1. 1 Future Scenarios of Marine Insurance Alessandro Morelli 8th October 2012 Shipping & The Law - Naples

2. 2Future scenarios of Marine Insurance - A. Morelli Hull claims 2012 Costa Concordia: H.M. 395M € Exmar: technological element of risks Stolt Valor: severe fire risks on tankers

3. 3Future scenarios of Marine Insurance - A. Morelli 2012: strong total loss impact (on uw years 2011 & 2012) Costa Concordia: Carnival Corporation & PLC website: 508+17 MUSD from H&M insurance. (2Q financial report, issued 02.07.2012)...and more total losses in excess of 30 MUSD did incur 1st half 2012 (partly attaching to uw year 2011). Hull – Gross Ultimate Loss Ratio Underwriting years 1996 to 2011 Source: IUMI 2012

4. 4Future scenarios of Marine Insurance - A. Morelli u/y 2011 at 31/3/2012 Corpi Mercato italiano – Loss Ratio lorda Sinistri pagati+riservati / Premi lordi

5. 5Future scenarios of Marine Insurance - A. Morelli Attritional losses impacts 5 Source. Braemar/Salvage Association

6. 6Future scenarios of Marine Insurance - A. Morelli Shipping Market Clarksea Index 11/1/20156 level recovered as economy improved, but has slipped back in 2011 and first half of 2012 Source: Clarkson Research, August 2012

7. 7Future scenarios of Marine Insurance - A. Morelli Insurers facing Challenges: 1  Increasing exposures and accumulations of risks:  Large cruise ships  Ultra large container carriers and their cargo  need to understand new exposures

8. 8Future scenarios of Marine Insurance - A. Morelli New risks scenarios: cruise ships "Oasis of the Seas" / "Allure of the Seas“ (Royal Caribbean) 5.400/6.400 pax (2.700 cabins) 2.100 crew Length 362 m Breadth: 60 m Draught: 9,3 m Height: 72 m GT 225.000 Oasis of the Seas (2.700) vs. Costa Atlantica (1.000/85.619). Costa Concordia: 1.500/114.000

9. 9Future scenarios of Marine Insurance - A. Morelli New risks scenarios: container ships 01/11/20159 Triple E Maersk Line 18.000 TEU’s 440 mt. length 59 mt. breadth 16,5 mt. draught

10. 10Future scenarios of Marine Insurance - A. Morelli New risks scenarios: container ships 01/11/201510 Strong increase of orders of post-panamax ULCS

11. 11Future scenarios of Marine Insurance - A. Morelli Potential Exposures and Accumulations  New cruiseship values: $ 1.000.000.000  Ultra Large Containership: Hull Value $ 500.000.000  18.000 TEU’s carrying capacity  20’ container average value: $ 50.000 /100.000  Total cargo value: $ 900.000.000 / 1.800.000.000  Total Value ( hull+cargo) $ 1.400.000.000 / 2.300.000.000  Costa Concordia (HM +IV) = $ 500.000.000

12. 12Future scenarios of Marine Insurance - A. Morelli Main Insurers on European Markets and Underwriting Capacity (*)  UK: 600M  Lloyds / RSA / XL / Lancashire  Nordic: 200M  GARD / Norwegian Hull Club / Swedish Club  France:200M  AXA / Allianz / Groupama Transport  Italy:100M  Alleanza Toro / Ariscom / Assitalia / AXA C.S./ Generali / Siat Swiss Re C.S.  Total Capacity 1.100M / 1.200M  Overcapacity in respect of current risks but what about future exposures? (*) internal estimate AXA C.S. - millions $

13. 13Future scenarios of Marine Insurance - A. Morelli Insurers facing Challenges: 2  Solvency II scheduled for 1/1/2014  Adoption of internal model of risk assessment  Greater attention to profitability  Economic Combined Ratio (“time value”)

14. 14Future scenarios of Marine Insurance - A. Morelli CONCLUSIONS  Difficult situation both for Insurers and Shipowners  Insurers need to balance their accounts  What is the way out?  Risk Management and Loss Prevention policies  Paris MOU NIR: ship risk profile  Facilitate long term relationships

15. 15Future scenarios of Marine Insurance - A. Morelli Thank you for your attention