IUMI 2002 – New York City A Joint Hull Committee View from London Casualty & Underwriting...

IUMI 2002 – New York City

A Joint Hull Committee View from London

Casualty & Underwriting Statistics

IUMI 2002 - New York City


Casualty Statistics

Casualty & Underwriting Statistics A Joint Hull Committee View from London Agenda


Casualty Statistics Total Loss Trends

• Summary of Total Loss Statistics

Casualty & Underwriting Statistics A Joint Hull Committee View from London Agenda


Casualty & Underwriting Statistics A Joint Hull Committee View from London



Major Partial Loss Trends• Observations from Salvage Ltd’s major casualty

database

Agenda






database

Underwriting Results

Agenda






database

Underwriting Results Market Results The Market Cycle

Agenda



Total Loss Trends• Summary of Total Loss Statistics


Total Losses 1989 – 2001By Number

Vessels > 500Grt

0

25

50

75

100

125

150

175

200

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Number

Bulkers Tankers Other Cargo Others Total

Source: LMIU for Joint Hull Committee


Total Losses 1989 – 2001By Tonnage

Vessels > 500Grt

0

250

500

750

1,000

1,250

1,500

1,750

2,000

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

GRT (000's)

Bulkers Tankers Other Cargo Others Total



Total Losses 1989 – 2001As Percentage of World Fleet

Vessels > 500Grt

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

0.6%

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

% of World Fleet

%age of Vessels %age of GRT



Total Losses 1994 – 2001Age / Type Profile

Vessels > 500Grt1.28%

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

0.6%

0-4 yrs 5-9 yrs 10-14 yrs 15-19 yrs 20-24 yrs 25 yrs +

% of World Fleet

Bulkers Tankers Other ships Total



Total Losses 1994 – 2001

0% 5% 10% 15% 20% 25% 30%

Various

Mach / Eng Rm

Hull / Structure

Collision

Fire

Grounding

Weather

Frequency (%age of overall total losses)

By Cause, All Vessel TypesVessels > 500Grt



Total Losses 1994 – 2001By Cause, Principal Vessel Types

Vessels > 500Grt

0%

5%

10%

15%

20%

25%

30%

35%

40%

Bulkers Tankers Gen Cargo Others

Frequency (%age of overall total losses)

Collision Fire Grounding Hull/Structure Mach/Eng Rm Weather Various



Total Losses

By Number, By Tonnage, As %age World Fleet:- Downward Trend

• Almost Year on Year

The Most Influential Factors:- Age & Weather

Major Issues:-• Maritime Regulation (Classification, ISM, STCW, Port State Control)

• Technology / Advances in Design & Construction

• World Economy (Maintenance Expenditure)

Conclusion


Major Partial Loss Trends• Observations from Salvage Ltd’s major

casualty database


Partial Loss Casualties 1999–2002

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1999 2000 2001 2002

Frequency (%age of overall PA Casualties)

Mach/Eng Rm Grounding Fire/Explosion Collision

Prop/Steering Heavy Weather Sinking/Capsize Others

Source: BMT Salvage Ltd

By Cause, All Vessel TypesEstimated Cost of Repairs > US$250,000



0%

10%

20%

30%

40%

50%

60%

Bulker Container GeneralCargo

Passenger Tanker ChemTanker

Ro/Ro Reefer Gas

Frequency (%age of overall PA Casualties)

Machinery/Eng Rm Grounding Fire/Explosion Collision


Principal Cause and Vessel TypeEstimated Cost of Repairs > US$250,000


Partial Loss Casualties 1999–2002Frequency & Magnitude, All Vessel Types

Estimated Cost of Repairs > US$250,000


$0.0

$0.2

$0.4

$0.6

$0.8

$1.0

$1.2

$1.4

Main

Eng

ine

Auxilli

ary

Oth

er ER

Collisi

on

Fire/E

xp

Gro

undin

g

HWD

Ingr

ess/F

lood

Ice

Structu

ral

Coatin

g

Prop/S

teerin

g

Av

era

ge

PA

Ca

su

alt

y C

os

t (U

S$

m)

0%

5%

10%

15%

20%

25%

30%

35%

Fre

qu

en

cy

(%a

ge

of o

'all b

y n

um

be

r)

Average PA Casualty Cost Frequency



0% 5% 10% 15% 20% 25% 30%

0-5 yrs

6-10 yrs

11-15 yrs

16-20 yrs

21-25 yrs

> 25 yrs

Frequency (%age of Total Number of machinery Losses)


Machinery Losses by Vessel AgeEstimated Cost of Repairs > US$250,000


Partial Losses

Machinery / Engine Room Damage Highest Frequency All Age and Vessel Types

• Machinery / Engine Room Surveys, Deductibles, New for Old? Fire

Highest Cost• Fire Precautions

Grounding / Collisions Significant Cost & Frequency

• Trading Pattern, Deductibles, Loadings Structural / Coating

Significant Cost• Building Surveys, Release to Builders, Warranty Periods

Conclusion


from London

Underwriting Results Market Results The Market Cycle


‘T’ Audit Code Projected ULR’s 1993 - 2001Net of Commission, Gross of Reinsurance

Lloyd’s Hull Results

98%

152%153%

106%

82%

63%

52%55%

144%

0%

100%

200%

1993 1994 1995 1996 1997 1998 1999 2000 2001

Projected ULR

Lloyd's Market Analysis Dept Current Projection

Lloyd's Solvency & Reserving Data (@ 31/12/01)

Source: Lloyd’s Market Analysis Dept


Lloyd’s Hull Results‘T’ Audit Code Projected ULR’s 1993 - 2001

Net of Commission, Gross of Reinsurance

114%

152%153%

106%

82%

63%

52%55%

157%

0%

100%

200%

1993 1994 1995 1996 1997 1998 1999 2000 2001

Projected ULR

Lloyd's Market Analysis Dept Current Projection

Lloyd's Solvency & Reserving Data (@ 31/12/01)

Source: Lloyd’s Market Analysis Dept


Lloyd's Audit Code 'T'Incurred Loss Ratios

(Net of Commission, Gross of R/I)

0%

20%

40%

60%

80%

100%

120%

140%

160%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

Quarter

Inc

urr

ed

Lo

ss

Ra

tio

1996

Hull Underwriting Results

Source: Lloyd’s Results 2nd Qtr 2002




0%

20%

40%

60%

80%

100%

120%

140%

160%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

Quarter

Inc

urr

ed

Lo

ss

Ra

tio

1997

1996






0%

20%

40%

60%

80%

100%

120%

140%

160%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

Quarter

Inc

urr

ed

Lo

ss

Ra

tio

1998

1997

1996






0%

20%

40%

60%

80%

100%

120%

140%

160%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

Quarter

Inc

urr

ed

Lo

ss

Ra

tio

19981999

1997

1996






0%

20%

40%

60%

80%

100%

120%

140%

160%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

Quarter

Inc

urr

ed

Lo

ss

Ra

tio

19981999

2000 1997

1996






0%

20%

40%

60%

80%

100%

120%

140%

160%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

Quarter

Inc

urr

ed

Lo

ss

Ra

tio

19981999

2000

2001

1997

1996




Hull Underwriting ResultsComparison @ 6th Quarter



0%

20%

40%

60%

80%

100%

120%

140%

160%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

Quarter

Inc

urr

ed

Lo

ss

Ra

tio

19981999

2000

2001

1997

1996






0%

20%

40%

60%

80%

100%

120%

140%

160%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

Quarter

Inc

urr

ed

Lo

ss

Ra

tio

6th Qtr



Lloyd's Audit Code 'T'Booked Premium & Incurred Claims @ 6 Quarters


£0

£50

£100

£150

£200

£250

£300

1996 1997 1998 1999 2000 2001

Underwriting Year

Bo

oke

d P

rem

ium

£m

0%

20%

40%

60%

80%

100%

120%

Incu

rred L

oss R

atio

Booked Premium Inc'd Claims Inc'd Loss Ratio




Premium Received vs Premium Written2000 - 2001 (as @ 18 mos)

0%

20%

40%

60%

80%

100%

Company (A) Company (B) Syndicate (1) Syndicate (2) Syndicate (3) Syndicate (4)

Bo

oke

d/W

ritt

en P

rem

ium

Rat

io

2000 2001

Cash Flow Comparison

Source: London Market Sample


Total Loss TrendAs Percentage of World Fleet

Vessels > 500Grt

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

0.6%

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

% of World Fleet

%age of Vessels %age of GRT



Renewal Terms

Premium DevelopmentA ‘Case Study’

Analysis of Renewal Terms since 1975Example: A Major Dry Bulk Operator (Annual Rate Movement)

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001

Year

Cas

h R

ise

/ Red

uct

ion

Source: Joint Hull Committee


Premium DevelopmentA ‘Case Study’

Renewal Terms

Analysis of Renewal Terms since 1975Example: A Major Dry Bulk Operator (Annual Rate Movement)

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001

Year

Cas

h R

ise

/ Red

uct

ion



A ‘Case Study’Premium Development

Analysis of Renewal Terms since 1975Example: A Major Dry Bulk Operator (Compound Rate Index)

£0.00

£0.20

£0.40

£0.60

£0.80

£1.00

£1.20

£1.40

1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001

Year

Val

ue

of

£1 P

rem

ium


Rating Index


Lloyd’s Results vs Fleet X-Section IndexProfit vs Rate Index

Lloyd's Audit Code 'T'Projected Ultimate Result and Rate Index


-60%

-40%

-20%

0%

20%

40%

60%

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Underwriting Year

Pro

fit

/ Lo

ss

0

30

60

90

120

150

180

Rate M

ovem

ent In

dex

Lloyd's SRD Projection (@ 31/12/01)

Fleet X-Section Rate Index

Source: Joint Hull Committee & Lloyd’s Market Analysis Dept


Profit vs Rate IndexLloyd’s Results vs Fleet X-Section Index



-60%

-40%

-20%

0%

20%

40%

60%

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Underwriting Year

Pro

fit

/ Lo

ss

0

30

60

90

120

150

180

Rate M

ovem

ent In

dex





Profit vs Rate IndexLloyd’s Results vs Fleet X-Section Index



-60%

-40%

-20%

0%

20%

40%

60%

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Underwriting Year

Pro

fit

/ Lo

ss

0

30

60

90

120

150

180

Rate M

ovem

ent In

dex




Lloyd’s MRAD

Projection


Results

Acute Cycle 1993 – 1996

• Exceptional Profits

1997 – 2000• Losses

2001 –• Improvement

Cash Flow, Total Loss Incidence Rating - relatively low

London Cycle or Worldwide?

Conclusion


Global Hull PremiumMarket Share 1992 - 2000

Source: CEFOR Report on Marine Insurance Premium 1999/2000

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

1992 1993 1994 1995 1996 1997 1998 1999 2000

Market Share

Spain




0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

1992 1993 1994 1995 1996 1997 1998 1999 2000

Market Share

Italy

Spain




0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

1992 1993 1994 1995 1996 1997 1998 1999 2000

Market Share

Norway

Italy

Spain




0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

1992 1993 1994 1995 1996 1997 1998 1999 2000

Market Share

USANorway

Italy

Spain




0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

1992 1993 1994 1995 1996 1997 1998 1999 2000

Market Share

France

USANorway

Italy

Spain




0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

1992 1993 1994 1995 1996 1997 1998 1999 2000

Market Share

JapanFrance

USANorway

Italy

Spain


Market Share 1992 - 2000Global Hull Premium


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

1992 1993 1994 1995 1996 1997 1998 1999 2000

Market Share

London

JapanFrance

USANorway

Italy

Spain



Global Hull PremiumMarket Share Development

Comparison of Market Share1994 & 2000

0%

10%

20%

30%

40%

50%

France Italy Japan Norway Spain London USA

Mar

ket

Sh

are

1994 2000


Looking Forward 2002 Result?

To Report on Next Year But

Reliance Upon:-• Cash Flow Improvement• Total Loss Reduction

Rating Relatively Low Issues

• World Economy• Effect of Regulation (Flag, STCW, ISM, IMO, IACS)• Changing Nature of Risk• Investment Income• Reinsurance



Casualty & Underwriting Statistics

IUMI 2002 - New York City

IUMI 2002 – New York City A Joint Hull Committee View from London Casualty & Underwriting...

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