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IUMI International Union of Marine Insurance Marine Insurance in a Challenging Economic Environment Deirdre Littlefield Starr Marine 12 August 2010.

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Presentation on theme: "IUMI International Union of Marine Insurance Marine Insurance in a Challenging Economic Environment Deirdre Littlefield Starr Marine 12 August 2010."— Presentation transcript:

1 IUMI International Union of Marine Insurance Marine Insurance in a Challenging Economic Environment Deirdre Littlefield Starr Marine 12 August 2010

2 IUMI International Union of Marine Insurance Agenda IUMI Current Environment and Trends Shipping and Insurance Statistics Future Success Page 2

3 IUMI International Union of Marine Insurance Established 1874 Member Associations from 54 countries Annual Conference attracts 500 marine professionals Main Pillars: Education, Lobbying, Membership International Union of Marine Insurance Page 3

4 IUMI International Union of Marine Insurance IUMI Technical Committees Cargo Ocean Hull Energy & Offshore Legal & Liability Inland Hull, Fishing Vessels & Yachts Loss Prevention Facts & Figures Page 4

5 IUMI International Union of Marine Insurance International Union of Marine Insurance Page 5

6 IUMI International Union of Marine Insurance Page 6 Marine Insurance – Meeting the Challenge of the New Decade

7 IUMI International Union of Marine Insurance International Union of Marine Insurance Education IUMI Lobbying Membership Page 7

8 IUMI International Union of Marine Insurance The worldwide Maritime industry, ravaged by the economy and financial crisis over the last 30 months, has passed through its darkest hour. Page 8 Economic Outlook

9 IUMI International Union of Marine Insurance Forecast Growth for 2010 Global GDP Growth 4.6% U.S. 3.3% Euro Countries 1.0% China 10.5% India 9.4% Middle East 4.5% LAC 4.5% Source: IMF Page 9

10 IUMI International Union of Marine Insurance Forecast Growth for 2010 Source: Global Financial Stability Report & IMF Page 10 LAC GDP Growth 4.5% Brazil 7.3% Mexico 5.0% Argentina 3.5% Bolivia 3.3% Chile 4.7% Colombia 2.3% Peru 6.3% Uruguay 5.7% Venezuela -2.8%

11 IUMI International Union of Marine Insurance Forecast Growth for 2010 Global Activity Production/Trade 9.0% 6.3% Oil 75.27* 77.50* Non-fuel commodity prices 15.5% Source: IMF *USD price per barrel Page 11

12 IUMI International Union of Marine Insurance Forecast Growth for 2010 the recovery remains largely policy- driven and faces significant challenges as policy makers look to unwind the unprecedented fiscal, monetary and financial support they provided to keep their economies and financial markets from collapsing Source: Global Financial Stability Report & IMF Page 12

13 IUMI International Union of Marine Insurance Obstacles to Recovery China New Tonnage Page 13

14 IUMI International Union of Marine Insurance Asset Impairment for Billion (USD) 11 Billion (USD) Ocean Carriers Air Carriers Page 14 Source: Journal of Commerce, New York Times

15 IUMI International Union of Marine Insurance Unprecedented recession but the worst of the slump may now be past Page 15 Source: IMF / IUMI

16 IUMI International Union of Marine Insurance So, as expected, a severe drop in world trade volumes… Page 16

17 IUMI International Union of Marine Insurance Page 17 …combined with commodities prices tumbling…

18 IUMI International Union of Marine Insurance … is leading to a collapse of world trade values. Page 18 9%

19 IUMI International Union of Marine Insurance World transport capacity: irrational exuberance Page 19 Source: Clarkson

20 IUMI International Union of Marine Insurance Clarksea Index The Clarksea Index is a weighted average of earnings for all the main commercial vessel types, where the weighting is based on the number of vessels in each fleet sector. Dec-2007: $49,841/day. 1H 2008: $38,396/day. Between the end of May 2008 and mid-April 2009, the Index fell from almost $50,000/day to an all-time low of $7,350/day before recovering slightly. The dry bulk market has provided some support to the Index in As of 8th January 2010, it stood at $16,783/day. Source: Clarkson

21 IUMI International Union of Marine Insurance Mobiles - Fleet Size by Region – All Rigs Page 21

22 IUMI International Union of Marine Insurance Mobiles – Utilisation Rates by Region Page 22

23 IUMI International Union of Marine Insurance Global Marine Premium 2008 by line of business Page 23

24 IUMI International Union of Marine Insurance Global Marine Premiums 2006 to 2008, as reported per accounting year Page 24

25 IUMI International Union of Marine Insurance Global Marine Premiums by line of business, 2000 – 2008 (USD Million), as reported Page 25

26 IUMI International Union of Marine Insurance Market Shares 2008 Page 26

27 IUMI International Union of Marine Insurance Global Cargo Premium by Market Page 27

28 IUMI International Union of Marine Insurance Page 28 Global Hull Premium by Market

29 IUMI International Union of Marine Insurance Page 29 Global Offshore Energy Premium by market

30 IUMI International Union of Marine Insurance Marine Hull and Cargo/Transport Gross* Ultimate Loss Ratio U/W Years 1997 to 2008 Page 30

31 IUMI International Union of Marine Insurance Offshore Energy Gross Reported Loss Ratios U/W Years 1996 to 2008 Page 31

32 IUMI International Union of Marine Insurance Serious and Total Losses 1994 – 2008 By Number (vessels > 500 GT) Page 32 Source: LMIU

33 IUMI International Union of Marine Insurance Serious and Total Losses 1994 – 2009 By Cause, All Vessel Type (vessels > 500 GT) Page 33 Source: LMIU, total losses as report by Llodys List

34 IUMI International Union of Marine Insurance Serious and Total Losses 1994 – 2009 By Cause, All Vessel Type (vessels > 500 GT) Page 34 Source: LMIU

35 IUMI International Union of Marine Insurance Challenges Protectionism Piracy Redeployment After Lay-Up Reduced Steel Weight Crew Recruitment and Training Vessel Maintenance/Slow Steaming Page 35

36 IUMI International Union of Marine Insurance On the Positive Side Insurance industry strong and resilient Successful fund raising by shipping industry More ship repair capacity Crewing crisis eases Younger world fleet Page 36

37 IUMI International Union of Marine Insurance Global P&C Industry – orderly transfer of risk continues Insurance Companies Pay claims Renew policies Write new business New products Competition Banks Banks disappear Eliminate lines of credit Turn away customers Scale Back products Consolidation Page 37 Source: iii, ISO

38 IUMI International Union of Marine Insurance Fewer Problems in the P&C Industry Because of emphasis on Underwriting Transparency Page 38 Source: iii, ISO

39 IUMI International Union of Marine Insurance Insurance Industry Challenges for 2010 Top line growth Reduced investment earnings Expected loss trends ROE Page 39 Source iii, ISO

40 IUMI International Union of Marine Insurance Impact of Interest Rate Levels on Returns on Surplus Page 40 Combined Ratio 100% 4.5% Return 9.6% Return 15.9% Return Source: iii, ISO % 10% 16%

41 IUMI International Union of Marine Insurance Insurance Industry Challenges for 2010 Top line growth Reduced investment earnings Expected loss trends ROE Access to capital Regulatory spillover Page 41 Source iii, ISO

42 IUMI International Union of Marine Insurance Top line growth will suffer Bottom line focus Marine tied to global economy < 95% combined very challenging Underwriting, underwriting, underwriting Strong Head Winds Page 42

43 IUMI International Union of Marine Insurance Thank you. For information about IUMI Page 43


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