Global Marine Insurance Report 2007

Global 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% 175% 150% No. Ships 125% Gross tonnage 100% 75% 50% 25% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Global Marine Hull & Liab. Premium Average insured vessel value (CEFOR) Sources: Indicators for World Fleet from ISL Bremen, Vessel value index: CEFOR World Seaborne Trade Volume and Trade Values, Global Cargo Premium Index of evolution, 1995 = 100% 250% 200% 150% Total World Trade Volume Global Cargo Premium Total World Trade Values 100% 50% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 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) Index of evolution of Exchange rates between US$ and selected currencies (as of December each year) 140% 130% 120% EUR 110% 100% 90% 80% 70% 60% 1999 2000 2001 2002 2003 2004 2005 2006 GBP JPY NOK Source: Norges Bank Exchange Rates Statistics Global premiums reported 2002 to 2006 (accounting years) Global Hull Transport / Cargo Marine Liability Offshore / Energy Total 0 5000 10000 USD (millions) 15000 20000 2006 2005 2004 2003 2002 Increase 01-04 and 05-06 partly due to weakening of USD against major European and Asian currencies. Stagnation 05 due to strengthening of USD against major European and Asian currencies. Market Shares 2006 11.7% 2.0% Europe Asia/Pacific North America Rest of World 22.4% 63.9% 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, Singapore North America : Bermuda, Canada, USA Rest 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) Europe, Asia: Exchange rate effects due to weakening/strengthening of USD 14000 12000 10000 8000 6000 4000 2000 0 2000 2001 2002 2003 2004 2005 2006 Accounting Year Europe Asia/Pacific North America Rest of the World Global Marine Premium 2000 - 2006 (USD Million), as reported 25,000 20,000 15,000 10,000 5,000 0 2000 2001 2002 2003 2004 2005 2006 Accounting Year Cargo Hull Energy Liability Total Global Hull Premium Major Markets, 2000 - 2006 (USD Million) 800 700 600 500 400 300 200 100 0 2000 2001 2002 2003 2004 2005 2006 Accounting Year France Italy Japan Norway Spain UK (ILU/IUA) UK (Lloyd's) USA From 2004 building risk is officially included in figures. Global Cargo Premium Major Markets, 2000 - 2006 (USD Million) 2000 1500 1000 500 0 2000 2001 2002 2003 2004 2005 2006 Belgium Chinese Taipei France Germany Italy Japan Netherlands Spain Sweden UK (ILU/IUA) UK (Lloyd's) USA Accounting Year Europe/Asia: exchange rate effects. MARINE MUTUAL MARKET SECTOR Gross Calls (Premium) – Operational location Per accounting year – USD Million 1800 1600 1400 1200 1000 800 600 400 200 0 2000 2001 2002 2003 2004 2005 2006 Accounting Year Japan Norway Sweden UK US Source: Standard & Poors Marine Mutual Report 2007 Marine Hull – Evolution of Paid Claims, Gross Premiums as reported, U/W Year 1999 to 2006 (USD) 3000 3000 3000 3000 USD 2500 1999 underwriting year USD 2500 2000 underwriting year 2000 underwriting USD 2500 2001 underwriting year USD 2500 2002 underwriting year 2000 2000 2000 2000 1500 1500 1500 1500 1000 1000 1000 1000 500 500 500 500 0 end of1999 2000 2001 2002 2003 2004 2005 2006 2007 ult 0 end of2000 2001 2002 2003 2004 2005 2006 2007 2008 ult 0 end of2001 2002 2002 2004 2005 2006 2007 2008 2009 ult 0 end of2002 2003 2004 2005 2006 2007 2008 2009 2010 ult 3000 3000 3000 USD 2500 2003 underwriting year USD 2500 2004 underwriting year USD 2500 2005 underwriting year 3000 USD 2500 2006 underwriting year 2000 2000 2000 2000 1500 1500 1500 1500 1000 1000 1000 1000 500 500 500 500 0 end of2003 2004 2005 2006 2007 2008 2009 2010 2011 ult 0 end of2004 2005 2006 2007 2008 2009 2010 2011 2012 ult 0 end of2005 2006 2007 2008 2009 2010 2011 2012 2013 ult 0 end of2006 2007 2008 2009 2010 2011 2012 2013 2014 ult Blue line = Gross Premium; Red line = Paid Claims Totals of 9 IUMI members – Belgium, France, Germany, Italy, Netherlands, Norway, Spain, UK Lloyds, UK IUA Marine Hull – Evolution of Paid and Total Claims, Gross Premiums as reported, U/W Year 1999 to 2006 (USD) 3000 3000 3000 3000 USD 2500 1999 underwriting year USD 2500 2000 underwriting year 2000 underwriting year USD 2500 2001 underwriting year USD 2500 2002 underwriting year 2000 2000 2000 2000 1500 1500 1500 1500 1000 1000 1000 1000 500 500 500 500 0 end of 1999 2000 2001 2002 2003 2004 2005 2006 2007 0 end of 2000 2001 2002 2003 2004 2005 2006 2007 2008 0 end of 2001 2002 2002 2004 2005 2006 2007 2008 2009 0 end of 2002 2003 2004 2005 2006 2007 2008 2009 2010 3000 3000 3000 3000 USD 2500 2003 underwriting year USD 2500 2004 underwriting year USD 2500 2005 underwriting year USD 2500 2006 underwriting year 2000 2000 2000 2000 1500 1500 1500 1500 1000 1000 1000 1000 500 500 500 500 0 end of 2003 2004 2005 2006 2007 2008 2009 2010 2011 0 end of 2004 2005 2006 2007 2008 2009 2010 2011 2012 0 end of 2005 2006 2007 2008 2009 2010 2011 2012 2013 0 end of 2006 2007 2008 2009 2010 2011 2012 2013 2014 Blue line = Gross Premium; Red line = Paid Claims, Yellow line = Paid+Outstanding claims Totals of 8 IUMI members – Belgium, France, Germany, Italy, Netherlands, Norway, Spain, UK Lloyds Marine Hull Gross Loss Ratio paid claims, Actual and estimated towards ultimate U/W Year 1996 to 2005 140% 1999 120% 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) 1998 2000 100% 80% 60% 40% 20% 0% 2002 1997 2001 2004/05/1996 2003 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 12 24 36 48 60 72 84 96 Ultimate calculation based on figures of 9 IUMI members: Belgium, France, Germany, Italy, Netherlands, Norway, Spain, UK Lloyds, UK IUA 10 8 12 0 1 U 32 lti m at e Transport/Cargo – Evolution of Paid Claims, Gross Premiums as reported, U/W Year 1999 to 2006 (USD) 5000 4500 4000 3500 3000 2500 2000 1500 1000 500 0 end of 1999 2000 2001 2002 2003 2004 2005 2006 2007 ult 5000 5000 USD 1999 underwriting year USD 4500 4000 3500 3000 2500 2000 1500 1000 500 2000 underwriting year USD 4500 4000 3500 3000 2500 2000 1500 1000 500 2001 underwriting year 2001 underwriting year 5000 USD 4500 4000 3500 3000 2500 2000 1500 1000 500 2002 underwriting year 0 end of 2000 2001 2002 2003 2004 2005 2006 2007 2008 ult 0 end of2001 2002 2003 2004 2005 2006 2007 2008 2009 ult 0 end of 2002 2003 2004 2005 2006 2007 2008 2009 2010 ult 5000 USD 4500 4000 3500 3000 2500 2000 1500 1000 500 2003 underwriting year 5000 5000 USD 4500 4000 3500 3000 2500 2000 1500 1000 500 2004 underwriting year 5000 USD 4500 4000 3500 3000 2500 2000 1500 1000 500 2005 underwriting year USD 4500 4000 3500 3000 2500 2000 1500 1000 500 2006 underwriting year 0 end of 2003 2004 2005 2006 2007 2008 2009 2010 2011 ult 0 end of2004 2005 2006 2007 2008 2009 2010 2011 2012 ult 0 end of2005 2006 2007 2008 2009 2010 2011 2012 2013 ult 0 end of2006 2007 2008 2009 2010 2011 2012 2013 2014 ult Blue line = Gross Premium; Red line = Paid Claims Totals of 8 IUMI members – Belgium, France, Germany, Italy, Netherlands, Spain, UK Lloyds, UK IUA Transport/Cargo – Paid and Total Claims, Gross Premiums as reported, U/W Year 1999 to 2006 (USD) 4500 4500 4500 USD 4000 3500 3000 2500 2000 1500 1000 500 1999 underwriting year USD 4000 3500 3000 2500 2000 1500 1000 500 0 end of 2000 underwriting year USD 4000 3500 3000 2500 2000 1500 1000 500 2001 underwriting year 2001 underwriting year 4500 USD 4000 3500 3000 2500 2000 1500 1000 500 2002 underwriting year 0 end of 1999 2000 2001 2002 2003 2004 2005 2006 2007 2000 2001 2002 2003 2004 2005 2006 2007 2008 0 end of 2001 2002 2003 2004 2005 2006 2007 2008 2009 0 end of 4500 2002 2003 2004 2005 2006 2007 2008 2009 2010 4500 USD 4000 3500 3000 2500 2000 1500 1000 500 2003 underwriting year 4500 4000 3500 3000 2500 2000 1500 1000 500 2004 underwriting year 4500 4000 3500 3000 2500 2000 1500 1000 500 2005 underwriting year USD 4000 3500 3000 2500 2000 1500 1000 500 2006 underwriting year 0 end of 2003 2004 2005 2006 2007 2008 2009 2010 2011 0 end of 2004 2005 2006 2007 2008 2009 2010 2011 2012 0 end of 2005 2006 2007 2008 2009 2010 2011 2012 2013 0 end of 2006 2007 2008 2009 2010 2011 2012 2013 2014 Blue line = Gross Premium; Red line = Paid Claims, Yellow line = Paid+Outstanding claims Totals of 7 IUMI members – Belgium, France, Germany, Italy, Netherlands, Spain, UK Lloyds Transport/Cargo, Gross Loss Ratio paid claims, Actual and estimated towards ultimate U/W Year 1996 to 2006 100% 90% 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) 80% 70% 60% 50% 40% 30% 20% 10% 0% 2002/04/05/06 2003 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 12 24 36 48 60 72 84 96 8 0 12 Ultimate calculation based on totals of 8 IUMI members – Belgium, France, Germany, Italy, Netherlands, Spain, UK Lloyds, UK IUA U lti 2 m at e 10 13 Marine Hull and Cargo/Transport Gross Ultimate Loss Ratio U/W Year 1996 to 2006 140% Impact of major claims in 2007 attaching to 2006 + further increase in partial claims costs in 2007 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%). 120% 100% 80% Marine Hull Cargo/Transport 60% 40% 20% 0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Examples of Major Hull claims in 2007, attaching to Underwriting year 2006 Date 18.01.07 08.03.07 08.03.07 08.03.07 05.04.07 12.04.07 Vessel Name MSC Napoli MSC Joanna W.D. Fairway Repubblica de Genova Sea Diamond Bourbon Dolphin Casualty Grounding Collision Collision other Grounding 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 evolution Net loss ratio paid+outstanding claims Hull & Machinery insurance Net loss ratio* (net of acquisition costs) (excluding LOH, freight and hull interest, building risk) 120.0% 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% 1 2 3 4 5 6 7 8 9 10 * =(Paid+Outstanding claims) / Net premium 2005 2006 Quarters Source: CEFOR, Underwriting years 2005 and 2006 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