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Hull Insurance in the 21st Century. AMLIN. - does it have a future?. Simon Beale Marine Divisional Underwriter, Amlin. Agenda. Shipping Statistics Market Results Current Market Future Market. Shipping Statistics. - PowerPoint PPT Presentation
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- does it have a future?- does it have a future?
Simon BealeSimon BealeMarine Divisional Underwriter, AmlinMarine Divisional Underwriter, Amlin
AMLIN
Hull Insurance in the 21st CenturyHull Insurance in the 21st Century
22
Shipping StatisticsShipping Statistics
Market ResultsMarket Results
Current MarketCurrent Market
Future MarketFuture Market
AgendaAgenda
33
Shipping StatisticsShipping Statistics
4
World Merchant FleetWorld Merchant Fleet of ships of 300gt and overEvolution of the growth rates (GT, DWT, and Number of ships) between 1993 and 2004
38,500 ships (+ 10.8%)
39,665 ships + 14.2%
570,325 m GT + 38.9%
488,032 mGT (+ 18.8%)
840,355 m DWT + 26.8%
743,611 mDWT (+ 12.2%)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Source: Indicators issued from various sources such as ISL Bremen for World fleet and trading figures (as at May 2004) and Clarkson Research Studies for shipbuilding and scrapped vessels (as at June 2004).
5
Total Merchant FleetTotal Merchant Fleet DWT 1993 - 2003
2003 DWT 816,384
1993 DWT 662,553
500,000
550,000
600,000
650,000
700,000
750,000
800,000
850,000
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Year
DWT
Source: Institute of Shipping Economics & logistics.
2003
=
+23%growth on
1992
66
Since 1993Since 1993Strong growth (13%) in numbers of vesselsStrong growth (13%) in numbers of vessels
Stronger growth (23%) in world fleet sizeStronger growth (23%) in world fleet size
Average size increased Average size increased
19,100 DWT – 20,700 DWT (9% growth)19,100 DWT – 20,700 DWT (9% growth)
? increased values? increased values
? increased premiums? increased premiums
Fleet GrowthFleet Growth
7
Freight RatesFreight RatesClarksons Index 1990 - 2004
Source: Clarksons Freight Index
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
1990 1992 1994 1996 1998 2000 2002 2004
Year
Fre
igh
t In
dex
8
Cargo Shipowners’ EarningsCargo Shipowners’ Earnings
-40,000,000
-20,000,000
0
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
1999 2000 2001 2002 2003
$ '000 Income
Expense
Profit
99
International Market ResultsInternational Market Results
10
0%
20%
40%
60%
80%
100%
120%
140%
12 24 36 48 60 72 84 96
Ultim
ate
1996
1997
1998
1999
2000
2001
2002
70%
2003
Ultimate calculation based on figures of 6 Member Organisations: France, Germany, Italy, Norway, UK Lloyds, UK IUA (6 for 1996 – No Germany)
Marine Hull – Evolution of Gross Loss Ratio,Marine Hull – Evolution of Gross Loss Ratio, actual and estimated towards ultimate U/W Year 1996 to 2003
Assuming a 30% expense ratio (acquisition and management expenses), technical break even is achieved when the gross loss ratio does not exceed 70%
1999
1998
2000/ 2002
1997 / 20012003
1996
11
Global Marine Hull Premium Global Marine Hull Premium ($m)($m) 1992 - 2003
0
1,000
2,000
3,000
4,000
5,000
6,000
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Pre
miu
m I
nc
om
e (
$m
)
2003
=
69%of
1994
12
Global Marine Hull Premium ($m)Global Marine Hull Premium ($m) v’s Merchant Fleet (DWT) between 1992 - 2003
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Year
Me
rch
an
t F
lee
t (D
WT
)
0
1,000
2,000
3,000
4,000
5,000
6,000
Pre
miu
m I
nc
om
e (
$m
)
1994
$8.3 / DWT
2003
$4.7 / DWT
1999
$3.7 / DWT
2003
=
56%Of
1994
1313
International Market International Market ResultsResults
Lost money / inadequate profits since 1995Lost money / inadequate profits since 1995
Recent Premium increases inadequateRecent Premium increases inadequate
compared to 1994compared to 1994
Current Premium wholly inadequate forCurrent Premium wholly inadequate for
world fleetworld fleet
9 Minutes!9 Minutes!
SEXSEX
1515
Current International MarketCurrent International Market
16
0
200
400
600
800
1,000
1,200
1,400
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Accounting Year
France
Italy
Japan
Norway
Spain
UK (ILU/ IUA)
UK (Lloyd's)
USA
Global Hull Premium - Major Global Hull Premium - Major Markets 1992 - 2003Markets 1992 - 2003 (USD Million)
17
Underwriting StatisticsUnderwriting StatisticsRelative Rating 1995 – 2003(Sample 1)
0
6
12
18
24
30
36
1995 1996 1997 1998 1999 2000 2001 2002U/W Year
Average Value ($m) & Average Age
0
1
2
3
4
5
6
$/Dwt Overall
Average Values Average Age $/Dwt Overall
Source: Broker Portfolio (1) for Joint Hull Committee
18
International Market PremiumsInternational Market Premiums’Discounted’ Fleet
$1,234,906
$1,037,860
$827,044 $820,445
$621,313 $607,145
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
A B C D E F
Market
$ P
rem
ium
Source: Broker Research
Cla
ims
Lea
d
51%
of
Claims
Lead
Price
19
International Market PremiumsInternational Market Premiums’Discounted’ Fleet’Discounted’ Fleet
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
A B C D E F
Market
$ P
rem
ium
0
5
10
15
20
25
Ord
er
Source: Broker Research
Total Price Paid (100% order)
68%
Of Claims Lead Price
2020
Current International MarketCurrent International Market
Dearth of technical understanding in Dearth of technical understanding in global underwriting communityglobal underwriting community
Total lack of disciplineTotal lack of discipline
Too many underwriters and brokersToo many underwriters and brokers
2121
Requirement for InsuranceRequirement for InsuranceLarger world fleetLarger world fleet
Significant assetsSignificant assets
Cruise vessels to fishing vesselsCruise vessels to fishing vessels
‘‘Rewrite’Rewrite’
Capital requires profitCapital requires profit
Shipowner better served by stabilityShipowner better served by stability
Future MarketFuture Market
2222
CaptivesCaptives
Reinsurance MarketReinsurance Market
MutualsMutuals
ConsortiumsConsortiumsMarketing Marketing Underwriting ExpertiseUnderwriting ExpertiseClaims serviceClaims service
OptionsOptions
2323
ConclusionConclusion
World Fleet GrowthWorld Fleet Growth
Inadequate returnsInadequate returns
‘‘Rewrite’ – a question of whenRewrite’ – a question of when
Price / Profit is keyPrice / Profit is key
““Niceties”, if at all, come laterNiceties”, if at all, come later
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