THE MARINE INSURANCE MARKET 2002

Houston Marine Insurance Seminar September 22, 2002

International Union of Marine Insurance

Founded in Berlin in 1874 55 Member Associations Purpose: To represent, safeguard and

develop insurers’ interests in marine and transport insurance

Fosters cooperation and exchanges information with international governmental and non-governmental organizations

IUMI Organization and Annual Conference

“The Market”

“ The area of economic activity in which buyers and sellers come together and the forces of Supply and Demand affect Prices”

- Webster’s Dictionary

Capital Economic Activity Reinsurance Return on Investments Management Decisions Intangibles

What Factors Drive the Market?

The 1992 –2002 Cycle

Peak Years of 1992-1994 Booming World Trade Robust World Economic Growth Favorable Investment Environment Growing Order Book for New Vessels Falling Insurance Rates

U.S. Marine Insurance Results 2001Highlights

12% growth in Direct Written Premium to $2.34 billion 102% Combined Ratio Second Consecutive Year of Improvement Stellar Cargo Results – 86.1% Combined Ratio Excellent Yacht Results – 15% Growth / 93.4% Combined Ratio Solid Liability Results – 88.9% Combined Ratio No Cat’s

U.S. Marine Insurance Results 2001Lowlights

Energy & Offshore 89% Growth / 152.9% Combined Ratio

Ocean Hull Premiums grew 3.5 X’s / 113.1% Combined Ratio

Other Hull / P&I – 116% Combined Ratio Liabilities – 9% decline in Direct Written

Premium / Deteriorating Trend Marginal ROE

U.S. Marine Calendar Year Financials

Global Marine Premiums

Global Marine Premiums

Global Marine Premiums

Major Marine Markets

2000 Japan $2,087 United Kingdom $1,766 USA $1,554 France $ 972 Germany $ 964 Norway $ 584 Italy $ 509

Global Cargo Premiums

Global Hull Premiums

Major Marine Markets% Change

2000 1998-2000

Japan $2,087 -9.2% United Kingdom $1,766 +3.9% USA $1,554 +4.7% France $ 972 -10.2% Germany $ 964 -24.5% Norway $ 589 -12.2% Italy $ 509 -36.2%

Where Do We Go From Here?

The 2002-2012 Cycle Market Consolidation New Capital Management Decisions

The Blame GameWho’s responsible?

The Underwriter The Broker/Agent The Reinsurer The Customer