SHIPPINGFORUM APRIL 2016 IRAN-SANKSJONER OG P&I FORSIKRINGSIMPLIKASJ ONER JONATHAN HARE

THE PROBLEM

US PRIMARY SANCTIONS Implementation Day  16 January 2016 Secondary sanctions lifted Primary sanctions remain  US persons  US owned or controlled foreign entities

 US reinsurers  Non-US subsidiaries of US companies P&I INSURANCE General Excess Loss 2016

IG REINSURANCE PROGRAMME EXCESS USD 80 m. 90+ REINSURERS

IG REINSURANCE PROGRAMME EXCESS USD 80 m. US Domicile d US Parent

IG REINSURANCE PROGRAMME EXCESS USD 80 m. US Domicile d US Parent Retrocessio n

NON-CERTIFIED Clubs protected by chicken rule CERTIFIED Blue cards issued by Club IMO Conventions  Pollution  Wreck removal  Passenger death/injury Club directly liable to third party claimants TWO TYPES OF CLAIM

WHICH SHIPOWNERS ARE AFFECTED?  Iranian shipowners  Non-Iranian shipowners trading with Iran  Non-Iranian shipowners who face a claim involving Iranian interests

THE SOLUTION

IG RESPONSE Meeting with OFAC  30 January 2016 General License H American Club Underlying aims of JCPOA

«FACILITATION» FEARS  OFAC Comfort Letter 26 February 2016 LIMITED CAPACITY NET LINES  €70 million any one event and annual aggregate  One reinstatement ENOUGH TO COVER SHORTFALL FOR CLAIM UP TO USD 500 million FALL-BACK COVER

A SHORT TERM SOLUTION Cover exhausted by  single very large claim/multiple large claims  reinstatement used Single claim exceeds cover  Supplemental pooling

THE FUTURE

LONG TERM SOLUTION OFAC LICENSE US REINSURERS ELIMINATE OR REDUCE US PARTICIPATION

THE FUTURE US Secretary of the Treasury Jack Lew Evolution of Sanctions and Lessons for the Future Carnegie Endowment for International Peace 30 March 2016  Seventy-five years ago, one day after Nazi Germany invaded Norway and Denmark, President Roosevelt established an office within the Treasury Department to freeze U.S.-held assets of the governments of Norway and Denmark. The Executive Order he signed on that spring day in 1940 prevented the Nazis from seizing those assets as terror spread across Europe.

THE FUTURE  The risk that sanctions overreach will ultimately drive business activity from the U.S. financial system  If foreign jurisdictions and companies feel that we will deploy sanctions without sufficient justification or for inappropriate reasons—secondary sanctions in particular—we should not be surprised if they look for ways to avoid doing business in the United States or in U.S. dollars  We must maintain a high bar for imposing sanctions, so that they are used only to address significant threats to our national security, foreign policy, or economy.

THE FUTURE  The risk that sanctions overreach will ultimately drive business activity from the U.S. financial system  If foreign jurisdictions and companies feel that we will deploy sanctions without sufficient justification or for inappropriate reasons—secondary sanctions in particular—we should not be surprised if they look for ways to avoid doing business in the United States or in U.S. dollars  We must maintain a high bar for imposing sanctions, so that they are used only to address significant threats to our national security, foreign policy, or economy.

SHIPPINGFORUM APRIL 2016 IRAN-SANKSJONER OG P&I FORSIKRINGSIMPLIKASJ ONER JONATHAN HARE