2007 IUMI - FF - Global Marine Insurance - Seltmann

Global Marine Insurance Report 2007Global Marine Insurance Report 2007

Astrid Seltmann, Facts & Figures Committee Analyst/Actuary, CEFOR, Norway

Thanks also to Pamela Frood and Cédric Charpentier

Report on marine insurance premiums 2005 and 2006

• By end of August 2007, 45 of 53 (ex 47 of 54) members reported their country’s marine premium figures for accounting years 2005 and 2006.

• Reported figures represent approx. 97% of the total marine premium written by all IUMI members in 2005 and 2006.

• Total premium for 2006 is therefore estimated to reach approx. USD 20.3 billion*. (excluding P&I from mutual P&I Clubs).

* Strong exchange rate effects on premium volume, see explanations in presentation.

World Merchant Fleet and Global Marine Hull & Liability Premium

Index of evolution, vessels > 100 GT, 1995 = 100%

Sources: Indicators for World Fleet from ISL Bremen, Vessel value index: CEFOR

25%

50%

75%

100%

125%

150%

175%

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

No. Ships

Gross tonnage

Global Marine Hull &Liab. Premium

Average insured vesselvalue (CEFOR)

50%

100%

150%

200%

250%19

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

06

Total World TradeVolume

Global CargoPremium

Total World TradeValues

World Seaborne Trade Volume andTrade Values, Global Cargo Premium

Index of evolution, 1995 = 100%

Source: Indicators for World Trade Volume from ISL Bremen

A major part of the increase 2001-04 and 06 and decrease 2004-2005 is due to change in exchange rate against USD!(Cargo mostly written in local currency)

60%

70%

80%

90%

100%

110%

120%

130%

140%

1999 2000 2001 2002 2003 2004 2005 2006

EUR

GBP

JPY

NOK

Index of evolution of Exchange rates between US$ and selected currencies

(as of December each year)

Source: Norges Bank Exchange Rates Statistics

USD weakerstronger weaker

Global premiums reported 2002 to 2006 (accounting years)

0 5000 10000 15000 20000

USD (millions)

Total

Offshore / Energy

Marine Liability

Transport / Cargo

Global Hull20062005200420032002

Stagnation 05 due to strengthening of USD against major European and Asian currencies.

Increase 01-04 and 05-06 partly due to weakening of USD against major European and Asian currencies.

Market Shares 2006

22.4%

11.7%2.0%

63.9%

EuropeAsia/PacificNorth AmericaRest of World

Europe : Albania, Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Netherlands, Norway, Poland, Portugal, Romania, Russia, Slovenia, Spain, Sweden, Switzerland, Turkey, Ukraine, United Kingdom (IUA + Lloyds)Asia/Pacific : Australia, Chinese Taipei, Hong Kong, India, Japan, North Korea, South Korea, Malaysia, New Zealand, SingaporeNorth America : Bermuda, Canada, USARest of the World : Congo, Egypt, Israel, Kenya, Lebanon, Mexico, Morocco, Nigeria, South Africa,Tunisia, United Arab Emirates

Countries in italics did not report in 2007

Report on marine insurance premiums by economic areas

(USD Millions)

0

2000

4000

6000

8000

10000

12000

14000

2000 2001 2002 2003 2004 2005 2006

Accounting Year

Europe

Asia/Pacific

NorthAmerica

Rest of theWorld

Europe, Asia: Exchange rate effects due to weakening/strengthening of USD

Global Marine Premium 2000 - 2006

(USD Million), as reported

0

5,000

10,000

15,000

20,000

25,000

2000 2001 2002 2003 2004 2005 2006

Accounting Year

Total

Cargo

Hull

EnergyLiability

0

100

200

300

400

500

600

700

800

2000 2001 2002 2003 2004 2005 2006

Accounting Year

FranceItalyJapanNorwaySpainUK (ILU/IUA)UK (Lloyd's)USA

Global Hull PremiumMajor Markets, 2000 - 2006 (USD Million)

From 2004 building risk is officially included in figures.

Global Cargo PremiumMajor Markets, 2000 - 2006 (USD Million)

0

500

1000

1500

2000

2000 2001 2002 2003 2004 2005 2006

Accounting Year

Belgium

Chinese Taipei

France

Germany

Italy

J apan

Netherlands

Spain

Sweden

UK (ILU/IUA)

UK (Lloyd's)

USA

Europe/Asia: exchange rate effects.

MARINE MUTUAL MARKET SECTOR

Gross Calls (Premium) – Operational location

0200400600800

10001200140016001800

2000 2001 2002 2003 2004 2005 2006

Accounting Year

J apan

Norway

Sweden

UK

US

Per accounting year – USD Million

Source: Standard & Poors Marine Mutual Report 2007

Marine Hull – Evolution of Paid Claims, Gross Premiumsas reported, U/W Year 1999 to 2006 (USD)

Totals of 9 IUMI members – Belgium, France, Germany, Italy, Netherlands, Norway, Spain, UK Lloyds, UK IUA

Blue line = Gross Premium; Red line = Paid Claims

2000 underwriting year

end of 2000 2001 2002 2003 2004 2005 2006 2007 2008 ult0

500

1000

1500

2000

2500

3000

end of 1999 2000 2001 2002 2003 2004 2005 2006 2007 ult0

500

1000

1500

2000

2500

3000

1999 underwriting yearUSD USD 2000 underwriting year

end of 2002 2003 2004 2005 2006 2007 2008 2009 2010 ult0

500

1000

1500

2000

2500

3000

USD 2002 underwriting year

end of 2001 2002 2002 2004 2005 2006 2007 2008 2009 ult0

500

1000

1500

2000

2500

3000


end of 2003 2004 2005 2006 2007 2008 2009 2010 2011 ult0

500

1000

1500

2000

2500

3000


end of 2004 2005 2006 2007 2008 2009 2010 2011 2012 ult0

500

1000

1500

2000

2500

3000


end of 2005 2006 2007 2008 2009 2010 2011 2012 2013 ult0

500

1000

1500

2000

2500

3000


end of 2006 2007 2008 2009 2010 2011 2012 2013 2014 ult0

500

1000

1500

2000

2500

3000


Marine Hull – Evolution of Paid and Total Claims, Gross Premiumsas reported, U/W Year 1999 to 2006 (USD)

Totals of 8 IUMI members – Belgium, France, Germany, Italy, Netherlands, Norway, Spain, UK Lloyds

Blue line = Gross Premium; Red line = Paid Claims, Yellow line = Paid+Outstanding claims


end of 2000 2001 2002 2003 2004 2005 2006 2007 20080

500

1000

1500

2000

2500

3000

end of 1999 2000 2001 2002 2003 2004 2005 2006 20070

500

1000

1500

2000

2500

3000

1999 underwriting yearUSD USD 2000 underwriting year

end of 2002 2003 2004 2005 2006 2007 2008 2009 20100

500

1000

1500

2000

2500

3000


end of 2001 2002 2002 2004 2005 2006 2007 2008 20090

500

1000

1500

2000

2500

3000


end of 2003 2004 2005 2006 2007 2008 2009 2010 20110

500

1000

1500

2000

2500

3000


end of 2004 2005 2006 2007 2008 2009 2010 2011 20120

500

1000

1500

2000

2500

3000


end of 2005 2006 2007 2008 2009 2010 2011 2012 20130

500

1000

1500

2000

2500

3000


end of 2006 2007 2008 2009 2010 2011 2012 2013 20140

500

1000

1500

2000

2500

3000


0%

20%

40%

60%

80%

100%

120%

140%

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Ultimate calculation based on figures of 9 IUMI members: Belgium, France, Germany, Italy, Netherlands, Norway, Spain, UK Lloyds, UK IUA

Marine Hull Gross Loss Ratio paid claims,

Actual and estimated towards ultimateU/W Year 1996 to 2005

1999

1998

2000

2002

1997

2001

2004/05/1996

2003

Technical break even is achieved when the gross loss ratio does not exceed 100% minus the expense ratio (between 20% and 30%, acquisition costs, capital costs and management expenses)

Transport/Cargo – Evolution of Paid Claims, Gross Premiumsas reported, U/W Year 1999 to 2006 (USD)

Totals of 8 IUMI members – Belgium, France, Germany, Italy, Netherlands, Spain, UK Lloyds, UK IUA

Blue line = Gross Premium; Red line = Paid Claims

end of 2003 2004 2005 2006 2007 2008 2009 2010 2011 ult0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000


end of 1999 2000 2001 2002 2003 2004 2005 2006 2007 ult0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

1999 underwriting yearUSD

end of 2000 2001 2002 2003 2004 2005 2006 2007 2008 ult0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

USD 2000 underwriting year 2001 underwriting year

end of 2001 2002 2003 2004 2005 2006 2007 2008 2009 ult0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000USD 2001 underwriting year

end of 2002 2003 2004 2005 2006 2007 2008 2009 2010 ult0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000


end of 2004 2005 2006 2007 2008 2009 2010 2011 2012 ult0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000


end of 2005 2006 2007 2008 2009 2010 2011 2012 2013 ult0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000


end of 2006 2007 2008 2009 2010 2011 2012 2013 2014 ult0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000


Transport/Cargo – Paid and Total Claims, Gross Premiumsas reported, U/W Year 1999 to 2006 (USD)

Totals of 7 IUMI members – Belgium, France, Germany, Italy, Netherlands, Spain, UK Lloyds

Blue line = Gross Premium; Red line = Paid Claims, Yellow line = Paid+Outstanding claims

end of 2003 2004 2005 2006 2007 2008 2009 2010 20110

500

1000

1500

2000

2500

3000

3500

4000


end of 1999 2000 2001 2002 2003 2004 2005 2006 20070

500

1000

1500

2000

2500

3000

3500

4000

4500

1999 underwriting yearUSD

end of 2000 2001 2002 2003 2004 2005 2006 2007 20080

500

1000

1500

2000

2500

3000

3500

4000

4500

USD 2000 underwriting year 2001 underwriting year

end of 2001 2002 2003 2004 2005 2006 2007 2008 20090

500

1000

1500

2000

2500

3000

3500

4000


end of 2002 2003 2004 2005 2006 2007 2008 2009 20100

500

1000

1500

2000

2500

3000

3500

4000


end of 2004 2005 2006 2007 2008 2009 2010 2011 20120

500

1000

1500

2000

2500

3000

3500

4000

4500


end of 2005 2006 2007 2008 2009 2010 2011 2012 20130

500

1000

1500

2000

2500

3000

3500

4000

4500


end of 2006 2007 2008 2009 2010 2011 2012 2013 20140

500

1000

1500

2000

2500

3000

3500

4000

4500


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Ultimate calculation based on totals of 8 IUMI members – Belgium, France, Germany, Italy, Netherlands, Spain, UK Lloyds, UK IUA

Transport/Cargo, Gross Loss Ratio paid claims,Actual and estimated towards ultimate U/W Year 1996 to 2006

2002/04/05/06

2003

Technical break even is achieved when the gross loss ratio does not exceed 100% minus the expense ratio (between 20% and 30%, acquisition costs, capital costs and management expenses)

0%

20%

40%

60%

80%

100%

120%

140%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Marine Hull

Cargo/Transport

Marine Hull and Cargo/TransportGross Ultimate Loss Ratio

U/W Year 1996 to 2006

Technical break even is achieved when the gross loss ratio does not exceed 100% minus the expense ratio (acquisition costs, capital costs and management expenses, usually between 20% and 30%).

Impact of major claims in 2007 attaching to 2006 + further increase in partial claims costs in 2007

Examples of Major Hull claims in 2007, attaching to Underwriting year 2006

Date Vessel Name Casualty18.01.07 MSC Napoli Grounding08.03.07 MSC Joanna Collision08.03.07 W.D. Fairway Collision 08.03.07 Repubblica de Genova other05.04.07 Sea Diamond Grounding12.04.07 Bourbon Dolphin Capsize

Claims xs 20 MUSD occurred in 2007, but attaching to 2006, are estimated to sum up to about 600 USD million, adding roughly additional 18% to the 2006 hull gross loss ratio.

Marine Hull - Quarterly evolutionNet loss ratio paid+outstanding claimsHull & Machinery insurance (excluding LOH, freight and hull interest, building risk)

Source: CEFOR, Underwriting years 2005 and 2006

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

1 2 3 4 5 6 7 8 9 10

2005

2006

Net loss ratio* (net of acquisition costs)

Quarters

* =(Paid+Outstanding claims) / Net premium

Summing up Marine Hull

Underwriting years 2004, 2005: Few major claims But increase in average attritional claims amount

Underwriting year 2006: Increase in the number and severity of major claims Continuing trend towards higher attritional claims amounts

Quo vadis?

Transport/Cargo Exposures in values increases significantly, but not reflected

in premium development Even so, stability in results since 2002

2007 IUMI - FF - Global Marine Insurance - Seltmann

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