1. “Marine Insurance in a Challenging Economic Environment”
Deirdre Littlefield
Starr Marine
12 August 2010

2. Agenda IUMI Current Environment and Trends
Shipping and Insurance Statistics
Future Success
Page 2

3. International Union of Marine Insurance
Established 1874
Member Associations from 54 countries
Annual Conference attracts 500 marine professionals
Main Pillars: Education, Lobbying, Membership
Page 3

4. IUMI Technical Committees
Cargo
Ocean Hull
Energy & Offshore
Legal & Liability
Inland Hull, Fishing Vessels & Yachts
Loss Prevention
Facts & Figures
Page 4

5. International Union of Marine Insurance
Page 5

6. “Marine Insurance – Meeting the Challenge of the New Decade”
Page 6

7. International Union of Marine Insurance
IUMI
Education
Lobbying
Membership
Page 7

8. Economic Outlook
The worldwide Maritime industry, ravaged by the economy and financial crisis over the last 30 months, has passed through its darkest hour.
Page 8

9. Forecast Growth for 2010 Global GDP Growth 4.6% U.S. 3.3%
Euro Countries %
China %
India %
Middle East %
LAC %
Page 9
Source: IMF

10. Forecast Growth for 2010 LAC GDP Growth 4.5% Brazil 7.3% Mexico 5.0%
Argentina %
Bolivia %
Chile %
Colombia %
Peru %
Uruguay %
Venezuela %
Page 10
Source: Global Financial Stability Report & IMF

11. Forecast Growth for 2010 Global Activity 2010 2011
Production/Trade 9.0% %
Oil * *
Non-fuel commodity prices 15.5%
*USD price per barrel
Page 11
Source: IMF

12. Forecast Growth for 2010
“the recovery remains largely policy-driven and faces significant challenges
as policy makers look to unwind the unprecedented fiscal, monetary and financial support they provided to keep their economies and financial markets from collapsing”
Page 12
Source: Global Financial Stability Report & IMF

13. Obstacles to Recovery
China
New Tonnage
Page 13

14. Asset Impairment for 2009 20 Billion (USD) 11 Billion (USD)
Ocean Carriers
11 Billion (USD)
Air Carriers
Page 14
Source: Journal of Commerce, New York Times

15. Unprecedented recession but the worst of the slump may now be past
Page 15
Source: IMF / IUMI

16. So, as expected, a severe drop in world trade volumes…
Page 16

17. …combined with commodities prices tumbling…
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18. … is leading to a collapse of world trade values. 9%
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19. World transport capacity: “irrational exuberance”
Page 19
Source: Clarkson

20. Clarksea Index
The Clarksea Index is a weighted average of earnings for all the main commercial vessel types, where the weighting is based on the number of vessels in each fleet sector.
Dec-2007: $49,841/day.
1H 2008: $38,396/day.
Between the end of May 2008 and mid-April 2009, the Index fell from almost $50,000/day to an all-time low of $7,350/day before recovering slightly. The dry bulk market has provided some support to the Index in 2009.
As of 8th January 2010, it stood at $16,783/day.
Source: Clarkson

21. Mobiles - Fleet Size by Region – All Rigs
Page 21

22. Mobiles – Utilisation Rates by Region
Page 22

23. Global Marine Premium 2008 by line of business
Page 23

24. Global Marine Premiums 2006 to 2008, as reported per accounting year
Page 24

25. Global Marine Premiums by line of business, 2000 – 2008 (USD Million), as reported
Page 25

26. Market Shares 2008
Page 26

27. Global Cargo Premium by Market
Page 27

28. Global Hull Premium by Market
Page 28

29. Global Offshore Energy Premium by market
Page 29

30. Marine Hull and Cargo/Transport Gross
Marine Hull and Cargo/Transport Gross* Ultimate Loss Ratio U/W Years 1997 to 2008
Page 30

31. Offshore Energy Gross Reported Loss Ratios U/W Years 1996 to 2008
Page 31

32. Serious and Total Losses 1994 – 2008 By Number (vessels > 500 GT)
Page 32
Source: LMIU

33. Serious and Total Losses 1994 – 2009 By Cause, All Vessel Type (vessels > 500 GT)
Page 33
Source: LMIU, total losses as report by Llody’s List

34. Serious and Total Losses 1994 – 2009 By Cause, All Vessel Type (vessels > 500 GT)
Page 34
Source: LMIU

35. Challenges Protectionism Piracy Redeployment After Lay-Up
Reduced Steel Weight
Crew Recruitment and Training
Vessel Maintenance/Slow Steaming
Page 35

36. On the Positive Side Insurance industry strong and resilient
Successful fund raising by shipping
industry
More ship repair capacity
Crewing crisis eases
Younger world fleet
Page 36

37. Global P&C Industry – orderly transfer of risk continues
Insurance Companies
Pay claims
Renew policies
Write new business
New products
Competition
Banks
Banks disappear
Eliminate lines of credit
Turn away customers
Scale Back products
Consolidation
Page 37
Source: iii, ISO

38. Fewer Problems in the P&C Industry
Because of emphasis on
Underwriting
Transparency
Page 38
Source: iii, ISO

39. Insurance Industry Challenges for 2010
Top line growth
Reduced investment earnings
Expected loss trends
ROE
Page 39
Source iii, ISO

40. Impact of Interest Rate Levels on Returns on Surplus
Combined Ratio
15.9%
Return
100%
9.6%
Return
16%
10%
4.5%
Return 6%
2005
2009
1979
Page 40
Source: iii, ISO

41. Insurance Industry Challenges for 2010
Top line growth
Reduced investment earnings
Expected loss trends
ROE
Access to capital
Regulatory spillover
Page 41
Source iii, ISO

42. Strong Head Winds Top line growth will suffer Bottom line focus
Marine tied to global economy
< 95% combined very challenging
Underwriting, underwriting, underwriting
Page 42

43. For information about IUMI
Thank you.
For information about IUMI
Page 43