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2                                                                                                                                                                                                                                              Friday August 25 2006

                                                                                                        Business & Insurance

I Catastrophe I
Hurricane-hit                                                                                                                                                                                                                                  China $100m order
                                                                                                                                                                                                                                               GERMAN owner Bockstiegel
                                                                                                                                                                                                                                               Reederei has returned to
                                                                                                                                                                                                                                               China’s Zhejiang Zhenyu
                                                                                                                                                                                                                                               Shipyard in Ningbo with or-

Liberty set to                                                                                                                                                                                                                                 ders worth $100m for eight
                                                                                                                                                                                                                                               6,800 dwt general cargo
                                                                                                                                                                                                                                               multi-purpose vessels, writes
                                                                                                                                                                                                                                               Keith Wallis in Hong Kong.
                                                                                                                                                                                                                                                  The first vessel is due to
                                                                                                                                                                                                                                               be delivered in February

cut capacity
                                                                                                                                                                                                                                                  The Emden-based owner
                                                                                                                                                                                                                                               already has four sister ships
                                                                                                                                                                                                                                               on order at the same yard for
                                                                                                                                                                                                                                               delivery in January, April,
                                                                                                                                                                                                                                               July and October 2007.
                                                                                                                                                                                                                                                  Head of the company,
                                                                                                                                                                                                                                               Captain Werner Bockstiegel
Company will ‘take account of market conditions as seen just                                                                                                                                                                                   was on holiday and unavail-
                                                                                                                                                                                                                                               able to comment on the lat-
ahead of September deadline’, writes James Brewer                                                                                                                                                                                              est deal.

ONE of the largest managing           Liberty       International,   priced, some other lines have                                                                                                                                             Brit backs engineering
agents at Lloyd’s, Liberty         which includes both Lloyd’s       weakened.                                                                                                                                                                 LONDON and Lloyd’s in-
Syndicates, is expected to         and London company busi-             Liberty Syndicates has ex-                                                                                                                                             surance group Brit is
scale back its input next year     ness, recorded a pre-tax loss     panded considerably in re-                                                                                                                                                backing a new insurance
as it restores its hurricane-      of $220m for the year.            cent years and like most oth-                                                                                                                                             and reinsurance under-
battered finances.                    In June two of the senior      ers is ready to trim its                                                                                                                                                  writing agency with ex-
   Its syndicate 4472 has          figures at Liberty Syndicates,    capacity in line with the                                                                                                                                                 pertise in engineering,
been operating with £912m          the highly respected manag-       strategy of writing for profit                                                                                                                                            writes James Brewer.
($1.63bn) capacity for 2006,       ing director Sean Dalton and      rather than volume, but the                                                                                                                                                  Contego Underwriting
but unless there is a renewed      managing underwriter An-          forthcoming Liberty cut may                                                                                                                                               will specialise in under-
upsurge in rates caused by         drew Elliott, left the company    be more decisive than most.                                                                                                                                               writing contractors’ plant
the Atlantic hurricane season      without public announce-             It has continued to vary its                                                                                                                                           and equipment, machin-
or other major factor analysts     ment.                             wide-ranging portfolio, which                                                                                                                                             ery breakdown and elec-
believe the figure will be no-        In the same month Stan-        includes an important pres-                                                                                                                                               tronic equipment expo-
ticeably reduced in the next       dard & Poor's lowered its syn-    ence in marine and energy.                                                                                                                                                sures. It is said to be the
term.                              dicate assessment on 4472            Earlier this year it led a      NICASIO Alcantara, chief executive of Petron Corporation, part-owned by the Philippines government, is pictured                        only underwriting agency
   The company declined to         because it said that the mag-     $400m capacity consortium                                                                                                                                                 dedicated to these classes
                                                                                                        apologising at a news conference in Manila yesterday. Petron may use $1bn in insurance to clean up the nation’s                        and has been assured ca-
comment except to say that it      nitude of last year’s hurri-      of underwriters to insure In-
would take account of market       cane losses raised some con-      marsat and other satellite op-     worst oil spill and repair the damage to a central island caused by the tanker Solar 1. Mr Alcantara said the company                  pacity by Brit Insurance.
conditions as seen just ahead      cerns over risk management        erators. In July it acquired       would tap insurance to augment other funding to which the Philippines and the operator of the sunken tanker have                          The new offering is
of the September 21 Lloyd’s        processes, earnings volatility    the portfolio of Strike Risks      access. The government can draw as much as $301m from international pollution funds while Sunshine Maritime                            headed by Charles Par-
deadline for submission of         and potential balance sheet       Management which insures           Development Corporation is insured for $6.7m, Mr Alcantara said.                                                   AP                  menter and Anthony Will-
final business plans.              strain. At the same time the      against consequential loss                                                                                                                                                sher, both previously at
   Analysts have been watch-       ratings agency referred to the    caused by marine and non-                                                                                                                                                 Mayflower Underwriting
ing developments since Lib-        “good underwriting profile” of    marine strike action.                                                                                                                                                        They said that such
                                                                                                                                                                                                                                               classes tended to be over-
erty Syndicates, part of Lib-
erty Mutual Group of Boston,
the sixth largest property-
                                   Liberty Syndicates.
                                      Several competitors are
                                   expected to maintain or
                                                                        The parent Liberty Mutu-
                                                                     al’s largest line of business is
                                                                     private automobile, and it is
                                                                                                        Odfjell fails                     Toll reaps integration benefits                                                                      looked by larger reinsur-
                                                                                                                                                                                                                                               ers because of the rela-
casualty insurer in the US,
accounted for a significant
part of the overall Lloyd’s loss
                                   slightly reduce capacity at
                                   Lloyd’s this year for, al-
                                   though catastrophe exposure
                                                                     involved in many other major
                                                                     US lines. It ranks 102nd on
                                                                     the Fortune 500 list of largest
                                                                                                        to meet                           TOLL Holdings, Australia’s        had not been at the expense       dividends, the company said.
                                                                                                                                                                                                                                               tively small exposures
                                                                                                                                                                                                                                               and generated premium
in 2005.                           continues to be strongly          corporations in the US.            expectations                      largest transport group, has
                                                                                                                                          reported a 17% rise in annual
                                                                                                                                          profit on new contracts and
                                                                                                                                                                            of strong growth in existing
                                                                                                                                                                               “Integration of the busi-
                                                                                                                                                                                                              Net profit was A$231m.
                                                                                                                                                                                                                 Revenues rose 30% to
                                                                                                                                                                                                                                               New inland rules
                                                                                                                                                                                                                                               CLASSIFICATION societies
                                                                                                                                          acquisitions and said savings     nesses is already well pro-          Toll, which has made more     Germanischer Lloyd and Bu-
                                                                                                        ODFJELL’S latest quarterly

Don’t be complacent over                                                                                results came in below expec-
                                                                                                        tations yesterday, despite a
                                                                                                        55% jump in pre-tax profits
                                                                                                        to $31m, writes David Osler.
                                                                                                                                          from integrating Patrick and
                                                                                                                                          SembCorp were better than
                                                                                                                                          expected, Reuters reports.
                                                                                                                                             Toll said the acquisition of
                                                                                                                                                                            gressed with major cost syn-
                                                                                                                                                                            ergies ahead of initial
                                                                                                                                                                            projections,” Toll said.
                                                                                                                                                                               Net profit for the year
                                                                                                                                                                                                              than 42 acquisitions since
                                                                                                                                                                                                              1989, has also flagged that
                                                                                                                                                                                                              cost savings from integrating
                                                                                                                                                                                                              Patrick into the group would
                                                                                                                                                                                                                                               reau Veritas have agreed on
                                                                                                                                                                                                                                               new rules for inland vessels,
                                                                                                                                                                                                                                               writes Katrin Berkenkopf in

storm season, market told                                                                                  Analysts had been predict-
                                                                                                        ing something more like
                                                                                                        $37m, according to a survey
                                                                                                        conducted by Reuters.
                                                                                                                                          Australia’s biggest ports op-
                                                                                                                                          erator Patrick and SembCorp
                                                                                                                                          Logistics of Singapore, south-
                                                                                                                                          east Asia’s largest logistics
                                                                                                                                                                            ended June 30 climbed to
                                                                                                                                                                            A$242.5m ($185m) before the
                                                                                                                                                                            amortisation of intangible
                                                                                                                                                                            assets from its acquisitions
                                                                                                                                                                                                              be more than A$65m. It
                                                                                                                                                                                                              forecast that these would be
                                                                                                                                                                                                              delivered at a faster pace
                                                                                                                                                                                                              than the original three-year
                                                                                                                                                                                                                                                  “It was time to incorpo-
                                                                                                                                                                                                                                               rate the technical progress of
                                                                                                                                                                                                                                               the past 16 years,” a spokes-
                                                                                                                                                                                                                                               man for Hamburg-based GL
                                                                                                                                          company, in the second half       and after preference share        target.                          said. For example, new for-
A SENIOR energy insurance executive in the            “The damage and frequency of loss has                Softer clean petroleum
Lloyd’s market has warned against compla-          risen,” he said. “Last year was a horrendous         markets saw timecharter re-                                                                                                            mulas for the calculation of
cency over the financially benign impact of        season in the Atlantic, and the fact that there      sults come in 3% lower than                                                                                                            the hull structure had been
the main catastrophe season to date, writes
James Brewer.
   Stuart Davies, managing director of Aegis
                                                   has been little activity there so far this year
                                                   must not allow us to forget that we must take
                                                   long-term decisions.”
                                                                                                        in the first three months, the
                                                                                                        Norwegian chemical tanker
                                                                                                        and tank storage outfit said.
                                                                                                                                           Adsteam’s profits jump by 15%                                                                       created, which offered higher
                                                                                                                                                                                                                                               safety, and new materials
                                                                                                                                                                                                                                               like the sandwich plate had
Managing Agency, said that businesses had             Premium rates have soared in the past                For the first half, the con-                                                                                                        been developed.
                                                                                                                                            STRONG results for its Australian               the solid results were in line with                   The rules came into force
to take a long-term view of the threat of          year for offshore energy exposures and terms         solidated net result after tax
                                                                                                                                            operations have pushed Adsteam                  forecasts.                                         on 1 August this year and
climate instability.                               have been tightened, while property catas-           was $60m, down from $68m
                                                                                                                                            Marine’s net profits up by 15%, writes             There was $1.1m fall in earnings be-            will apply to all vessels or-
   All the disasters of the past few weeks have    trophe rates have risen by around 70% to             in the corresponding period
                                                                                                                                            Lloyd’s List DCN in Australia.                  fore interest, tax and depreciation at             dered from that date and
been in lightly insured areas, sparing the US      80%. Underwriters say this is fully justified        last year.
                                                                                                                                              Results for the year ending June 30,          its British arm compared with last                 classified by GL or BV.
and Gulf of Mexico, which has billions of          given the damage caused last year by                    But in the longer term it
                                                                                                                                            released yesterday, show net profit             year when the operation was a key                     The companies added that
dollars of insured property and power and          Hurricanes Katrina, Wilma and Rita.                  shrugged off the gloom with
                                                                                                                                            after tax grew to $43.1m while net              factor in its strong performance.                  the new rules comply with
energy hardware.                                      Energy consultancy Wood Mackenzie,                an upbeat prognosis for its
                                                                                                                                            profit before tax was $47.9m, up 22%               It had been “a tough year in the                the Regulation for the Car-
   Most of the devastation has been in the         meanwhile, has warned that the risk of hur-          future prospects.
                                                                                                                                            on 2004-2005.                                   United Kingdom”, Mr Moller said.                   riage of Dangerous Goods on
Pacific region. Typhoon Saomai has been the        ricane-related disruptions to oil and gas pro-          A strong world economy
                                                                                                                                              The towage company puts the re-                  Lower volumes and restructuring                 the Rhine.
strongest such storm to hit China since            duction in the Gulf of Mexico will increase as       will drive demand for its ser-
                                                                                                                                            sults down to an increase in shipping           in the first half of the year had seen
records began in 1949, destroying 39,000           companies move into deeper waters, using             vices for years to come, Odf-
homes and killing well over 400 people in the      hub facilities that can process output from          jell insisted.
                                                                                                                                            movements at Australian ports that              the British arm dip slightly.                      Bremer funds shipping
                                                                                                                                            meant tug use was up by 3%.                        Overall revenue from services
eastern province of Zhejiang.                      multiple fields.                                        Yesterday’s numbers in-                                                                                                             GERMANY’S public-law
                                                                                                                                              Adsteam managing director John                reached $321.5m, down slightly on
   Only three tropical storms have formed in          One such project under construction, the          cluded an $8m provision for                                                                                                            bank Bremer Landesbank
                                                                                                                                            Moller told Lloyd’s List DCN that               last year.
the Atlantic hurricane season to date, al-         Independence Hub, will have the capacity to          settlements related to its                                                                                                             said it granted €1.4bn
though citizens of many countries are check-       process 1bn cu ft a day of deepwater natural         part in the chemtanker cartel                                                                                                          ($1.8bn) in new shipping
ing their defences because late August and         gas produced from 10 fields operated by              scandal, as well as a capital                                                                                                          loans over the first half of
early September are usually a very danger-         Anadarko and other producers.                        gain of $14m from compensa-                                                                                                            this year, affecting 102
ous time. Last year produced a record 28
tropical storms and hurricanes.
   One current threat, Tropical Storm Debby
which has formed off Cape Verde, is likely to
                                                   G Rating agency A M Best has affirmed its as-

                                                   sessment of A (excellent) on Aegis syndicate
                                                   1225, with a stable outlook. The agency said
                                                   that the syndicate was likely to generate
                                                                                                        tion for the relocation of a
                                                                                                        tank farm in Dalian.
                                                                                                           Odfjell said in a statement:
                                                                                                        “We anticipate a somewhat
                                                                                                                                          Lasco asset sales boosts profits                                                                     ships, writes Katrin Ber-
                                                                                                                                                                                                                                               kenkopf in Cologne.
                                                                                                                                                                                                                                                  That brings the total
                                                                                                                                                                                                                                               lending volume of the
become a hurricane and is tracking to the          strong earnings this year because of favoura-        improved operating result be-     LATVIAN Shipping Co yes-          up from $13m in the corre-        units, with ten tankers on       bank to €3.4bn, according
east of Bermuda, but is forecast to pose little    ble market conditions following a likely loss of     fore capital gains in the last    terday announced a 17% rise       sponding period of 2005.          order. It also operates two      to a spokesman for par-
immediate threat to land.                          10% of capacity on the 2005 account.                 six months compared to the        in first-half profits, with the      In a statement to the Riga     LPG carriers as part of the      ent group NordLB
   Mr Davies told Lloyd’s List that insurers          It said that the offshore energy account          second quarter.”                  numbers boosted by asset          bourse, the product tanker        ScandiGas pool.                     Bremer Landesbank is
were concerned about the worldwide growth          was likely to contribute $66m to gross premi-           A second-quarter dividend      sales, writes David Osler.        specialist said the outcome in-      Analysts told Bloomberg       almost completely owned
in hurricanes and needed to assess the global      ums at the syndicate this year compared with         of $0.36 a share was also an-        Net income rose to $15.2m      cluded $6m from asset sales.      they expected a stronger per-    by the neighbouring pub-
pattern.                                           $44m in 2005.                                        nounced.                          in the six months to June 30,        Lasco operates a fleet of 38   formance in the second half.     lic-law bank Nord LB.
                                                                                                                                                                                                                                               The latter said that its
                                                                                                                                                                                                                                               own lending volume in
                                                                                                                                                                                                                                               ship financing reached
                                                                                                                                                                                                                                               €7.5bn by the middle of
Joint War Committee UK P&I Club agrees MMS medical franchise deal                                                                                                                                                                              this year. That was slight-
                                                                                                                                                                                                                                               ly up on the figure of year
                                                                                                                                                                                                                                               end 2005, when it saw

appoints Washbourn                                                   UK P&I Club’s pre-employment medical examina-
                                                                     tion has reached a franchise agreement with Mar-
                                                                     itime Medical Services of Hamilton, New Jersey,
                                                                     writes James Brewer.
                                                                                                                                 The programme is designed to protect shipown-
                                                                                                                              ers from claims arising from medical conditions
                                                                                                                              existing before employment.
                                                                                                                                 The appointment marks an important expan-
                                                                                                                                                                                      which is based in Las Vegas, to cater for cruise
                                                                                                                                                                                         Maritime Medical Services chief executive Bill
                                                                                                                                                                                      Palmieri said: “Life at sea is an ‘all or none’ propo-
                                                                                                                                                                                                                                                  Together, the two
                                                                                                                                                                                                                                               banks are among the
                                                                                                                                                                                                                                               three largest ship financ-
By James Brewer                                                         Maritime Medical will manage the scheme               sion of the programme’s clinic range, by adding         sition — you can either perform the essential job        ing institutions in Germa-
                                                                     across its network of 12,000 affiliated US and Ca-       extensive coverage of the important US crew             functions or you cannot.                                 ny. They were the first
CLIVE Washbourn, head                                                nadian physicians, arranging appointments for            market.                                                    “The role of the medical programme manager is         non-dedicated shipping
of marine at Lloyd’s en-                                             seafarer medical examinations and feeding results           Up to now, the UK Club has operated                  to ensure that all crew undergo a medical exami-         banks to issue a ship
terprise Beazley Group,                                              into the programme’s central database.                   only one accredited clinic in the whole of the US,      nation to determine ‘fit for duty’ status.”              mortgage bond earlier
has been appointed chair-                                                                                                                                                                                                                      this year.
man of the Joint War                                                                                                                                                                                                                           Menlo Australia move
Committee, the body that                                             I Automotive I                                                                                                                                                            MENLO Worldwide, the US
represents the interests
of the London underwrit-                                                                                                                                                                                                                       logistics company, has won a

                                                                     Diamond city’s flood disaster to swamp
ing community on hull                                                                                                                                                                                                                          contract from Siemens to
war risk issues.                                                                                                                                                                                                                               provide warehousing, prod-
   He succeeds Rupert                                                                                                                                                                                                                          uct configuration and distri-
Atkin, director of under-                                                                                                                                                                                                                      bution services in Australia,
writing at Talbot Under-                                                                                                                                                                                                                       writes Keith Wallis in Hong
writing, who will step
down after a decade in
the post, but who will
remain a committee
                                   Washbourn: shipping fuels
                                                                     Indian companies with motor claims                                                                                                                                        Kong.
                                                                                                                                                                                                                                                  As a result of the contract
                                                                                                                                                                                                                                               Menlo has opened a logistics
                                                                                                                                                                                                                                               centre in Sydney to serve the
                                                                                                                                                                                                                                               South Pacific as part of its
   Mr Washbourn, a vigor-
                                   the global economy.               Second year of heavy claims will make insurers wary of this of cover, writes Shirish Nadkarni in Mumbai                                                                   expansion in Australia.
ous and outspoken per-                “This leads to increas-
sonality on market issues,         ing challenges for the            INDIAN insurance companies which           cover when they know that their           houses in some areas. So the vehicles        “The problems due to motor claims       Cocoa blocks canal
takes over after the com-          marine underwriter,” he           have sold motor policies in the indus-     state-run counterparts have had to        are likely to be a dead loss.”            in Surat are going to be much              A BARGE carrying cocoa
mittee resolved one of its         continued.                        trial town of Surat are bracing them-      fork out in claims as much as 400% of        Mr Dhruva added that surveyors         more magnified than they were in           beans has sunk in the
most contentious issues               “The recent initiatives        selves for a cascade of claims result-     premiums collected.                       had suggested to insurance compa-         Mumbai as there will be enormous           Hartel Canal near Rotter-
— by removing the Malac-           taken by the committee            ing from the Gujarat floods.                  Although insurers now collect          nies that customers could be provid-      pressure on repair facilities,” said       dam blocking the en-
ca Strait from its hull,           to address the piracy and            According to initial reports from       roughly 4% of the declared value of a     ed with three options — terms for a       Shrirang Samant, managing director         trance to the locks of the
war, strikes, terrorism            terrorism issue, which is         surveyors, around 50,000 cars and          vehicle as annual premium for com-        complete write-off, a lumpsum pay-        and chief executive of HDFC Chubb          inland waterway, writes
and related perils listed          a growing maritime risk,          75,000 two-wheelers in Surat, India’s      prehensive insurance, heavy claims in     ment for repairs or reimbursement of      General.                                   Helen Hill in Amsterdam.
areas, after what was in           is just one example where         diamond capital, have been either          successive     years   after   severe     actual repair expenses.                      “The cost of repairs and replace-         Just after 1300 hours
essence a long probation-          the initiatives of this           damaged or fully submerged after           flooding in Mumbai and Surat are             The surveyors' report states that      ment will increase due to an imbal-        local time, the vessel sank
ary period.                        committee have proven             floods inundated roads and houses          bound to make them even more chary        around 30,000 Maruti-Suzuki vehi-         ance in demand and supply, as is al-       very quickly according to
   That followed a report          significant on a global           with between 4 ft and 21 ft of water,      of taking on motor insurance in the       cles, 12,000 Hyundais, 3,000 Hondas       ways the case.”                            police reports. Three
by security analysis firm          scale.”                           depending on the locality.                 future.                                   and another 5,000 vehicles of various        Maruti Udyog, the Indian joint          crew escaped unhurt and
Aegis, which concluded                Mr Atkin said: “I am              The    figures    comprehensively          “Both public and private sector        brands have been damaged.                 venture with Suzuki Motors of              were picked up by a near-
that long-term measures            delighted to have such a          swamped even Mumbai’s huge tally           general insurance companies are              Insurance companies that will face     Japan, has the largest number of           by ship.
were in place.                     capable successor.                of motor claims, involving 16,000          holding meetings to evolve a common       the maximum number of motor               damaged cars to deal with and has            The vessel was not im-
   Mr Washbourn said:                 “Clive brings with him         cars and 30,000 two-wheelers, in the       strategy for dealing with flood-relat-    claims include the four public sector     plans to shift the vehicles to higher      pacting seagoing ships or
“Today’s global economy            a wealth of sector knowl-         July 26 floods last year, producing        ed claims,” said Mahendra Dhruva,         insurers, New India Assurance, Na-        ground so that they can be serviced        shipments of crude oil, a
is sustained and fuelled           edge and experience               claims aggregating Rs2bn ($43m).           national president of the Institute of    tional Insurance, Oriental Insurance      and provided with spare parts.             Port of Rotterdam
through shipping, and              which, combined with his             Motor insurance has traditionally       Insurance Surveyors and Adjusters,        and United India Insurance, which            Company officials said that addi-       spokesman said.
the maritime industry              unique drive and passion          been a lossmaking portfolio for Indi-      after the Surat emergency.                are obliged to insure any vehicle that    tional manpower was being brought            As yet it is not known
is enjoying a period of            for the business, will be         an insurance companies and private            “Most of the cars have been fully      is presented to them. Affected pri-       in through Maruti authorised service       why the vessel sank, the
unprecedented                      of enormous benefit to            insurers have over the past five years     submerged as the flood levels             vate insurers include Iffco Tokio,        stations outside Surat as well as          weather was not stormy
activity.                          the committee.”                   been extremely choosy about offering       reached even the second floor level of    Bajaj Allianz and HDFC Chubb.             Gujarat.                                   at the time.

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