P&I Report 2009

THE P&I REPORT 2009/10

Since 1820

P&I Report 2009/10

Contents
About Us P&I Team Contacts P&I Report Softly, Softly… Summary of 2008/09 Results Premier Division Second Division Third Division P&I Market Share Standard & Poor’s Ratings of P&I Clubs Average Expense Ratios Supplementary Call Record  Standard Increases Pooling and Reinsurance Protection & Indemnity Club Reviews Fixed Premium and Other P&I Facilities Page 5 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 ‐18 Pages 19 ‐ 46 Pages 47 ‐ 52 Page 3 Page 4

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P&I Report 2009/10

ABOUT US
Founded in 1820, 1820 Tysers is a leading independent international Lloyd’s broker that is based at the heart of the world’s premier insurance market in London. London Tysers employs some 200 people; handles around $600 million of annual premiums; and works with leading insurance markets worldwide to deliver risk solutions to a global client base. Tysers’ reputation for delivering a professional service backed by experience across a wide range of specialist insurance classes is unsurpassed. Not surprisingly for a company that started life nearly two centuries ago and spawned a shipping line, Tysers’ Marine division is one of the oldest and most highly respected in the London market. All our people are client focused and combine to provide a seamless broking, administration and claims service.

Areas of Expertise
 Protection and Indemnity, FDD, other marine liabilities including contractual and specialist operations  Charterers’ covers  Containers and chassis  Ship agents’ liabilities  Ports and Terminals  Loss of Hire/ Trade Disruption (TDI)  Hull & Machinery  War Risks  Piracy  Reinsurance  Builders Risks – including related delay covers and Contract Repudiation  Miscellaneous – including Mortgagees Interest, Kidnap and Ransom, Strike Risks and Confiscation

Key Strengths
Global expertise – With particular strength in the UK, Europe, Indian sub-continent, South East Asia, the Far East and South America. Established market presence – Strong relationships with Market and P&I underwriters facilitate competitive pricing. Our standing and reputation in the

London and other major marine insurance markets ensures us ready access to market leaders worldwide. Extensive experience – Our team has a unique blend of experience to put at clients’ disposal, many of them having worked previously for International Group P&I Clubs, leading insurers and other major brokers. Reinsurance expertise – Our reinsurance clients range from the London Market to other major marine underwriting centres, P&I Clubs, fixed premium and overseas insurers. Proactive claims service – Our integrated claims team is involved in all accounts from day one, before any loss occurrence. The broking and claims teams work in harmony to deliver a complete service. Our claims staff maintain a clear and

regular dialogue with our clients, regardless of the level of specific claims activity on their accounts.
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P&I Report 2009/10

P&I TEAM CONTACTS
Martin Hubbard Jonathan Macey
Email: Direct line: Mobile: [email protected] +44(0)20 3037 8300 +44(0)7971 501 743 Email: Direct line: Mobile: [email protected] +44(0)20 3037 8309 +44(0)7971 501 747

Managing Director of the Marine Division.

35 years P&I experience, mainly as a Senior Underwriter and Director with the Steamship Mutual Underwriting Association Ltd. Joined Tysers in 2005.

Harriet Meikle
Email: Direct line: Mobile: [email protected] +44(0)20 3037 8301 +44 (0)7977 251 503

Julien Hubbard
Email: Direct line: Mobile: [email protected] +44(0)20 3037 8308 +44(0)7971 501 770

Joined Tysers in 2008, having previously worked in Aon’s P&I division.

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

Piers O’Hegarty
Email: Direct line: Mobile: [email protected] +44(0)20 3037 8315 +44(0)7971 501 742

Chris Sydenham
Email: Direct line: Mobile: [email protected] +44(0)20 3037 8340 +44(0)7971 501 772

Joined the Marine Division in 1999 having previously been with Sedgwicks and Aon.

Claims Director Director, responsible for all Marine claims claims. 28 years with Tysers Tysers.

Philip Ottey
Email: Direct line: Mobile: p p [email protected] y@ y +44(0)20 3037 8316 +44(0)7971 501 746

Simon Haycock
Email: Direct line: Mobile: [email protected] y @y +44(0)20 3037 8342 +44(0)7971 501 757

Joined Tysers in 2001 and has over 35 years P&I experience.

Marine Claims Manager. Joined Tysers in 2005.

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P&I Report 2009/10

Softly  Softly Softly, Softly….
Post Armageddon, g , we still have thirteen International Group p Clubs although g six had to make substantial unbudgeted g calls to g get through g the financial crisis. These calls, , worth over $500 million, distort the underwriting surpluses shown in the following summary table. Without them, the Group would have suffered a total deficit of around $1 billion. Scary stuff, particularly for the smaller Clubs. Earlier this year we questioned whether the market needs thirteen Clubs or whether a smaller Group of larger, merged Clubs, would offer more stability without diminishing competition or diluting the Clubs’ generally excellent service. We have no doubt it would, but fear the instinct of selfpreservation among P&I managers is too highly developed. The Clubs are prone at times to short term memory loss, and, indeed, 2009 is looking rosier. How they love a recession to sort out their problems! Claims are expected to reduce if not this year then in the near future, and many Clubs are reporting solid investment returns so far in 2009. Only two Clubs, North and Steamship, moved totally out of equities (Japan Club has always concentrated on fixed-rate bonds and cash). They have thus missed out on the financial market recovery in 2009 and will have to rely on a solid underwriting performance f to avoid any further f erosion of f reserves. We shall not be surprised if f other Clubs C cash in their equity gains and move to a more defensive f investment strategy over the coming months.

The strongest Clubs will be pushing hard for the individual Club retention to rise from $7 million to $8 million, but we would prefer the status quo to be maintained. The Clubs singularly failed to cope with the last increase six years ago, and the greatest need is a period of consolidation and stability rather than unnecessary change. We also fail to see the logic of Clubs increasing their “retention” only to rush individually to the reinsurance markets to lay it off again.

Some Clubs will be fearful that the fallout from their additional calls is not yet over as, in some cases, renewals last year were, to all intents and purposes, bound before the calls were announced. After a number of years of large Standard Increases, the Clubs will not have much of a stomach for another confrontational renewal and will be looking to regain the support of their members.

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P&I Report 2009/10

Softly  Softly Softly, Softly….
So, P&I wise, 2010 should be a much better year for ship owners with the average Standard Increase well under double figures. Clubs such as UK, West and London are still working to turn round technical deficits but others appear to have turned the corner and, with positive investment returns and reducing claim values, we shall be interested to see how these Clubs justify any “inflation” increases. Surely now is the time for zero Standard Increases and proper selective underwriting on its merits, rather than hiding behind a circular flagging a 5% Increase in order to achieve a neutral result? But the Clubs will be fearful that owners with good records will be pushing hard for reductions and will not readily accept that “as expiry” is a good result, Any sniff of attractive new business should get the taste buds salivating as Clubs look to make up for sold/scrapped tonnage and lay up returns.

As usual, we shall issue an updated report once all Clubs have announced their renewal strategy.

This is the second year we have included our own P&I league tables. For the mutuals, the most important consideration is the calls record and the risk of future additional calls. However, we should stress that the tables are not based solely on financial data, and where possible we also take into account other factors including service (not just claims, but also general factors such as speed of response and accuracy of documentation), underwriters’ attitude to renewal discussions, handling of cover issues and overall “user friendliness”. These factors inevitably involve considerable subjectivity.

We include non-Group P&I providers in the tables, but as they do not have the same influence as the Clubs on the shipping community and are restricted regarding limits and the types of fleets they will insure, the best they can hope for is a place in the Second Division. We should, though, mention that British Marine were worthy winners of the “Marine/P&I Insurer” category in Lloyd’s List Global Awards 2009

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P&I Report 2009/10

Summary of 2008/09 Results
CLUB TOTAL COMPOUND S. INCREASE  2003‐2009 290% 191% 185% 201% 264% 264% 159% 206% 246% 261% 247% 254% 261% AVERAGE 233%
* Includes Boudicca ** Hull/P&I combined. ***Excludes $98m “hybrid capital” NB Figures for American, London, Steamship, Swedish, UK and West include additional unbudgeted calls.

U/W PROFIT/LOSS 2008/09 ($M) 21 (20) 94 (5) 78 32 33 13 42 106 38 66 82 TOTAL 580

INVESTMENT INCOME 08/09 ($M) (19) (18) (199) 7 (39) (41) (61) (73) (92) (101) (18) (56) (96) TOTAL (806)

SURPLUS FEB 2009  ($M) 2 (40) (122) 1 35 (9) (28) (59) (50) 2 19 7 (13) TOTAL (255)

FREE RESERVES FEB  09  ($M) 36 277 * 394 124 116 211 96 144 176 188 107 ** 236 *** 161 TOTAL 2,266

TOTAL OWNED GT FEB 09  ($M) 13 93 127 90 39 75 16 49 65 50 25 110 51 TOTAL 803

FREE RESERVES  PER OWNED GT $2.77 $2.98 $3.10 $1.38 $2.97 $2.81 $6.00 $2 94 $2.94 $2.71 $3.76 $4.28 $2.15 $3.16 AVERAGE $2.82

AMERICAN BRITANNIA GARD JAPAN LONDON NORTH SHIPOWNERS SKULD STANDARD STEAMSHIP SWEDISH UK WEST

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P&I Report 2009/10

Premier Division
We have relegated Steamship Mutual from the Premier Division this year due to its need, declared shortly before 20th February 2009, to make unbudgeted calls on the 2006 2007 and 2008 policy years. 2006, years This is the second time in under ten years the Club has been forced to make calls due to investment losses. We do not feel any of the current Second Division deserve promotion this year, so the Premiership is for the time being reduced to an elite of five Clubs. These Clubs are all solidly managed and have been able to absorb their investment losses. Both Gard and Skuld have announced impressive half-year results for 2009 and we expect to see the free reserves of all five Clubs grow again based on generally positive underwriting results. results Gard has quietly overtaken UK as the largest Club for owned tonnage, and the lack of any gloating was rather refreshing.

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P&I Report 2009/10

Second Division
UK Club should have surprised no one in 2008 with their unbudgeted calls. These are worth $193 million, including $65 million still estimated and to be confirmed for 2008. These funds are needed so do not expect any alleviation of the pain. The Club accepted being overtaken by Gard as the largest owned tonnage Club with good grace. The Swedish Club made unbudgeted calls for 2006 and 2007 but gave its members some good news by deciding not to proceed with an unbudgeted call on 2008. British Marine has shown the benefit of being part of the mighty g y QBE Group p in that they y emerged g pretty p y well unscathed from the world financial crisis. Shipowners has followed two horrible claims’ years with a big investment loss in 2008. With free reserves back under d $100m, $100 serious i underwriting d iti discipline di i li is i required i ddo they have the stomach for this when faced with stiff opposition from the fixed premium market? London and West of England hit their members with painful unbudgeted calls. Both have announced changes to management personnel in 2009, and the incumbents face a big task to get their Clubs back in order.

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P&I Report 2009/10

Third Division
Little change at Japan Club, but we fear unbudgeted calls may be just round the corner. The American Club is now the smallest in the Group and it is i hard h d to t see how h it is i going i to t move forward. f d Navigators continues to be a useful facility for smaller tonnage and, being a small cog in the parent company’s wheel, its pricing was not affected by the 2008 financial meltdown. Intercoastal now falls under the banner of Raetsmarine, backed for now by Swiss Re security. South of England continues to benefit as the only real home for larger vessels too old for the International Group.

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P&I Report 2009/10

P&I Market Share
These comparisons show the relative size of P&I Clubs by owned gross tonnage as at 20 February 2009.

P&I Club Cl b Gard  UK  Bi Britannia i   Japan  North of England  Standard  West of England  Steamship  Skuld  London  Swedish  Shipowners American  Total

O Owned d GT 127,000,000 110,000,000 93 000 000 93,000,000 89,850,000 75,000,000 65,000,000 50,700,000 49,700,000 49,100,000 39,123,000 24 500 000 24,500,000 15,868,755 13,200,000 802,041,755

% 15.83 13.71 11 60 11.60 11.20 9.35 8.10 6.32 6.20 6.12 4.88 3 05 3.05 1.98 1.65 100

A Accounting ti  Year Y  Premium P i  $ 460,158,000 548,723,000 275 916 000 275,916,000 206,810,000 255,082,000 205,065,000 408,549,000 384,376,000 213,200,000 213,785,000 111 955 000 111,955,000 169,543,000 144,726,000 3,597,888,000

% 12.79 15.25 7 67 7.67 5.75 7.09 5.70 11.36 10.68 5.93 5.94 3 11 3.11 4.71 4.02 100

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P&I Report 2009/10

Standard & Poor’s Ratings of P&I Clubs
Insurance Year Gard Britannia North of England Standard Skuld UK Club Steamship Japan Club London Club Shipowners Swedish Club West of England American Club 2003 A A A‐ A BB+ A BB ‐ BBB A BBB‐ BBB BBB‐ 2004 A A A A BBB+ A BBB ‐ BBB A BBB BBB BBB‐ 2005 A A A A BBB+ A BBB BBB BBB A BBB BBB B 2006 A+ A A A A‐ A BBB BBB BBB A BBB BBB B 2007 A+ A A A A‐ A BBB BBB BBB A BBB BBB B 2008 A+ A A A A A BBB BBB BBB A BBB BBB BB 2009 A A A A A‐ A‐ BBB+ BBB BBB BBB BBB BBB BB‐

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P&I Report 2009/10

Average Expense Ratios
The AER was introduced in 1998 as a means of comparing the administration costs of the mutual P&I Associations under the terms of the exclusion from the E.U. Competition Directive. The Clubs are only obliged to report their five-year AER and most do not show their annual expense ratio. The 2009 figures below are all fiveyear averages.

2003 Shipowners A American i  Cl Club b  West of  England  Standard  Skuld  Steamship  Gard  Swedish  North of England  UK Club London Club Britannia  Japan Club Average  21.00% 11 50% 11.50% 12.82% 7.00% 11.60% 10.60% 8.20% 10.10% 10.00% 10.64% 10.00% 8.53% 7.40% 10.72%

2004 21.00% 12 20% 12.20% 12.99% 12.30% 11.70% 12.00% 8.20% 9.50% 9.20% 10.85% 10.50% 8.62% 7.39% 11.27%

2005 19.00% 13 10% 13.10% 13.08% 11.40% 11.10% 12.50% 8.60% 9.90% 9.20% 10.14% 9.10% 8.44% 7.52% 10.97%

2006 17.00% 12 80% 12.80% 12.41% 10.50% 10.90% 12.80% 7.80% 9.10% 9.10% 9.27% 8.60% 7.74% 7.55% 10.33%

2007 17.00% 12 80% 12.80% 12.41% 10.50% 10.90% 12.80% 7.80% 9.10% 9.10% 9.27% 5.90% 7.74% 7.55% 10.33%

2008 17.00% 13 00% 13.00% 12.48% 10.60% 10.40% 10.20% 7.90% 9.20% 9.20% 9.46% 7.80% 7.85% 7.22% 10.37%

2009 19.00% 15 20% 15.20% 13.82% 13.60% 12.70% 11.60% 11.40% 10.90% 10.80% 9.96% 9.40% 8.39% 6.69% 11.80%

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P&I Report 2009/10

Supplementary Call Record 
(O i i l E (Original Estimate/Current i /C  Estimate) E i )
Policy  Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 American* 25/115 25/60 40/70 20/50 0/0 0/20 0/20 0/30 0/25 20/20 Britannia 25/25 25/25 40/40 40/40 40/30 40/30 30/30 30/30 40/40 40/40 Gard 25/25 25/25 25/25 25/25 25/25 25/20 25/20 25/25 25/25 25/25 Japan 20/20 20/10 20/20 30/10 30/30 30/30 30/60 30/30 30/30 40/40 London 40/40 40/40 40/40 40/40 40/40 40/40 40/89 40/89 40/75 40/40 North of  England  25/25 25/25 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0 Ship Owners 25/25 25/0 25/0 25/25 25/25 25/25 25/25 10/10 10/10 10/10 Skuld 20/65 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0 Standard 25/25 25/25 0/0 0/0 0/0 0/0 0/0 0/0 0/0 0/0 SSM 0/30 0/40 0/0 0/0 0/0 0/0 0/12.5 0/14 0/20 0/0 Swedish 0/0 0/0 0/0 0/0 0/0 0/0 0/35 0/35 0/0 0/0 UK 0/0 0/0 0/0 0/0 0/0 0/0 0/20 0/25 0/20 0/0 West of  England   50/50 20/20 20/20 20/20 20/35 20/35 20/40 20/55 20/65 30/30

* Includes ‘S ‘Surplus enhancement calls’

Called above Estimated Total Call Called full Estimated Total Call Called below Estimated Total Call

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P&I Report 2009/10

Standard Increases
American Britannia Gard Japan London North Ship Owners Skuld Standard SSM Swedish UK West

2003 2004 2005 2006 2007 2008 2009 2010

25 17.5 10 10 10 15 29

15 8.5 7.5 ‐2.5 5 23.8 12.5 5

15 7.5 5 7.5 5 10 15*

19.2 0 0 0 10 20 27.5

25 15 12.5 12.5 7.5 17.5 15

25 17.5 12.5 7.5 7.5 17.5 17.5

15 0 0 0 5 20* 10

25 15 7.5 5 2.5 7.5 15

25 20 12.5 5 5 15 15

25 20 12.5 5 9 15 17.5

25 15 10 10 7.5 15 15

20 17.5 12.5 12.5 7.5 17.5† 12.5

25 15 12.5 12.5 5 15 19

* 2008 – not officially declared, but widely sought † 2008 – the actual amount required although was expressed as part Standard Increase/part Pool Surcharge Many Clubs had not declared their 2010 Increases at the time this report was published. An update will be issued when all Clubs have announced their Increases.

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P&I Report 2009/10

Pooling and Reinsurance
Layers of International Group Programme 2009/10
Pollution only Non‐pollution Overspill

General Excess Loss Contract Layer 4

US$ 1bn Collective Overspill One reinstatement US$ 1bn

US$ 3.05bn

Layer 3

US$ 2.05bn

Layer 2

US$ 500m

US$ 500m

US$ 1.05bn

Layer 1 25% Reinsured to Hydra

US$ 500m

US$ 500m

US$ 550m

25% Upper P U Pool l Reinsured to Hydra Lower Pool US$ 20 20m US$ 23m

75%

75%

25% US$ 50 50m  US$ 30m

Club Retention

US$ 7m

US$ 7m

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P&I Report 2009/10

Excess of Loss reinsurance rates
Th Excess The E Loss L rates t (claims ( l i excess of f $30 $30m) )f for owned dt tonnage h have d developed l d as f follows: ll

International Group Reinsurance 2009
Dirty Tanker Clean Tanker Passenger Other

1.8 1.6
INTERNATIO ONAL GROUP EXCE ESS RATE (US$ per GT)

14 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2002 2 2003 2 2004 2 2005 2 2006 2 2007 2 2008 2 2009 2

The Actual 2009 rates per GT are:

Dirty Tanker 0 8079 0.8079

Clean Tanker 0 3677 0.3677

Passenger 1 6026 1.6026

Other 0 3695 0.3695

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P&I Report 2009/10

Estimated Cost of Notified Pool Claims
The pool limit increased from $30m to $50m in 2004. Claims at the lower limit are shown for comparison purposes.

Estimates as at 20 February 2009

Estimates  as at 20 August 2009 for $50  million Pool 2008 2007 2006 $125 million $358 million $456 million $258 million $291 million

2008

2007

2005 2004

2006 $30m limit $50m limit 2005

2004

0

50

100

150

200

250 $ millions

300

350

400

450

500

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P&I Report 2009/10

Protection & Indemnity Club Reviews
The American Club Britannia Gard Japan London North of England Shipowners Skuld Standard Steamship Mutual Swedish UK Club West of England
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P&I Report 2009/10

P&I Club Information
Introduction
  The information contained in this report is not and is not intended to be a definitive analysis of the Clubs’ accounts. In so far as is possible we have homogenised the data to enable comparison, but the variety of accounting procedures and practices used makes this difficult.        Calls and Premiums are the consolidated totals for all classes. The net underwriting statistics express the ‘technical’ result for the year and exclude any ‘non-technical’ investment income. Operating Expenses include management expenses and business acquisition costs. Solvency margins are calculated as the ratio between total assets and gross outstanding claims. All monetary figures shown are US dollars. Where identified, identified adjustments made to prior years years’ statistics and reported in a Club Club’s s most recent accounts have been included. included Whilst every effort has been made to ensure that the information contained in the report is accurate and up-to-date at the time of printing, this cannot be guaranteed by Tysers. Under no circumstances shall Tysers be responsible or liable for any loss or d damage caused d directly di tl or indirectly i di tl by b the th use of f this thi information. i f ti

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P&I Report 2009/10

American Steamship Owners Mutual Protection &  Indemnity Association, Inc. 
CEO Joe Hughes would make a very successful politician – an entertaining and educated speaker able to talk forever without actually answering any of the questions. Except for the entertaining bit, the Annual Report mirrors Joe’s personal qualities. In the Report’s “highlights”, we are advised there was a small decline in tonnage but nowhere is the current tonnage figure mentioned (it is down to just over 13m GT, making them the smallest Club in the Group); we are also told that Standard and Poors has reaffirmed the Club’s financial strength – “stable outlook maintained” but no mention is made Managers SCB Inc ( Eagle Ocean Management LLC) Gross Tonnage Mutual Owned Fixed Chartered Free Reserves 2009 2008 2007 2006 2005 2004 2003 Standard & Poor’s Rating BB- (stable) that the rating is only BB-. Elsewhere in the Report, we are told the Club’s “underwriting results continue to be at the leading edge of market performance performance”. Very Blairite, Blairite and the failure to mention this is after unbudgeted calls in eight of the last nine years can only be an oversight. Finally, there is an intriguing note on the last page of the Accounts informing that 13,200,000 83,000 on 17th December 2008 (the Club works to a calendar year end) the Club borrowed $10 million from Deutsche Bank on a line of credit. Perhaps the members would be interested to know the need for this line? Looking at what the Report does tell us, free reserves are up $2 million to just under $36 million thanks to a technical $35,667,000 $33,969,000 $31,580,000 $14,929,000 $34 964 000 $34,964,000 $31,949,000 $20,307,000 return of $21 million (including unbudgeted calls) offset by an investment loss of $19 million. The latter equates to an 8.5% decline in asset value, a comparatively good result based on a very defensive investment strategy of fixed income securities, in p particular municipal p bonds, which now account for around 72% of the total p portfolio. The Club reports a 25% increase in premium at the 2009 renewal, with a “small” loss of tonnage. Apparently, the tonnage not renewed had a net five year loss ratio of 91% so there is hope the renewed tonnage with its 25% premium increase will perform better. Europe accounts for 65% (8.6m) of entered tonnage, with USA and Asia 16% each. Looks like it is time to swap the Statue of Liberty for the Acropolis?

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P&I Report 2009/10

American Steamship Owners Mutual Protection & Indemnity Association,  Inc. 
The Club continues to develop its loss prevention capabilities. Besides increased vessel inspections and the extension of its PEME (pre-employment medical examination) programme to 14 countries, it has now started a series of computer based training tools with the first aimed at assisting members and crews to comply with Marpol requirements. On the claims side, the Club suffered four claims over $6 million and overall, collisions, sinkings and groundings accounted for an usually high 35% of all claims. Frequency of claims was down and the Club does feel there is some cause for Tonnage by Vessel Type guarded optimism as to future claims trends. For 2009, the Club has in place retention reinsurance covering claims of $ $3.5m excess of $3.5 $ million, subject to an aggregate limit of $10.5 $ million and an annual aggregate deductible of $7 $
5% 10% Bulkers

million, up from $4 million in 2008 so the reinsurance has no doubt been well tested. This cover is placed with the usual suspects Munich Re and Swiss Re – do they make a profit on any of their numerous Club reinsurances?

Tankers 26% 59% General Cargo  Passenger Container Tugs/Barges/Small Craft Year 2009 2008 2007 2006 2005

Tonnage By Area
3% 16%

Calls/Premium Reinsurance Cost Net Claims (incurred) E Europe North America Operating Expenses Net Underwriting Result Gross Outstanding Claims Total Assets Other Average Expense Ratio Solvency Margin Reserves per GT Ratio

$142,152, 000 $10,531,000 $72,264,000 $38,227,000 $21,130,000 $316,182,000 $382,148,000 15.20% 1.21 $2.77

$148,473,000 $13,902,000 $106,959,000 $36,298,000 ($8,686,000) $290,399,000 $347,927,000 13% 1.19 $1.96

$164,166,000 $12,010,000 $106,512,000 $41,069,000 $4,575,000 $250,207,000 $336,122,000 12.80% 1.34 $1.88

$161,833,000 $10,927,000 $139,694,000 $36,906,000 ($25,694,000) $201,724,000 $279,295,000 13.10% 1.38

$134, 311,000 $9,100,000 $94,118,000 $32,857,000 ($1,764,000) $149,883,000 $224,652,000 12.20% 1.4

16% 65%

Asia

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P&I Report 2009/10

The Britannia Steam Ship Insurance Association Limited
New chairman Nigel Palmer OBE took over in July 2008 and his timing was perfect, coming just after the Club had the largest Standard Increase in the International Group and also had in place a collar to protect its equity investments. As a result, the Club suffered an investment loss of just $18 million (5%), which without the collar would have risen to around $100 million, and also managed a much improved pure technical result with a loss of $20 million. Managers Tindall Riley (Britannia) Limited Gross Tonnage Mutual Owned Fixed Chartered Free Reserves 2009 2008 2007 2006 2005 2004 2003 2002 Owned tonnage grew by 5 million to 93 million with new members from China and Greece, countries where the Club has traditionally been under-represented. An impressive 62% of entered tonnage is under ten years old. Net retained claims in 2008 currently total $159 million, some 14% higher than 2007 and 20% up on 2006. 27 claims are 93,000,000 42,000,000 expected to cost over $1 million, eight of which are estimated to exceed $2m but none will hit the Pool. The Club points to bridge team error as a major cause of the larger claims. $191,520,000 $191 520 000* $188,600,000* $193,094,000* $166,347,000* $60,966,000 $73,610,000 $30 8 000 $30,758,000 $29,978,000 Palmer comments that while the reduction in maritime activity might suggest an eventual fall in claim levels, levels the liability environment continues to deteriorate and financial pressures on ship owners may lead to “corner cutting”. The Club will not therefore assume any improvement in claims costs in their projections. He warns that premiums must continue to rise so the Club can maintain and grow free reserves to face the combined challenge of high claims and reduced i investment t t returns. t N t welcome Not l news for f ship hi owners at t a time ti of f global l b l economic i downturn, d t b t the but th Club Cl b appears determined to avoid any possibility of unbudgeted calls and intends to ensure strict underwriting discipline will weather the storm.

Standard & Poor’s Rating A

* Excluding Boudicca reserves. 2009 includes deferred calls which excluded from prior years.

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23

P&I Report 2009/10

The Britannia Steam Ship Insurance Association Limited
Concerned with the rising trend in claims, the Club has developed an enhanced risk management programme to educate seafarers and superintendents on claims prevention and help owners identify the underlying cause of claims. This programme involves technical seminars around the world and risk management analysis of individual Member’s claims records. We like the way the Club is quietly and professionally moving forward. Other Clubs could do worse than emulate the Tonnage by Vessel Type
5% 15% 28% Bulker / OBO Tankers (crude) Containers 25% 27% Tankers (Other) Cargo/Other

Britannia approach.

Year

2009

2008

2007

2006

2005

Tonnage by Area
6% 3% Asia 16% 45% Europe Americas Other 30% Scandianvia

Calls/Premium Reinsurance Cost Net Claims (incurred) Operating Expenses Net Underwriting Result Gross Outstanding Claims Total Assets Average Expense Ratio Solvency Margin Reserves per GT Ratio

$275,916,000 $81,469,000 $189,680,000 $24,879,000 ($20,112,000) $842,792,000 $1,062,437,000 8.39% 1.26 2.98*

$242,897,000 $66,008,000 $195,457,000 $24,567,000 ($43,135,000) $813,927,000 $1,024,928,000 8% 1.26 $3.54*

$233,311,000 $55,130,000 $195,157,000 $22,238,000 ($39,214,000) $822,937,000 $1,050,727,000 7.74% 1.28 $2.2

$221,801,000 $53,855,000 $147,426,000 $20,204,000 $3,160,000 $675,438,000 $885,991,000 8.44% 1.31

$227,212,000 $50,845,000 $147,480,000 $19,412,000 $9,475,000 $644,175,000 $808,229,000 8.62% 1.25

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24

P&I Report 2009/10

Assuranceforeningen Gard
Chairman Stephen Pan appears confident it is business as usual despite a whopping investment loss of nearly $200 million on the P&I business. “Our model is built to weather unpredictable, severe financial downturns…the role of healthy free reserves is to absorb periodic shocks to the system”. A combined net ratio of 76% resulted in an impressive technical surplus of $94 million so, overall, free reserves fell from $516 million to $394 million. Pan is bullish that the Club’s asset base can be rebuilt quickly from retained earnings but is wary whether one can count on improving claims to take the stress out of risk pricing. The Chairman points out that even when the financial markets were at their lowest Managers Gard Services AS Gross Tonnage Mutual Owned Fixed Chartered Free Reserves 2009 2008 2007 2006 2005 2004 2003 2002 in November 2008, the Club’s capital base still met the Solvency II requirements. The investment losses were due not only to market losses but also currency movements, which accounted for some 127,000,000 50,000,000 50% of the investment under-performance against the benchmark. The Club set up a Risk Capital Committee in the second half of the year to monitor more closely the financial markets and take timely actions when needed. Total owned tonnage is now 127 million, so Gard has quietly overtaken the UK as the largest Club. Chartered tonnage $394,100,000 $515,615,000 $483,241,000 $429,644,000 $385 618 000 $385,618,000 $327,835,000 $242,222,000 $195,222,000 is around 50 million and this area of the business has faced stiff competition from both other Group clubs and fixedpremium facilities. 2008 was a good year on the claims front, front with net claims down well over $100 million on the previous year. year There were no claims on the Pool. A third of all large claims was due to collision or grounding and the Club notes that seafarer fatigue remains a significant risk factor with, alarmingly, key people falling asleep at critical times.

Standard & Poor’s Rating g A

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25

P&I Report 2009/10

Assuranceforeningen Gard
The Club has launched a new safety product involving case studies for onboard safety meetings; details of selected claims are distributed electronically to all entered vessels on a monthly basis, intended for discussion during onboard briefings, and they come with a checklist for risk assessment. This looks to be a useful innovation which officers and crews should find interesting and informative. A new crisis room has also been inaugurated in Arendal; let’s hope it is used rarely and becomes a useful storage facility. Tonnage by Vessel Type The Club has had a difficult year but was big enough to emerge relatively unscathed. Big does look to be beautiful and supports the view that mergers in the Group would be in ship owners interest.
4% 5% Bulkers/OBO 10% 42% Containers MOU 16% Dry Cargo 17% Car Carriers Year Passenger/Cruise/Ot P /C i /Ot her Calls/Premium Reinsurance Cost 10% 21% 12% Asia Norway Europe Germany 16% 21% Greece Americas 20% Net Claims (incurred) Operating Expenses Net Underwriting Result Gross Outstanding Claims Total Assets Average Expense Ratio Solvency Margin Reserves per GT Ratio www.tysers.com 2009 2008 2007 2006 2005 6% Tankers & Gas

Tonnage by Area

$460,158,000 $66,436,000 $256,962,000 $42,818,000 $93,942,000 $698,776,000 $1,153,090,000 11.40% 1.65 $3.10

$406,095,000 $59,084,000 $371,535,000 $36,394,000 ($60,918,000) $720,787,000 $1,327,688,000 8% 1.84 $4.78

$337,096,000 $56,057,000 $298,270,000 $32,279,000 ($49,510,000) $632,013,000 $1,205,842,000 7.80% 1.91 $4.74

$287,570,000 $49,064,000 $225,477,000 $27,726,000 ($14,697,000) $536,768,000 $1,045,950,000 8.60% 1.95

$242,725,000 $63,127,000 $194,473,000 $43,694,000 ($58,569,000) $497,031,000 $935,030,000 8.20% 1.89

26

P&I Report 2009/10

Japan
Director General Minoru Sato reports a challenging year for the Club, not only due to the global economic downturn but also as a result of an upward trend in both claim numbers and values. Groundings and crew claims were particularly hi h compared high d to t previous i years. A strong t Y saw income Yen i f ll but fall b t a similar i il benefit b fit to t claims l i was offset ff t by b higher hi h claim l i values. Overall, the Club achieved a small surplus of $1m, thanks to a small investment return of $7 million (1.83%) – the only Club not to make an investment loss, due to the Club’s policy of avoiding the equity markets. Owned tonnage Managers Self-Managed Gross Tonnage Mutual Owned Fixed Chartered Free Reserves 2009 2008 2007 2006 2005 2004 2003 2002 increased by 7 million. 2008 was the first year of in the latest “five-year-term strategy”, and at year end free reserves were around $18 million below the strategy target. Sato lays the blame for this on increasing claims and states the Club does not anticipate any 89,850,000 12,180,000 downward trend in claims; a minority view in the International Group, and members should take good note of Sato’s statement that there is no cause for optimism and the Club must review its strategy “in in respect of the plan for the $124,092,000 $105,697,000 $85,028,000 $100,934,000 $106 824 000 $106,824,000 $86,768,000 $63,434,000 $54,591,000 accumulation of free reserves”. Sounds to us like a warning additional calls may be on their way. Besides being in their second five-year plan, as we predicted last year the Club also started in 2009 its fifth three-year medium-term plan. We are told the latter contains three management concepts as values that must be pursued to obtain greater achievement, including reliability, soundness and competitiveness. Not exactly ground-breaking stuff, and why do these concepts only apply to the shorter term plan? Will the Club become uncompetitive in year four?

Standard & Poor’s Rating g BBB

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27

P&I Report 2009/10

Japan
Sato concludes that the three-year plan will be successfully accomplished because the staff will carry on the business of P&I insurance. We wonder what they were planning to be doing before the planners took control.….

Tonnage by Vessel Type
5% 11% Tankers 13% 49% Car Carriers Container Ships 22% General  Cargo/Other Year 2009 2008 2007 2006 2005 Bulk Carriers

Tonnage by Registry
5% 4% 11% Panama Others 13% 67% Japan Hong Kong Liberia

Calls/Premium Reinsurance Cost Net Claims (incurred) Operating Expenses Net Underwriting Result Gross Outstanding Claims Total Assets Average Expense Ratio Solvency Margin Reserves/GT Ratio

$206,810,000 $38,412,000 $149.899,000 $21,871,000 ($3,372,000) $261,640,000 $397,127,000 6.69% 1.52 $1.38

$231,299,000* $48,399,000 $130,332,000 $20,906,000 $31,662,000 $239,943,000 $372,939,000 7% 1.55 $1.26

$165,019,000 $27,663,000 $129,680,000 $16,224,000 ($6,548,000) $236,424,000 $297,552,000 7.55% 1.26 $1.12

$135,362,000 $25,442,000 $92,941,000 $15,760,000 $1,319,000 $155,036,000 $283,058,000 7.52% 1.83

$136,432,000 $14,055,000 $84.330.000 $16,075,000 $21,972,000 $123,469,000 $294,475,000 7.39% 2.39

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28

P&I Report 2009/10

London Steamship Owners Mutual Insurance Association Ltd
Memo to new Bilbrough’s Chief Executive Ian Gooch: change the format of the annual Report – thirty pages of text is just oh so dull. And why is there a picture of the West of England building on the cover? Chairman John Lyras spends very little time on the Club’s problems in 2008 but does thank the membership for their support and for their understanding of the need for three years of unbudgeted calls. Otherwise, his report concentrates on general International Group matters, reflecting the continued influence of former CEO Paul Hinton. One very relevant point is that, with the development of Conventions which invariably involve the direct liability of the Club, there is an Managers A Billbrough & Co Ltd Gross Tonnage Mutual Owned Fixed Chartered Free Reserves 2009 2008 2007 2006 2005 2004 2003 increased credit risk and the Club warns it may not be prudent to continue to offer their current generous payment terms. At the moment, the Club allows a deferred call of 40% of Advance Call, so the members are now on notice that 39,123,528 2,600,000 this is likely to change and should not be surprised if the Club moves to a system of charging most if not all of its estimated total premium up front. Total tonnage stands at 42 million, including 2.6 million of chartered entries which the Club has finally started to accept $115,519,000 $80,884,000 $110,928,000 $110,478,000 $100 308 000 $100,308,000 $101,854,000 $82,762,000 backed by Lloyd’s reinsurance. The owned tonnage held up despite the additional calls thanks mainly to their largest Member, Zodiac, deciding to move a large block of vessels back from North of England. The Club’s average vessel size is the largest in the Group at 38,600GT and 55% of entered vessels are under ten years of age. The investment loss was $39 million or 13.4%, but thanks to the additional calls the overall surplus for the year was $35 million. The losses were incurred in equities despite a significant switch into fixed income in July 2008. Claims wise, 2008 saw only one claim over $2m but attritional claims were higher and overall the 2008 policy year is showing a marginal increase over 2007.

Standard & Poor’s Rating BBB

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29

P&I Report 2009/10

London Steamship Owners Mutual Insurance Association Ltd
The Club does appear to look after its members and we hear regular good reports of its service. It has a bit of a reputation for being, dare we say, boring and the Annual Report does not help this image. So, Mr Gooch, we know there was not much good news last year but was it really appropriate to devote nearly seven pages to general Group matters? Cover this in your newsletters and let’s have more facts on the Club in future.

Tonnage by Vessel Type
2% 15% Bulkers 45% LNG/LPG & Tankers Container 38% Cargo

Year

2009

2008

2007

2006

2005

Tonnage by Area
Calls/Premium 3% 4% Reinsurance Cost Net Claims (incurred) Europe 32% 61% Far East Americas  Other Operating Expenses Net Underwriting Result Gross Outstanding Claims Total Assets Average Expense Ratio Solvency Margin Reserves/GT Ratio www.tysers.com $213,785,000 $20,869,000 $82,658,000 $16,553,000 $93,705,000 $316,560,000 $492,683,000 9.40% 1.56 $2.97 $103,563,000 $20,074,000 $95,959,000 $10,897,000 ($23,367,000) $317,477,000 $453,426,000 8% 1.43 $2.01 $102,003,000 $18,439,000 $91,256,000 $10,460,000 ($18,152,000) $290,364,000 $469,082,000 5.90% 1.62 $3.08 30 $95,402,000 $17,147,000 $92,034,000 $9,806,000 ($23,585,000) $246,916,000 $384,970,000 8.60% 1.56 $91,037,000 $16,820,000 $91,320,000 $9,780,000 ($26,883,000) $279,971,000 $395,814,000 9.10% 1.41

P&I Report 2009/10

The North of England P&I Association Limited
Chairman, Albert Engelsman, must be very happy with last year’s results. Accepting that no one is immune from the global financial meltdown, the results rank very well against the competition and with the combined ratio improved from 108% to 88% and investment losses of 4.2% the Club’s free reserves fell by only $9 million and now stand at a still very respectable $211 million. The investment performance could have been a lot worse had the Club not started reducing its exposure to equities in 2007, so that by October 2008 the investment portfolio was restricted to bonds and cash. At the end of the policy year, the cash holding was a massive 70% with the balance mainly in government bonds. Managers North Insurance Management Ltd Gross Tonnage Mutual Owned Fixed Chartered Free Reserves 2009 2008 2007 2006 2005 2004 2003 2002 “We We have been tested,…have shown our resilience and have come out in good shape shape”, , says Engelsman. Quite rightly, he believes the Clubs should now forget about investment income, get back to basics and underwrite on a break- even 75,000,000 20,000,000 basis. The Club casts doubt on whether the underlying claims trend remains anything but upwards. While the current downturn may provide a respite, the Club warns this may be only temporary unless owners take full advantage of the slowdown to $211,112,000 $220,018,000 $190,241,000 $168,005,000 $142 300 000 $142,300,000 $133,500,000 $99,594,000 $87,300,000 look after their ships and employ the best crews available. 85% of the Club’s forty most expensive claims in 2008 involved human error, suggesting there is still much work to be done on the human element of loss prevention. The Club hopes owners will use the downturn as an opportunity for more training and ship familiarisation and also to ensure more shore-based support. The Club already has a deserved good reputation for its service on claims and loss prevention. The Chairman confirms its commitment in these areas and states that risk management focus is now being applied on a more member specific basis. Its underwriters are prone to being tough at renewal, and they will certainly be so this year with an investment return unlikely to exceed around 2%, so the pressure is on to provide a first class service during the year. The Club is succeeding and the claims and advisory service appears to many members to compensate for a few days with a prickly underwriter in February.

Standard & Poor’s Rating g A ‘stable’

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31

P&I Report 2009/10

The North of England P&I Association Limited
Other Clubs, in somewhat pompous tradition, continue to insist that this newcomer to the big league is about to take a bath. The message from North is loud and clear – we are here to stay, will continue to grow, know what we are doing and are a major force in the International Group. We suggest the doubters pay attention.

Tonnage by Vessel Type
3% Bulkers 36% 23% Tankers Containers Other General Cargo 30% Year 2009 2008 2007 2006 2005

8%

Tonnage by Area
3%3% 12% Europe Far East

Calls/Premium Reinsurance Cost Net Claims (incurred) Operating Expenses Net Underwriting Result

$255,082,000 $44,177,000 $142,226,000 $36,300,000 $32,379,000 $619,872,000 $853,815,000 10.80% 1.38 $2.81

$213,015,000 $34,477,000 $162,129,000 $30,170,000 ($13,761,000) $614,426,000 $855,905,000 9.2% 1.39 $3.38

$193,535,000 $28,631,000 $179,719,000 $29,006,000 ($43,821,000) $563,781,000 $771,486,000 9.10% 1.37 $3.45

$177,117,000 $23,991,000 $130,939,000 $24,170,000 ($1,983,000) $450,498,000 $645,504,000 9.20% 1.43

$174,466,000 $32,669,000 $105,581,000 $19,211,000 $17,005,000 $432,281,000 $592,160,000 9.20% 1.37

14%

47%

Middle East Scandinavia Americas Gross Outstanding Claims Total Assets Average Expense Ratio Solvency Margin Reserves/GT Ratio

21%

Other

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32

P&I Report 2009/10

The Shipowners Mutual Protection & Indemnity Association  (Luxembourg)
New Chairman Donald MacLeod has not had the easiest of baptisms. A downgrading by S&P from ‘A’ to ‘BBB’ followed by an investment loss of $61 million would have spelt absolute disaster if the claims’ experience of 2006 and 2007 had been repeated. Fortunately, helped by the strengthening US dollar, 2008 was a more benign claims’ year, with an improvement of 30% in total claims per ton and a reduction in overall claims frequency of 10%. Claims in all categories have reduced except for Collision/FFO, and the Club suffered eleven claims over $1 million compared to fifteen in 2007. With a 16% increase in premium, the Club is able to report a healthy combined ratio of 78%. However, the investment Managers The Shipowners’ Protection Ltd Gross Tonnage Mutual Owned Fixed Chartered Free Reserves 2009 2008 2007 2006 2005 2004 2003 2002 losses mean free reserves have still dropped 23% to $96 million. The Club remains bullish that in the long term equities are a good bet and have not disposed of the portfolio, which traditionally makes up 30% of the total asset allocation. 15,868,755 Gross tonnage increased by 4% to nearly 16 million. MacLeod points out that today’s financial world is completely different to that of mid 2008, with many venerable institutions no longer with us. He feels the one exception to “this current reality” is the P&I Club institution which has $95,567,000 $123,738,000 $129,709,000 $126,908,000 $107 865 000 $107,865,000 $100,420,000 $61,116,000 $58,083,000 withstood many economic cycles in the past and, in his opinion, will continue to do so. He does acknowledge that with half the International Group making unbudgeted calls last year, there is no room for complacency and the Group must move with the times. MacLeod believes the Club is “well-positioned to weather this most recent and some would say perfect storm”, and will rely on diligent underwriting and prudent investment management to move forward, rather than any unbudgeted additional call. Brave words as free reserves have dropped below 2004 levels when the Club had 35% less tonnage. Continuing the climate analogy, we must hope “every MacLeod has a silver lining” and the Club can find the underwriting discipline required in the face of growing and stiff competition from the fixed market.

Standard & Poor’s Rating g BBB

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33

P&I Report 2009/10

The Shipowners Mutual Protection & Indemnity Association  ( uxembourg) (Luxembourg)
With Singapore now up and running, the Chairman points out that in conjunction with the London and Vancouver offices, the Club now has an office literally open every hour of the day to serve members and their brokers. The Club has sent six members of staff from London to man the Singapore office, which seems a bit extravagant and we have to wonder whether the worldwide twenty- four hour service will come at too high a cost. Tonnage by Vessel Type
4% 4% 6% 11% 27%

The Club desperately needs a quiet and stable year and, presumably, a strong US dollar if, as MacLeod concludes, it “will continue to provide stability, continuity and security as it has in the past”.
Harbour Barges Fishing Ferries

13% 18% 17%

Offshore Dry Tankers Yachts Year 2009 2008 2007 2006 2005

Tonnage by Area
Europe 6% 9% 29% 11% Americas

Calls/Premium Reinsurance Cost Net Claims (incurred) Operating Expenses S.E. Asia & Far East Net Underwriting Result Australia/NZ &  Pacific 23% Other Middle East &  India Gross Outstanding Claims Total Assets Average Expense Ratio Solvency Margin Reserves/GT Ratio

$169,543,000 $18,863,000 $85,134,000 $29,805,000 $35,741,000 $335,312,000 $457,648,000 19.00% 1.36 $6.00

$146,531,000 $21,542,000 $126,926,000 $26,950,000 ($28,887,000) $340,073,000 $494,460,000 17% 1.45 $8.27

$130,593,000 $17,860,000 $118,354,000 $23,574,000 ($29,195,000) $272,909,000 $418,605,000 17.00% 1.54 $9.29

$116,687,000 $15,492,000 $48,301,000 $19,733,000 $33,161,000 $191,222,000 $333,446,000 19.00% 1.74

$108,433,121 $15,707,341 $51,838,433 $7,784,000 $33,103,347 $165,278,008 $290,208,447 21.00% 1.76

22%

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34

P&I Report 2009/10

Assuranceforeningen Skuld
The self-styled ‘New Generation P&I Cub’ has really gone overboard with new sound-bytes. The theme this year is “Almost invisible, completely indispensable”, with studies of the unfortunate and very expensive “Hebei Spirit” 2007 pollution claim and other large claims dotted around the Annual Report. We then have to fight through “Accurate, caring and dedicated” which, CEO Douglas Jacobsohn tells us, are the values which form the core of Skuld, while “Bold” urges continual change, new direction, constant improvement and the need to think outside the box. Apparently, 2008 was the “Year of Values” so while the rest of the industry was fighting off financial meltdown, the Skuld staff was Managers Skuld ASA Gross Tonnage Mutual Owned Fixed Chartered Free Reserves 2009 2008 2007 2006 2005 2004 2003 2002 attending cultural workshops to develop its understanding of Skuld values. We then move onto “Transparency pays” and you can lose a lot of sleep trying to fathom out whether you can be both 49,100,000 47,700,000 invisible and transparent. Just when you think you are safe, Chairman Erik Gleeson again comes up with Skuld the “Human Capital Company” full of experienced, professional and dedicated staff whose knowledge base, we are told, benchmarks positively in the P&I market. market $143,967,000 $203,518,000 $191,366,000 $150,709,000 $113 064 000 $113,064,000 $81,593,000 $50,080,000 $77,873,000 Thankfully, we do eventually find the facts and figures and, fair to say, they are well presented and very clear. Investment losses totalled $73 million (15%), but with a small underwriting surplus the overall loss was $59 million, reducing free reserves to 2005/6 levels at $144 million. This is the sixth year running that the Club has achieved a technical surplus and although the total surplus over the six years is only $70 million, the regular positive returns are the envy of many Clubs. Owned tonnage has grown to around the 50 million mark, while chartered entries fell slightly to under 48 million. The Club acknowledges that the charterers business is facing some challenges and could fall by 30%. This business has been profitable for the Club, so there may be a concern that a big drop in business could affect the Club’s overall technical result.

Standard & Poor’s Rating g A

.

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35

P&I Report 2009/10

Assuranceforeningen Skuld
The Club does feel the claims trend is downwards, and expects less accidents at sea and lower commodity prices resulting in less cargo claims. Rather like North of England, Skuld has been very successful in recent years yet there remain doubters in the Group insisting there are problems around the corner. Jacobsohn has done a great job turning the Club round, but we have concerns at the high proportion of chartered business and also at rumours of moves into other classes of marine Tonnage by Vessel Type
5% 10% Tankers 13% 46% Bullker Carries Container General Cargo 26% Other Year 2009 2008 2007 2006 2005

insurance. We hope p the Club sticks to its core business, , avoids complacency p y and consolidates itself in our Premier division.

Tonnage by Area
6% Europe 39% Far East

Calls/Premium Reinsurance Cost

$213,239,000 $23,350,000 $144,301,000 $32,675,000 $12,913,000 $273,179,000 $441,473,000 12.70% 1.62 $2.94

$192,654,000 $20,012,000 $137,054,000 $29,467,000 $6,121,000 $280,930,000 $504,901,000 10% 1.8 $4.92

$174,122,000 $19,028,000 $121,112,000 $27,244,000 $6,738,000 $260,012,000 $468,114,000 10.90% 1.8 $5.31

$156,816,000 $16,880,000 $95,211,000 $24,002,000 $20,723,000 $248,317,000 $418,602,000 11.10% 1.69

$149,194,000 $19,931,000 $85,911,000 $21,041,000 $22,311,000 $284,437,000 $374,684,000 11.70% 1.32

6% 10%

Net Claims (incurred) Operating Expenses Net Underwriting Result Norway Denmark Sweden Other Gross Outstanding Claims Total Assets Average Expense Ratio Solvency Margin Reserves/GT Ratio

13%

26%

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36

P&I Report 2009/10

The Standard Steamship Owners Protection & Indemnity Association  (Bermuda) ( ermuda) Ltd td
Chairman Ricardo Menendez reports that the Club’s solid fundamentals have seen it safely through a difficult year. An investment loss of $92 million (17%) was partly offset by a $42 million surplus on the technical account so free reserves reduced by $50 million to $176 million. While still within an acceptable range, Menendez acknowledges he would prefer the free reserves to be higher and the focus will be to restore them to last year’s levels. The combined ratio of 76% achieved last year was due mainly to an improvement in prior year claims, this in turn resulting from the Club’s conservative approach to claims reserving. The underwriting performance on a policy year Managers Charles Taylor & Co (Bermuda) Gross Tonnage Mutual Owned Fixed Chartered Free Reserves 2009 2008 2007 2006 2005 2004 2003 2002 basis shows a small loss which is expected to improve in 2009, following a successful renewal and the Club Club’s s “realistic” realistic pricing policy and selective underwriting. Tonnage is up slightly, with the “passenger/ferry” category up from 4% to 13% 65,000,000 18,000,000 presumably due to the Club’s somewhat controversial decision to take on a share of Carnival Cruise Line with a $10 million deductible. Menendez comments that pool claims are well down and welcomes the International Group’s decision to adjust the pool $175,432,000 $225,882,000 $217,155,000 $192,277,000 $171 909 000 $171,909,000 $163,527,000 $113,641,000 $127,007,000 contribution mechanism. The Club already has a significant surplus on its pool record. It had one pool claim in 2008 and 17 claims exceeded $1 million. The Chairman rightly emphasises the importance of quality service during difficult times, times with the Club ready to stand behind and support the members on an equitable basis. He further emphasises that risk is the key focus for the Club, with the Board regularly reviewing all areas of risk – investment, underwriting, operational, market, liquidity. Menendez believes the key to managing risk is diversification, and the Board keeps under review the composition of the Club’s membership as well as that of its assets. Not surprisingly, the Board spent most of its time in 2008 looking at its investments.

Standard & Poor’s Rating g A

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37

P&I Report 2009/10

The Standard Steamship Owners Protection & Indemnity  Association (Bermuda) Ltd
During the year, the Club had particular problems with two hedge funds, one being hit by a fraud which resulted in a write off of over $5 million while the other was managed by Lehman Brothers resulting in the Club’s holding being frozen although lth h the th holding h ldi is i protected t t d by b insurance. i Its It benchmark b h k of f 58% b bonds d and d 42% equities iti was suspended d dt to allow ll a lesser equity holding, and at February 2009 the asset allocation stood at 57% bonds, 25% equities, 15% alternatives and 3% cash – still a comparatively bullish approach. Tonnage by Vessel Type Menendez points out that the Club has made calls below or on budget We have little doubt it will p g for the last 17 years. y
Tankers 9% 13% 3% 29% Cargo /  Container Bulkers Passenger &  Ferrier Offshore 29% Other Calls/Premium Reinsurance Cost 6% 11% 43% 14% 6% Europe Asia USA Rest of World Canada 20% UK Gross Outstanding Claims Total Assets Average Expense Ratio Solvency Margin Reserves/GT Ratio www.tysers.com $459,757,000 $712,871,000 13.60% 1.55 $2.71 $482,708,000 $814,829,000 11% 1.69 $3.09 $497,030,000 $803,991,000 10.50% 1.61 $4.82 38 $472,994,000 $706,890,000 11.40% 1.49 $450,571,000 $668,110,000 12.30% 1.48 Net Claims (incurred) Operating Expenses Net Underwriting Result $205,065,000 $31,225,000 $114,492,000 $17,490,000 $41,858,000 $168,869,000 $36,461,000 $134,622,000 $17,842,000 ($20,056,000) $152,350,000 $32,040,000 $145,534,000 $15,399,000 ($40,623,000) $170,378,000 $30,746,000 $142,955,000 $13,386,000 ($16,709,000) $163,558,000 $28,400,000 $152,464,000 $12,869,000 ($30.175,000) Year 2009 2008 2007 2006 2005

overcome the hiccups of 2008 and remain a strong Premier League player.

17%

Tonnage by Area

P&I Report 2009/10

Steamship Mutual Protection & Indemnity Association
“What a difference a year makes”, we opened last year, as free reserves rose to record levels and membership was growing at a reasonable pace. Sad to report the need to use the same headline this year, but for all the wrong reasons. Investment losses of just over $100 million forced the Club to announce, just a few weeks before renewal, additional unbudgeted calls of $80m so putting a serious dampener on the Club’s 2009 centenary celebrations. Chief Executive James Stockdale, in his final report before handing over the reins to Gary Rynsard, prefers not to dwell on the finances and highlights service as the one aspect of the business to have remained constant over the last Managers Steamship Mutual Management (Bermuda) Limited Gross Tonnage Mutual Owned Fixed ed C Chartered a te ed Free Reserves 2009 2008 2007 2006 2005 2004 2003 2002 century. Stockdale asserts that it is the ability to deliver the service the members want and expect that has defined the Club’s success in the past and will continue to define its success in the future. Let’s hope so, as the second enormous investment failure in the last eight years would otherwise be defining something very different. 49,700,000 25,000,000 5,000,000 The additional calls turned an overall loss of $78 million into a surplus of $2 million. The underlying technical underwriting result is actually rather good – without the calls 2008 would have shown a surplus of $26 million. Net $187,700,000 $185,800,000 $158,145,000 $157 372 000 $157,372,000 $137,367,000 $139,159,000 $89,177,000 $148,864,000 claims were down $21 million but Stockdale, like Britannia and the Japan Club, warns this should not be taken as an indicator that claims will continue to decline in 2009, even with the decline in shipping activity. Tonnage during the year increased by 3 million. Renewal saw a small increase of 300,000gt. For some reason, the Club mentions three times that this generated additional net premium of $8.5 million! That makes the rate a hefty $28 per GT so presumably comprises expansion in small US tonnage which most view as business to avoid. The additional calls clearly made the 2009 renewal difficult, and in cash terms the Club only achieved just over half of the 17.5% standard increase, although a further 4.4 % is said to have been achieved by means of changes in terms.

Standard & Poor’s Rating BBB+ (stable)

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39

P&I Report 2009/10

Steamship Mutual Protection & Indemnity Association
Unlike most of the other Clubs, but not surprisingly, the Club has moved out of equities totally, with 46% of their portfolio now in cash and 40% in bonds. As a result, the Club has to aim for no worse than a breakeven underwriting position d has h reduced d d the th combined bi d ratio ti target t t from f t 100%. 100% and 108% to Stockdale believes that the mutual system has come through the financial crisis with flying colours. 2008 was in his view Tonnage by Vessel Type a 1 in 200 year event which produced disastrous consequences for the banking and insurance industries, requiring government intervention and recapitalisation. g p Stockdale feels the Club’s mutual system y fared better in that it enabled the
7% 12% 6% Bulkers 29% Tankers Container Cruise 19% 27% General Cargo Other Year 2009 2008 2007 2006 2005

Club to restore its capital adequacy by recourse to the “unique method” of calling for additional premium from its Members. All very well, but over half the International Group did not need additional calls and cynics may argue there is not actually much difference between a taxpayer bail out and clients/shareholders footing the bill.

Calls/Premium

$384,376,000 $41,681,000 $194,033,000 $42,819,000 $105,843,000 $729,027,000 $960,371,000 11.6% 1.17 $3.76

$258,538,000 $39,458,000 $183,528,000 $31,051,000 $4,501,000 $662,993,000 $912,806,000 10% 1.38 $3.96

$227,052,000 $30,314,000 $211,942,000 $35,569,000 ($50,773,314) $645,378,000 $862,031,000 12.80% 1.34 $3.59

$218,334,000 $24,843 $212,,722,000 $33,101,0000 ($52,332,,000) $602,431,000 $812,150,000 12.50% 1.35

$207,408,000 $28,105,000 $170,848,000 $33,357,000 ($24,902,000) $587,019,000 $794,826,000 12.00% 1.35

Tonnage by Area
6% 11% 4% 33% Far East Europe North America 14% Africa/ Middle  East 32% www.tysers.com Indian sub‐ continent Latin America

Reinsurance Cost Net Claims (incurred) Operating Expenses Net Underwriting Result Gross Outstanding Claims Total Assets Average Expense Ratio Solvency Margin Reserves/GT Ratio

40

P&I Report 2009/10

The Swedish Club
A welcome revamped Report and Accounts with far more information and for the first time we have a Chairman’s report, with yet another new Club Chairman, Lennart Simonsson, making his debut. Simonsson leaves the detail to Managing Director Lars Rhodin, but does confirm that the days of making good underwriting losses from investment income are now just a dim memory. He feels the Club’s core business remains strong and a commitment to sound underwriting and conservative investment strategies provides a firm foundation for development. Rhodin continues the “safe and sound” theme. He points out that the unbudgeted calls for 2006 and 2007 were different Managers Self Managed Gross Tonnage Mutual Owned Fixed Chartered Free Reserves 2009 2008 2007 2006 2005 2004 2003 2002 in character from other Clubs, in that they were prompted by unbalanced pool liabilities . Rhodin stresses that the calls have done their job and the Club is now well positioned to continue its strategy of controlled and sustainable growth. 24,500,000 15,000,000 Good news indeed for the members that the Club was able to avoid an additional call for 2008. Rhodin also points to the fall in commodity prices, lower pool claims and the strong dollar as positive signs moving forward. $106,800,000 $99,700,000 $102,000,000 $90,943,000 $94 916 000 $94,916,000 $81,500,000 $56,612,000 $61,381,000 Tonnage grew during the year to 40 million, although this is mainly due to the Club developing their chartered business. With $35 million of additional calls, the P&I account had a technical surplus of just under $38 million, but investment losses of $18m (13.5%) (13 5%) brought the final surplus down to just over $19 million. million Combined Hull and P&I free reserves rose $7m to $107 million. On the investment side, Rhodin makes the rather startling statement that “our largest risks relate to finance rather than the core insurance business” – surely this cannot be right for a mutual insurer? - and concludes that the traditional benchmark of 30% in equities is too high risk. Members will be relieved to hear the Club is taking a close look at its asset mix going forward, and at the end of 2008 held just 13% in equities and had no exposure to hedge funds, commodity funds or private equity investments.

Standard & Poor’s Rating g BBB (stable)

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41

P&I Report 2009/10

The Swedish Club
Particularly refreshing is the fact that the Club has made full disclosure of its management income and other operating costs, and pretty reasonable they look too. A shame so many other Club managers are so coy about what they earn. The Club is moving in the right direction, with its service highly regarded. We just wish it was larger, but the Club may point the finger back at us brokers for this. Tonnage by Vessel Type
8% 12% 36% Container Tankers Bulkers Other  21% Dry Cargo Year 2009* 2008* 2007* 2006 2005

23%

Calls/Premium

$111,955,000 $20,306,000 $35,429,000 $12,375,000 $50,059,000 $282,894,000 $439,803,000 10.90% 1.55 $4.28

$62,161,000 $19,324,000 45,416,,000 $8,706,000 ($5,732,000) $277,316,000 $426,842,000 9% 1.54 $3.97

$52,044,000 $11,563,000 $77,198,000 $7,201,000 ($43,918,800) $231,951,000 $373,539,000 9.10% 1.61 $4.64

$114,397,000 $34,335,000 $73,511,000 $14,709,000 ($8,158,000) $224,856,000 $348,829,000 9.90% 1.55

$99,897,000 $29,117,000 $58,199,000 $14,812,000 ($2,231,000) $203,678,000 $326,466,000 9.50% 1.6

Tonnage by Area
7% 2%

Reinsurance Cost Net Claims (incurred) Operating Expenses 32% Southern Europe Net Underwriting Result Asia Gross Outstanding Claims Total Assets Average Expense Ratio Solvency Margin

29%

Norther Europe Sweden Middle East 30%

Reserves/GT Ratio *P&I only (prior years include H&M)

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42

P&I Report 2009/10

The United Kingdom Mutual Steamship Assurance Association  (Bermuda) ( ermuda) Limited imited
Yet another new Club Chairman, Dino Caroussis, has to report on a year which has seen “the most dramatic reversal in economic conditions that the world has experienced in our working lifetimes”. The Club had reduced its equity and absolute return fund portfolios to 14% before the end of 2007 and raised $100 million capital in 2008 by means of perpetual bonds. The investment loss in 2008 was thus limited to $61 million (including the cost of servicing the bonds) of which the vast majority, $38 million, was due to currency movements which the Club hope will eventually be Managers Self Managed Gross Tonnage Mutual Owned Fixed Chartered Free Reserves 2009 2008 2007 2006 2005 2004 2003 2002 compensated by claims settling at lower US dollar values. The Board has now partially relaxed its restrictions on equity purchases h t take to t k advantage d t of f potential t ti l stock t k market k t rallies lli later l t in i the th year. The investment losses combined with a deterioration in retained claims persuaded the Board to bite the bullet and make 110,000,000 57,000,000 unbudgeted calls of around $193 million, of which $128 million relates to the 2006 and 2007 years and is included in this y year’s results. The net result is that free reserves rose slightly g y to $ $236 million or $ $334m including g the p perpetual p $235,767,000 $229,152,000 $262,757,000 $216,819,000 $206,213,000 $219,434,000 $179,298,000 $211,000,000 bonds or hybrid capital. The lower figure is the relevant one in terms of any possible need for additional calls, as the purpose of the hybrid capital is to strengthen the asset base and appease Standard and Poor’s so is very much a recourse of last resort. Not surprisingly, the 2009 renewal was a difficult one, but despite the loss of some members overall owned tonnage remained pretty much unaltered. unaltered The Club reports an 11.7% 11 7% increase in premium on renewing tonnage against the standard increase of 12.5%, before allowance for changes to terms. Caroussis reports that while 2008 saw a much better experience on the Pool, this was offset by a much higher level of claims within the Club retention, particularly in the crew personal injury category. Total claims for 2008 are projected at $322 million, marginally down on 2007.

Standard & Poor’s Poor s Rating A-

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43

P&I Report 2009/10

The United Kingdom Mutual Steamship Assurance Association (Bermuda)  Limited imited
We do hope the Club has now turned the corner but it will probably need the full 2008 call to push free reserves up to the $300 million mark. We are pleased the Club does not appear to be particularly concerned that it is no longer the largest in the International Group, as the last thing we want to see is a desperate effort to increase tonnage to regain top spot. The technical underwriting loss in 2008 was $54 million, well down on 2007 ($96 million excluding the unbudgeted call) and Tonnage by Vessel Type with recent changes to the underwriting team and other areas, the Club is hopefully on the right track back to stability.
Tankers / Gas Bulkers Container 10% 46% Passenger /  Ferry Car Carrier Other  25% Reefer & Cargo Year 2009 2008 2007 2006 2005

4% 8%

4% 3%

Tonnage by Area
12%

Calls/Premium Reinsurance Cost Net Claims (incurred) Operating Expenses Europe Net Underwriting Result Gross Outstanding Claims 60% Asia Pacific Americas Total Assets Average Expense Ratio Solvency Margin Reserves/GT Ratio

$548,723,000 $78,402,000 $353,079,000 $51,639,000 $65,603,000 $1,050,740,000 $1,404,843,000 9.96% 1.34 $2.15

$386,034,000 $74,078,000 $361,413,000 $46,836,000 ($96,293,000) $1,001,848,000 $1,137,423,000 9% 1.24 $2.05

$358,419,000 $78,308,000 $264,841,000 $41,129,000 ($25,859,000) $918,531,000 $1,199,593,000 9.27% 1.31 $2.48

$354,943,000 $128,560,000 $223,018,000 $41,294,000 ($37,929,000) $869,115,000 $1,101,217,000 10.14% 1.27

$340,305,000 $19,539,000 $331,749,000 $42,717,000 ($53,700,000) $936,929,000 $1,157,371,000 10.85% 1.24

28%

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44

P&I Report 2009/10

The West of England Shipowners Mutual Insurance Association  ( uxembourg) (Luxembourg)
The Annual Report is full of photographs of calm seas, portraying the image that with the additional unbudgeted calls announced in December 2008 (making a total of around $200 million extra premium for the last five years), the Club has no more nasty t surprises i up its it sleeve l and d normal l service i will ill be b resumed. d Some S members b h d clearly had l l had h d enough h and d around 4 million GT were lost at the February 2009 renewal. Chairman Matthew Los’ first year at the helm saw an investment loss of nearly $100m render additional calls Managers Self Managed Gross Tonnage Mutual Owned Fixed Chartered Free Reserves 2009 2008 2007 2006 2005 2004 2003 2002 unavoidable, , with the calls helping p g to reduce the overall deficit for the y year to $ $13 million. Los believes the current free reserves of $161 million will meet Solvency II requirements. He mentions an improving claims trend since the second half of 2008, with large claims down in both value and number. If this trend continues and investment income shows 50,700,000 16,000,000 some recovery, the Club believes that there is some prospect the estimated additional call of 45% for 2008 which is due for payment in 2010 may not need to be charged in full. full $160,744,000 $173,617,000 $204,762,000 $132,538,000 $134,308,000 $145,400,000 $125,045,000 $211,000,000 2008 saw five claims over $2 million but none exceeded the $7 million retention. A healthy improvement on 2007 when eleven claims exceeded $2 million including five over $7 million, and routine claims are also showing a small improvement on 2007. Los does warn that while some categories of claim can be expected to improve, others such as personal injury and pollution are likely to continue to rise. He feels depressed shipping markets in the past have led to a drop in standards as crewing and maintenance budgets are cut, and warns that ship owners must reverse this tendency and not allow Standard & Poor’s Poor s Rating BBB (stable) standards t d d to t fall. f ll Some S members b might i ht be b inclined i li d to t point i t out t that th t they th would ld have h more funds f d to t invest i t in i these th areas if the Club stopped making unbudgeted calls. The exact investment loss was $96.12 million (16.8%). At February 2009, the investment portfolio was 52% fixed income, , 23% cash, , 13% absolute returns and 12% equities. q The investment p policy y is under review and the Club has appointed two non-executive directors with investment management experience to the Board of its investment subsidiary.
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P&I Report 2009/10

The West of England Shipowners Mutual Insurance Association  ( uxembourg) (Luxembourg)
2009 has seen various welcome changes to the Club’s management team on both the claims and underwriting side and we must hope the new team will be able to bring some stability back to the Club. After a pretty awful five years, they need to get a move on. Tonnage by Vessel Type
Bulkers 5% 4% 16% 30% Tankers Containers Cargo /  Reefers 28% Ferries /  Passenger Other Year 2009 2008 2007 2006 2005

17%

Tonnage by Area
Calls/Premium Reinsurance Cost 8% 13% Asia 49% Americas 30% Europe Net Claims (incurred) Operating Expenses Net Underwriting Result Gross Outstanding Claims $408,549,000 $44,967,000 $231,916,000 $49,917,000 $81,749,000 $643,065,000 $919,249,000 13.82% 1.43 $3.16 $240,993,000 $46,216,000 $213,339,000 $41,441,000 ($60,003,000) $624,443,000 $923,879,000 12% 1.5 $3.23 $326,126,000 $48,583,000 $226,247,000 $41,430,000 $9,866,000 $568,073,000 $846,875,000 12.41% 1.5 $3.73 46 $251,362,000 $45,875,000 $184,341,000 $38,086,000 ($16,940,000) $542,164,000 $715,087,000 13.08% 1.32 $236,629,000 $41,700,000 $168,437,000 $33,581,000 ($7,089,000) $527,288,000 $717,835,000 12.99% 1.36

Total Assets Middle East /  North Africa Average Expense Ratio Solvency Margin Reserves/GT Ratio

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P&I Report 2009/10

Fixed Premium and Other P&I Facilities
(which have provided 2009 data)

British Marine Limited Charterers Club Navigators P&I RaetsMarine South of England

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47

P&I Report 2009/10

British Marine Limited
Fact Sheet Entered Tonnage 2009 Number of Vessels 2009 Limit Available Premium Income 2009 13,500,000 10,893 (2008: 9,655) $500,000,000 (with option for up to $1bn) $125 000 000 (2008 $93m) $125,000,000

Vessel type Bulkers Dredgers Fishing General Cargo Miscellaneous Smoothwater Tankers Tugs Unitised Yacht Region African Continent Australasia Central America & Caribbean Eastern Europe Far East Indian Sub-Continent Middle East North America Northern Europe Scandinavia South America Southern Europe

% 11% 1% 6% 35% 19% 8% 6% 1% 11% 2% % 2% 2% 2% 10% 15% 4% 12% 4% 22% 3% 3% 21%

British Marine is now a core company within QBE (Europe), and thus benefits from an A+ S&P rating. Notwithstanding the events of 2008, QBE Europe returned strong results with gross premium of GB£2.3 billion and a combined operating ratio of 87%. The Balance Sheet strength of QBE puts British Marine in an enviable financial position compared to the Group Clubs and investment losses were not an issue at the 2009 renewal. British Marine did seek an increase of 6% at the renewal to cover increased reinsurance costs resulting from the heavy claims we mentioned last term, including in 2008 the three largest losses in their history. The ease with which these losses were absorbed is certainly reassuring. CEO Robert Johnston rather gleefully refers to the International Group’s problems of 2008, feeling the Clubs had to coerce their members to renew, which is not the British Marine way. Johnston reports a 95% retention rate on the renewing portfolio with rates up 7%. A further 15% premium increase was generated from 90 new clients at 20th February 2009, with major growth coming from Northern Europe. British Marine continues to be the most viable alternative to the Group Clubs for smaller tonnage.

Standard & Poor’s Rating A+

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48

P&I Report 2009/10

Charterers P&I Club
Fact Sheet3 Insurance Carrier Commenced Underwriting Entered Tonnage Active Charterers Limit Available 2009 Estimated Premium Income
Vessel type Bulkers Liners Tankers Other % 75% 17% 5% 3%

Great Lakes/Munich Re 1986 (de-mutualised 1999) N/S 190 $50,000,000 (with option up to $350m) $23,000,000 (2008 $25.5m)

The Charterers P&I Club aims to fill the gap between the cover offered by commercial underwriters and the ownerorientated i t t d cover available il bl from f th P&I Clubs. the Cl b As A a fixed fi d premium i f ilit its facility, it purpose is i to t offer ff the th ethos th of f Club Cl b style t l service on a fixed premium basis. The client base of 190 members extends from liner operators to trading houses. It changed security last year from Lloyd’s to Great Lakes, which is part of the Munich Re Group and S&P rated AA-.

Region Europe Asia Americas Australia Middle East/India Africa

% 30% 37% 7% 9% 10% 7%

With a team t of f experienced i d maritime iti l lawyers and d commercial i l claims l i adjusters, dj t th Club the Cl b offers ff a good d service i aimed i d solely at protecting their charterer clients. However, premium income has reduced by around 15% since 2007 and in the current market and with the International Group aggressively seeking chartered tonnage, Charterers face a stiff challenge over the next few years.

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49

P&I Report 2009/10

Navigators Protection & Indemnity
Fact Sheet Insurance Carrier Commenced Underwriting Entered Tonnage Number of Vessels Limit Available 2008 Premium Income
Vessel type g General Cargo Bulk Carriers Fishing Vessels Tankers Tugs and Barges Supply/Offshore Oth Others % 70% 6% 3% 10% 5% 5% 1%

Navigators Insurance Co January 2004 N/A (2007:1,750) ) 3,000 ( $50,000,000 $28,200,000 (2007: $27.08m)

Navigators is well established in the fixed P&I market, offering fixed cost cover for smaller owned and chartered vessels mainly i l in i coastal, t l short h t sea and d inland i l d trade. t d Navigators N i t t targets t operators t who h do d not t need d a cover limit li it of f more than th $50 million, with usual limits between $10 million and $50 million. We are pleased to note they have not developed into larger tonnage as we feared last year and will stick to what they know best. Business is accepted p from all p parts of the world except p for US flag g tonnage, g , and is currently y evenly y spread p worldwide with an emphasis on general cargo vessels under 10,000GT.

Region Western Europe Eastern Europe Middle East Asia/Australasia Caribbean/N.America South/Central America

% 30% 11% 14% 20% 13% 12%

As part of a large US insurer, investment losses were not an issue at last renewal and, with no General Increase, premium rises were only sought from clients with poor records.

Standard & Poor’s Rating A

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P&I Report 2009/10

Raetsmarine
Fact Sheet Insurance Carrier Commenced Underwriting Entered Tonnage Number of Vessels Limit Available Anticipated Premium Income
Vessel type Fishing Vessels General Cargo Barges Tugs Yachts Reefers Passenger Workboats Other % 16% 17% 9% 8% 7% 5% 3% 12% 23%

Swiss Re International February 1999 for Owners P&I 5,000,000 (Blue Water) (Blue Water) ) 3,500 ( Up to USD 500,000,000 USD 35,000,000

Rotterdam-based, Raetsmarine is a specialist underwriting agency now acting for Swiss Re, to whom it switched from troubled Fortis on 1 January 2009; a somewhat strange move by Swiss Re away from its core business into primary P&I. The appetite for Swiss Re to continue this relationship may be in doubt given their preoccupation with restoring their core business. Raetsmarine has restructured into a single entity seeking to offer one-stop solutions including:  Charterers liabilities  Blue water ship owners  Inland craft  Ports and terminals
69% 16% 8% 4% 3%

Region Europe Asia Pacific Middle East/India CSA Other

%

 Hull  Cargo  FDD “Blue Blue water water” tonnage is limited to vessels under 10,000 10 000 GT and is mainly European. European USA trading is excluded, excluded as are ocean voyages, otherwise there are no age restrictions and singletons are accepted. 2009 income from this class is estimated at $35 million, with chartered premium estimated at a similar level.

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51

P&I Report 2009/10

South of England
Fact Sheet Commenced Underwriting Estimated 2009 Tonnage Estimated Number of Vessels Limit Available Anticipated Premium Income
Vessel type Bulkers General Cargo Tankers Passenger Container Other % 60% 18% 13% 3% 2% 4%

February 2004 9,500,000 1,000 Up to USD 500,000,000 USD 60,000,000

The South of England Protection and Indemnity Association (Bermuda) Limited (“ SEPIA”), is an independent Mutual Club which aims to provide an alternative to the International Group for ship owners but in reality insures tonnage which the Group prefers not to accept. SEPIA will consider all types of ships, but principally those over 7,500 gross tons trading internationally, excluding vessels with a predominantly U.S. trading pattern, or which are U.S. flagged and/or crewed. Older tonnage, nonI A C S classed I.A.C.S. l d ships hi and d singleton i l t operations ti will ill be b considered. id d The Th vast t majority j it of f entered t d tonnage t comes from f the Far and Middle East, and the average age of the Club’s tonnage is twenty-three years. SEPIA offers terms on an estimated total cost basis, backed this year by reinsurance from Allianz up to $5 million excess of a retention of $250,000 , each claim, , with higher g limits reinsured in Lloyd’s. y Usual limits vary y between $10 million and $50 million. Despite the small retention, SEPIA has announced unbudgeted additional calls of 25% for 2006, 2007 and 2008. The Club has its problems but has a vital place in the current market as the only P&I provider for large older tonnage. It continues to grow, and expects 2009 will see an increase in GT of around I million to 9.5 million and premium up from $52 million to $60 million.

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