Half-Year Report 2020FOR PERIOD ENDED 30 JUNE 2020

2 HALF-YEAR REPORT 2020 THE SWEDISH CLUB

Resilience in unprecedented times

Limited exposure to COVID-19 related claims

Strong business development

Investment loss experienced in the first quarter has been regained andthe Club has been able to offer a seamless and uninterrupted serviceto members during lockdown.

Improved premium adequacyA hardening of the rating environment continues across all Marinemarkets, but there is still a way to go before the market seesmeaningful pricing adequacy. The direction is stable and positive.

Whilst active with advice, claims, and assistance to members, the Clubhas limited exposure to high risk sectors such as the cruise industry.

The pace of growth is in line with the strategic plan. Developmentwithin the Marine portfolio is particularly strong.

In brief

THE SWEDISH CLUB HALF-YEAR REPORT 2020 3

Continued success for TELP initiative

Small deficit during first six months

Underwriting in line with 2019 at 107% combined ratio

Modest deficit at USD -3.4 million following a strong year in 2019.

The underwriting performance was within the expected range forthis part of the insurance cycle. A strengthening of market pricingwill most likely be a positive contributor to improved balance goingforward.

Offering the latest news on pandemic requirements at ports ofdestination, a substantial proportion of members signed up to enjoytailor made advice for their own trading patterns from the Club’s TradeEnabling Loss Prevention (TELP) programme.

4 HALF-YEAR REPORT 2020 THE SWEDISH CLUB

The free reserves have grown continually, reflecting the outcome of TheSwedish Club’s consistent operating performance.

0

50

100

150

200

250

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020H1

151 142 151 168 186 183 195 213 204 228 225

Free reservesUSD Million

THE SWEDISH CLUB HALF-YEAR REPORT 2020 5

The fundamental operations of the Club – the insurance business – have delivered well and predictably over time. The combined ratio has, in line withtarget, maintained an average level of below 100% for the last ten years.

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020H10%

20%

40%

60%

80%

100%

120%

4-year moving

87% 110% 110% 93% 86% 99% 98% 100% 99% 106% 107%

Combined ratioReported period 2010-2020H1

6 HALF-YEAR REPORT 2020 THE SWEDISH CLUB

Six months to 30 June 2020 (unaudited)

All amounts are stated in USD Million H1 2020 H1 2019

Gross premiums earned 85.9 72.8Reinsurance premiums -21.7 -18.6Reinsurance commissions 2.7 0.9Premiums net of reinsurance 66.9 55.1Investment income transferred from NTA 1.4 2.1Claims net of reinsurance -58.3 -47.6Acquisition costs -10.9 -9.0Administrative expenses -2.4 -2.8Underwriting result -3.3 -2.2Financial result -0.1 19.0Result before appropriations and tax -3.4 16.9Free reserves 225.0 220.7Combined ratio 107% 108%

Results

THE SWEDISH CLUB HALF-YEAR REPORT 2020 7

The result before appropriations and tax was USD -3.4 (16.9) million. As the Clubadded attractive business and adjusted its premiums to better align withexposures, the gross premiums earned grew by 18% in the first six monthscompared to the same period the previous year. Concurrently, the trend ofattritional claims was quite positive for the Club and its members; however, a fewsizeable claims in the current year and run-off brought the combined ratio to107% (108%) in the first half of 2020. The underwriting result was USD -3.3 (-2.2)million.

The financial result was USD -0.1 (19.0) million in a market that sawunprecedented drops and, subsequently, recuperations of equity prices. In thecourse of these developments the Club stayed alert and active to limit the riskexposures associated with volatility. At the end of the first six months, theinvestment portfolio had delivered a return of 0.5% (6.3%).

The Club grew selectivelyand continued tostrengthen its competitiveposition in the first sixmonths of the year

8 HALF-YEAR REPORT 2020 THE SWEDISH CLUB

As of 30 June 2020 (unaudited)

All amounts are stated in USD Million H1 2020 H1 2019

Assets Investment assets 371.4 355.6Reinsurers share unearned premiums 20.2 18.8Reinsurers share outstanding claims 61.2 59.7Debtors 173.7 136.7Other assets 45.9 41.3Total assets 672.4 612.2

Equity, provisions and liabilitiesFree reserves* 225.0 220.7Provision for unearned premiums 90.7 82.8Provision for outstanding claims 261.0 218.7Other liabilities 95.5 90.0Total equity, provisions and liabilities 672.4 612.2

* Equity, untaxed reserves and deferred tax

Balance sheet

THE SWEDISH CLUB HALF-YEAR REPORT 2020 9

The Club’s investment portfolio, composed of approximately 80% interest-bearing assets and 20% equity holdings, amounted to USD 371 (356) million.The portfolio’s increased size compared with the same time last year is due tocash generation through positive results and the timing of servicing previouslyreserved claims.

The free reserves were USD 225 (221) million at the end of June 2020. TheClub’s strong financial position is maintained by the continuously stable overalloperating performance delivered.

The year-on-year Solvency Capital Requirement (SCR) of the Club increased,as expected, to USD 121 (98) million due to higher business volume (seepremiums in the income statement). The solvency ratio of EOF/SCR, whichwas slightly down compared to a year ago for the same reason, amounted to239% (294%), still clearly signalling the financial resilience of the Club.

Further underscoring the financial strength of the Club, S&P Global Ratingsmaintains its insurer financial strength and issuer credit ratings on TheSwedish Club at A- with stable outlook. A.M. Best has once again awarded theClub a Financial Strength Rating of A- (Excellent) and the Long-Term IssuerCredit Rating of “a-”, with a stable outlook.

The balance sheet hasincreased year-on-yeardue to the favourabledevelopment of thebusiness.

10 HALF-YEAR REPORT 2020 THE SWEDISH CLUB

InvestmentAlong with most investors, the Club took an investment hit in the first quarter of 2020 –especially when the market went into freefall in March. A situation like that demonstratesexactly why a strong capital base is essential to provide a resistant buffer to withstand thatkind of shock. Then, in the second quarter we saw a remarkable comeback in theinvestment markets.

ClaimsAlthough the Club has seen some claims relating to the virus, it has limited exposure to thecruise industry and this has been of no material impact on the P&L statement.

Business developmentWhilst we do not see an effect in the long term, COVID-19 will affect both short andmedium-term business development projections. The pandemic is leading to layups and areduction in volumes.

Working environmentAll of The Swedish Club’s offices work remotely where they can and, like most businesses,the Club has seen a massive increase in the use of digital means of communication. Inthese new circumstances we have continued to conduct business well and used thesedigital tools to the maximum.

Moving forwardThese unprecedented circumstances have given us all time to consider – to reflect on whatwe do and what we are able to deliver. We will come out of this situation as a more efficientbusiness. However we will never forget that marine insurance is a people business and weare our members. I look forward to the day when we can meet up in person again.

Club perspective:COVID -19Lars Rhodin, Managing Director

12 HALF-YEAR REPORT 2020 THE SWEDISH CLUB

The Swedish Club is at the forefront of modern technology, using our skillsand expertise to anticipate and meet the needs of the shipping community.Together with our members and business partners we are constantlydeveloping, and creating new digital tools to help us work more efficiently.

Technology coupled with the quality of our people helps deliver oursophisticated loss prevention activities.

Gothenburg – Piraeus – Hong Kong – Tokyo – Oslo – London

Forward thinking

www.swedishclub.com

THE SWEDISH CLUB HALF-YEAR REPORT 2020 13

Following trials, The Swedish Club rolled out the Trade Enabling LossPrevention (TELP) initiative at the beginning of 2020. The Club knew that it wasan important initiative, but it could not know, with the advent of the COVID-19pandemic, quite how quickly members would find TELP essential to everydaysafe operations.

TELP is the next important step in the evolution of loss prevention.Traditionally loss prevention has been generic and reactive, focusing onstatistics and observations. The Club’s Maritime Resource Management(MRM) took this one step further, identifying root causes and trainingindividuals and teams to change behaviour. TELP is the next generation of lossprevention – specific and proactive it uses the claims experience gained fromaround 4,500 vessels across more than one million port calls and 11,000claims over the last five years to identify correlations between areas withhigher claim propensity – hotspots.

With the onset of COVID-19, measures to prevent the spread of the virus haveclosed ports or meant strict quarantine measures for crew. Ports have beenoperating with their own individual approaches to managing the coronavirussituation, making it difficult for the Master to prepare the vessel - or the crew –for the challenges facing them when theyprepare to berth.

The Club has been using TELP to guide vesselsinto ports around the world, helping membersovercome the difficulties they are facing inoperating ships during the outbreak. At itsheight, the Club was sending between 75 and100 specific messages each day to itsmembers, using information provided by theClub’s network of correspondents andautomatically triggered by the ship’s AIS.

TELPTrade Enabling Loss Prevention

14 HALF-YEAR REPORT 2020 THE SWEDISH CLUB

Two-way communication - the Club carried out its first webinar in June thisyear. The Loss Prevention team shared news on the progress of its TradeEnabling Loss Prevention (TELP) programme, recent input received frommembers on the scheme and the next development steps. Plans are now inprogress for additional webinars during the autumn and next year. The maintopics for discussion will be navigation, cargo, main engine damage andsanctions.

Support with current issues - COVID-19 is affecting not just the way that we dobusiness today, but the ways that we will be doing business tomorrow. Inaddition to delivering the latest information and guidance to members throughThe Swedish Club website, The Swedish Club Online (SCOL) and TELP, the Clubhas also put together a handbook to assist those in positions of responsibilityat sea and for those supporting them on shore. The COVID-19 Handbookprovides simple guidance and concise information on understanding andimplementing the practices and procedures which are now necessary for safeand successful long-term operations on board ship.

Sharing experience - the Club has spent many years compiling and reviewinginformation on statistics covering many different claims categories. In its latestloss prevention publication, Navigational Claims, the Club has used thatexperience to share with those crewing a vessel the knowledge needed to avoidthe major pitfalls that it has seen occurring all too often.

A bridge between those on shore and those at sea – The Swedish Clubunderstands that in any casualty, the Master plays a crucial role. On the scene,the Master has the ability to minimise the consequences of a casualty, and tofacilitate the handling of matters between the owners and the Club. Advice toMasters is designed to support that process, providing those on board withadvice relating to a casualty from the underwriter's point of view.

Loss PreventionLars A. Malm, Director Strategic BusinessDevelopment & Client Relations

www.swedishclub.comwww.halfyearreport.swedishclub.com

Printed by: PR-Offset, Sw

eden

Board of Directors photo: Jenny Christenson

2008pr400

Lennart SimonssonChairman of the Board

John CoustasDeputy ChairmanDanaos Shipping Co Ltd., Piraeus, Greece

Khalid HashimDeputy ChairmanPrecious Shipping Public Co. Ltd., Bangkok, Thailand

Thanasis C. BeisCostamare Shipping Co. S.A., Athens, Greece

Michael BodouroglouAllseas Marine S.A., Voula, Greece

Ryan ChanIMC Industrial Group, Singapore

Peter ClaessonStena AB, Gothenburg, Sweden

Jude CorreaSeaspan Ship Management, Vancouver, Canada

Demetri DragazisLatsco (London) Ltd, London, United Kingdom

Rob GroolZEABORN Shipmanagement GmbH & Cie. KG, Hamburg, Germany

Gustaf GrönbergGenting Cruise Lines, Kuala Lumpur, Malaysia

Gu ZhongdongCosco Shipping Co. S.A., Shanghai, People's Republic of China

Lars HöglundFuretank Rederi AB, Donsö, Sweden

Anders KällssonErik Thun AB, Lidköping, Sweden

Andonis LemosEnesel S.A., Athens, Greece

Mikael LivijnWallenius Marine AB, Stockholm, Sweden

Lu JianWinning Shipping, Singapore

Twinchok TanthuwanitRegional Container Lines Co. Ltd., Bangkok,Thailand

Michael VinnenF.A. Vinnen & Co, Bremen, Germany

Weng YiChina Shipping Company, Shanghai, People'sRepublic of China

Herbert XuChina Merchant Energy Shipping (Hong Kong)Co. Ltd., Hong Kong

Lars RhodinThe Swedish Club, Gothenburg, Sweden

Karoline RydelidElected by the employeesThe Swedish Club, Gothenburg, Sweden

Anna FjaervollElected by the employeesThe Swedish Club, Gothenburg, Sweden

Board of Directors