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The Aviation Insurance Market. Presented By Mr.Vijay Thakur. Contents. Airline Hull All Risks and Liability Market Capacity Airline Hull Deductible Market AVN52E and Excess Third Party War Risks Hull War Risks Cover Summary. - PowerPoint PPT Presentation
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Presented By
Mr.Vijay Thakur
ContentsAirline Hull All Risks and LiabilityMarket CapacityAirline Hull Deductible MarketAVN52E and Excess Third Party War RisksHull War Risks CoverSummary
Airline Insurance Industry Cycle:Airline Hull/Liability Premiums 1982-2009
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
US
$ B
illio
ns
Premium
Linear Trend
Hard
Soft
Har
d
Soft
Soft
Hard
Har
d
World Airline Premium and Claims 2000-2010
0.0
1.0
2.0
3.0
4.0
5.0
6.0
00 01 02 03 04 05 06 07 08 09 2010
US
$ B
illio
ns
PremiumClaimsAverage 10 Year PremiumAverage 10 Year Claims
Average Premium2002-2009 $2.32bn
Average Claims2002-2009 $1.41bn
Maximum Limit Progression 1985-2008
Hull Limit
0
50
100
150
200
250
300
350
1985 1990 1995 2000 2009
US
$ M
illio
ns
Liability Limit
0
500
1,000
1,500
2,000
2,500
1985 1990 1995 2000 2009
US
$ M
illio
ns
2009 Airline Premium & Rate Movements
Period Renewals AFV PaxHull
RatesLiab
RatesExpiring
Prem (US$m)Renewal Prem
(US$m)Premium
Movement
1Q09 13 50% 2% -4% -1% $29.74 $42.02 41%
2Q09 49 1% -4% 8% 13% $191.59 $214.81 12%
3Q09 52 2% -11% 27% 42% $246.98 $297.03 20%
October 18 25% 4% 23% 26% $96.03 $125.82 31%
November 23 4% -1% 5% 14% $169.81 $204.46 20%
December 63 2% 0% 10% 14% $872.54 $1,036.00 19%
4Q09 104 3% 0% 13% 16% $1,138.39 $1,366.28 20%
Annual Average/Total
218 3% -2% 15% 20% $1,606.70 $1,920.14 20%
The figures shown in the table below represent those of Airlines that have renewed in 2009 only.
2010 Airline Premium & Rate Movements
Period Renewals AFV PaxHull
RatesLiab
RatesExpiring
Prem (US$m)Renewal Prem
(US$m)Premium
Movement
1Q10 11 7% 3% 7% 9% $39.68 $44.80 13%
April 18 2% 10% -7% 2% $102.93 $110.47 7%
May 19 11% 15% -10% -8% $75.05 $77.22 3%
June 9 1% 6% -2% 2% $31.67 $37.43 18%
2Q10 46 5% 12% -7% -2% $209.65 $225.12 7%
July 16 12% 9% -16% -10% $154.24 $154.29 0%
Annual Average/Total
73 7% 11% -7% -2% $403.57 $424.21 5%
The figures shown in the table below represent airlines placements renewing in 2010 only.
LossesAwards and minor claim levels are constantly
increasing Recent passenger liability awards have been influenced by US
lawyers and jurisdiction This has meant awards exceeding US$1m per passenger in
countries where they would have previously been substantially less
Increases in minor losses are also having a significant impact on underwriters bottom line
2009/10 Airline Losses:Nett Hull losses in Excess of US$10m Shown
Total Hull/Liability Losses 2009 (including minor losses) – US$2.343bn2010 (including minor losses) – US$0.733bn
US Airways($40m)
Colgan Air($19m)
THY ($47m)
Lion Air($28m)
FedEx
Royal Air Maroc($10m)
Air France($93m)
Yemenia($34m)
Bangkok Airways($15m)
Air India($17m & $50m)
Saudi Arabian($19m & $14.3)
Emirates($19m)
Kingfisher($18m)
Avient($67m)
American Airlines($28m)
EthiopianAirlines($39m)
2009 Losses2010 Losses
Afriqiyah Airways($123m)
Satena($18m)
Five Year Premium and Claims by Region(based
on declared figures for 2009 renewals)
5yr CreditBalance
+US$184m
5yr CreditBalance
+US$117m
5yr CreditBalance
-US$267m
5yr CreditBalance
+US$1,701m
5yr CreditBalance
+US$821m
5yr Credit Balance
-US$404m
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Africa Middle East Europe Asia Pacific North America Latin America
US
$ B
illio
ns
Five Year Premiums
Five Year Claims
Five year Loss Ratios by Region(based on declared figures for 2009 renewals)
Loss Ratio54.71%
Loss Ratio76.23%
Loss Ratio110.87%
Loss Ratio34.67%
Loss Ratio70.22%
Loss Ratio189.09%
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
200%
Africa Middle East Europe Asia Pacific North America Latin America
Loss
Rat
io %
Airline Capacity to Accept Airline Risk:
Non-US Airline with a US$1.5 Billion Limit
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%AA 19.50%
AA- 27.00%
A+ 86.50%
A 7.30%
A- 26.60%
BBB 0.50%
BBB- 2.50%
Other 17.15%
Total 187.05%
Munich Re (10%)GAUM (7.5%)Inter Hannover (5%)Partner Re. (3.5%)Generali (1%)
Aspen (3.3%)Inter Aero (2.5%)SCOR (1.5%) LRA (13%)
Asia Capital (5%)KRIC (2%)Maxs Re (4%)Sirius (1.5%)Aviabel (1%)ADNIC (0.1%)
GIC, Ironshore (5%)Glacier Re (3%)MISR (1.25%)PICC, New India (1%)Oriental, (0.75%)Nissay (0.15%
It should be noted that underwriters are unlikely to participate up to their maximum capacity. The actual available capacity is dependant on
a number of variables and underwriters desire to participate on any particular risk.
Chartis (12.5%)Ace, Catlin, Swiss Re (10%)Mitsui (6%)Amlin, Starr, Talbot, XL (5%)QBE (4%)Faraday, (3%)Antares, St Paul (2.5%)Atrium (2%)Kiln, Samsung (1.5%)Axis (1%)
Allianz (10%)AXA (8%)Tokio (1.5%)
SCR (0.50%)
Oman (2.5%)
Aviation Hull Deductible Market
Talbot and Kiln have recently entered the deductible market
Rating is reasonably stable Very loss active (large number of claims but
restricted limits) Marginally profitable area to some
underwriters All markets write 100% of any individual risk
St Paul HCC
Secondary Markets
Principal Markets
ACE AspenChartis Allianz Kiln Talbot Travelers XLInsurance
Excess AVN52: Third Party LiabilityPremiums are now at their lowest level since the
introduction of this cover and reductions are now minimalPremium levels are significantly short of the maximum
insured limits Limits of US$1 billion or more being covered for an estimated
total market premium of around US$200 million in 2009The Excess AVN52 market has yet to suffer an insurable
lossThe market created in the wake of 9/11 has had the largest
percentage fall in premium levels since the highs of 2002 An influx of capacity and competition has driven premiums
down from US$1.5 billion in 2002Some hull and liability underwriters are evidencing appetite
to increase sub-limits to US$250m
Excess AVN52: Third Party Liability
An influx of capacity and competition has driven premiums down from US$1.5 billion in 2002 to US$120 million in 2008
The trend for premium reductions continued during 2009Premiums are now at their lowest level since the
introduction of this cover and reductions are minimal
Excess AVN52E Capacity: Based on US$850m excess US$150m
0%
20%
40%
60%
80%
100%
120%
140%
160%AA 10.00%
AA- 10.00%
A+ 123.60%
A 2.50%
A- 2.00%
Other 15.00%
Total 163.10%
Allianz (10%)
Inter Hannover (10%)
Aspen (2.5%)Liberty Mutual (2%)
Ironshore (10%)Glacier (5%)
It should be noted that underwriters are unlikely to participate up to their maximum capacity. The actual available capacity is dependant on
a number of variables and underwriters desire to participate on any particular risk.
Axis (30%)Chartis (25%)Swiss Re (20%)Catlin, Starr (10%)Brit (3%)Antares (2.5%)Aegis, Amlin, Liberty (2%)ARK (1.75%)Atrium, Faraday, Hiscox, Pritchard, Markel, Talbot, XL (1.5%)St Paul (1.25%)ACE, Hardy, Watkin (1%)Kiln (0.6%)
2009
Plus Berkshire Hathaway (AAA) capable of writing US$1,000m
Aviation underwriting-ReinsuranceUnderwriting factorsDebit credit balanceGovernment policiesDgcaAirworthinessCVC Flight data digital recorderPublic knowledge of all losses
September 11 Crash
Mangalore crash
Hudson Crash