive Director +44 (0)207 560 3338 [email protected]

London Marine P&I London Marine Division Senior Management

London Marine Division Divisional Directors

London Marine Division Associate Directors

Angus Blayney Associate Director +44 (0)207 204 8312 [email protected]

Daniel Leveridge Associate Director +44 (0)207 560 3695

Dave Clark Associate Director +44 (0)207 234 4717 [email protected]

David Gibbs Associate Director +44 (0)207 234 4718 [email protected]

Gary Brand Associate Director +44 (0)207 204 6121 [email protected]

James Richardson Associate Director +44 (0)203 425 3232 [email protected]

Jenny Mankelow Associate Director +44 (0)207 204 6220 [email protected]

Melanie Buitendag Associate Director +44 (0)203 425 3195 [email protected]

Nick Roblin Associate Director +44 (0)207 234 4983 [email protected]

Paul Tingley Associate Director +44 (0)207 234 4720 [email protected]

Phillip Mace Associate Director Marine Claims +44 (0)207 234 4981 [email protected]

Richard Lockwood Associate Director +44 (0)207 204 6198 [email protected]

Wendy Needham Associate Director +44 (0)207 204 1854 [email protected]

Andrew Albins Operations Director +44 (0)207 560 3454 [email protected]

Arthur J. Gallagher (UK) Limited is authorised and regulated by the Financial Conduct Authority.

Registered Office: The Walbrook Building, 25 Walbrook, London EC4N 8AW.

Registered in England and Wales. Company Number: 1193013. www.ajginternational.com

The information contained in this market has been compiled by Arthur J. Gallagher from information provided by each insurer. This does not purport to be comprehensive or to give legal advice. While every effort has been made to ensure accuracy,

Arthur J. Gallagher cannot be held liable for any errors, omissions or inaccuracies contained within the document. Readers should not act upon (or refrain from acting upon) information in this document without first taking further

specialist or professional advice.

AJGINTERNATIONAL.COM

contents...us$ 397 million in 2016, which is actually down -3.56% on 2015, but still accounts for...

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