20 2017 17 Glob lobal al Ma Marin ine e Ins nsura urance nce Ma Market et Data sourced from IUMI 2018 Facts and Figure Committee Presentation
Gl Glob obal al Mari rine ne Marine rine Insu surance rance Repo port Please Note & Disclaimer Figures reflect the 2018 state of reporting and will change retrospectively. Some figures are estimates. For comparison purposes, therefore compare the updated premiums and loss ratios at www.iumi.com ! All information given is of informational and non-binding character. Figures related to the marine market’s performance reflect market averages. They do not disclose single companies’ or local markets’ results. As with all averages, individual underwriting units may out- or underperform compared to the average. Foto: Astrid Seltmann IUMI’s aim is to provide information as available and raise Big thanks to Astrid Seltmann consciousness for the importance of a fact-based evaluation of Analyst/Actuary, The Nordic Association of Marine the risk exposure covered – and inspire everyone to do their Insurers (Cefor) own critical evaluation of real and seeming facts. Vice chair, IUMI Facts & Figures Committee
Gl Glob obal al Mari rine ne Marine rine Insu surance rance Repo port Market overview Income by line / by region Cargo Premiums / Loss ratios Hull Income / Vessel values / Claims / Loss ratios ______________________________________________________________ Additional data Marine premiums by line of business by country (https://iumi.com/statistics) Loss ratios triangulations Hull, Cargo, Energy
Gl Glob obal al Mari rine ne Premiu emium m 2017 17 (By Line of business ) Tota tal l Estima imate e $28 28.5B 5B USD 2% from m 2016 6 to 2017 NB: Exchange rate effects! 12% 24% Global Hull 7% Transportation/Cargo Marine Liability Offshore/Energy 57% Hull & offshore energy share reduced 1%, Cargo share up 2%.
Gl Glob obal al Mari rine ne Premiu emium m 2017 17 (By Region ) Europe ope 49.2 .2% North th Amer erica ica 5.6% 6% Asia Pacific cific 29.2% .2% Other her 6.3% 3% LATAM M 9.7% 7%
Marine premiums by region 2010-2017 20,000,000 18,000,000 16,000,000 Premium reduction 2013-16: Combination of strong USD and 14,000,000 market conditions. Europe 12,000,000 Asia/Pacific 2017 influenced by strengthening Latin America 10,000,000 of local currencies against USD North America 8,000,000 (besides market conditions). Middle East 6,000,000 Africa 4,000,000 2,000,000 2016 Total: 27.9 USD 0 2017 Total: 28.5 USD (+2%) 2010 2011 2012 2013 2014 2015 2016 2017
Glob lobal al Ca Cargo go Res esults ults 20 2017 17
Gl Glob obal al Cargo go Premium mium 2017 17 (By Region ) Tota tal l $16. 6.1B 1B USD 6% from m 2016 6 to 2017 3% 6% 6% Europe Asia Pacific 41% 12% Latin America North America Middle East Africa 32%
Glob Gl obal al Cargo go Premium mium 2017 17 (By Market ) Total estimate: 16.1 USD billion Belgium Brazil China 2017 Top 5: 2017 1.8% China 9.6% 5.3% 9.6% Japan 9% France Other UK (Lloyds) 8.8% 28.6% 4.8% Germany 7.4% Germany Brazil 5.3% 7.4% 2016 Top 5: UK (Lloyds) 9.5% India Japan 8.9% USA 2.1% China 8.4% 5.1% Italy Germany 7.3% 2.6% Brazil 5.3% UK (Lloyds) * Japan 8.8% UK (IUA) 9.0% Mexico Spain Singapore Russia Nordic * incl. prop & fac. 2.6% 3.3% Netherlands 1.4% reinsurance 2.4% 2.0% 1.4% 1.8%
Wor orld ld Tra rade e Values ues and Ex Expo ports ts Index of evolution, 2005=100% 220% 200% World Trade Values Evolution of world trade (Goods) values and cargo premium 180% seem to correspond. World Trade Volume 160% Premiums increase in 2017 (Goods) purely reflects exchange rate influences (USD). 140% Global Cargo Premium Extended risk covers and the 120% increasing risk of event losses (risk accumulation) need also 100% to be taken into account! 80% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
And then…There’s the Cargo Loss Ratio!
Cargo go Gr Gros oss s Lo Loss ss ra ratio o ( UW Years 1996-2017 17 **) Gross s Premiums, s, Paid & Outstan andin ing Claim ims 100% 2017 90% ? 80% Recent years strong impact by outlier & Nat-cat event losses: 70% 60% 2015: Tianjin port explosions 2016: Hanjin, Amos-6 satellite 50% 2017: Hurricanes / Nat Cat 40% 2018: Mærsk Honam 30% Increasing expenses a concern. 20% 10% 100% C/R doesn’t cut it any more 0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 reported IBNR estimate (normal pattern) IBNR Estimate (recent pattern) * Technical break even: gross loss ratio does not exceed 100% minus the expense ratio (acquisition cost, capital cost, management expenses) ** Data: Belgium, France, Germany, Netherlands, Italy, Spain (until 2007), UK, USA
Cargo go Lo Loss ss Tri riangu ngulati lations ons ( UW Years s 2011-20 2017 17) Gross Premium miums, , Paid d & O Out utstandin tanding Claims aims 90% 2014, 2015, 2016: Each year extraordinary 2010 increase in loss ratios. Change in typical 80% 2011 pattern. 2012 The new normal? 2013 70% 2017 starts at 2014 level. 2014 With a ‘normal’ pattern (grey lines), 2017 2015 would end around 70%. 2016 With recent pattern, 2017 ends around 80%. 60% 2017 50% 1 2 3 4 5 *Data included from: Belgium, France, Germany, Netherlands, Italy, UK, USA
Cargo go Conclu onclusions sions 4 Outlook 2 Results 3 1 Growth Claims Unstable, uncertain. Trade growth accelerating, Tianjin affecting 2014 & 2015 Tianjin port explosion Trade wars and Protectionism. but change in economical UW years. Amos 6, Hanjin potentially the largest single Covered risks increasingly and political frame and HIM will affect 2016 & cargo loss in history. represent stock exposure rather conditions makes 2017. Maersk Honam Risk of large event losses (Nat than just transit exposure. prognoses uncertain. impacting 2018. Cat and man-made) Increasing value accumulation USD premium influenced 2014-2016 results all severely substantially increased. on single sites/vessels. by combination of market deteriorated. Tightening London market, conditions and exchange 2017 underwriting year also repatriation of some accounts. rates. expected to deteriorate more CAT events every year? than average. New normal?
Glob lobal al Hu Hull ll Res esults ults 20 2017 17
Gl Glob obal al Hul ull l Premium mium 2017 17 (By Region ) Total tal $6.9B 9B USD 0.8% 10% from m 2015 to 2016 1.6% 3.9% 2.3% % from m 2016 to 2017 5.8% Europe Asia Pacific Latin America 48.1% North America Middle East 39.7% Africa
Gl Glob obal al Hul ull l Premium mium 2017 17 (By Market ) Total estimate 2017: USD 6.9 billion 2017 Top 5: China 2017 UK (Lloyds) 16.4% Other 10.6% Singapore 12.1% 15.4% France Italy China 10.6% Latin America 4.0% 4.5% Nordic 9.0% 5.8% Japan 7.3% Japan USA 7.3% 3.3% 2016 Top 5: Korea, Republic UK (Lloyds) 17.3% 2.8% Singapore 11.8% Netherlands China 10.9% UK (Lloyds) 2.0% * Nordic 8.8% 16.4% Nordic Japan 7.8% * Includes prop. & 9.0% fac. reinsurance UK (IUA) Spain Singapore 5.1% 12.1% 1.6%
Hul ull l Premiu mium m / Wor orld ld Fl Fleet et World fleet continues to grow, especially in tonnage. Hull premium deteriorates in line with ship values (FX has less impact) 225% World fleet continues to grow, especially in tonnage. Gross tonnage 200% (> 300 GT) Ship values depressed by 175% supply/demand No. Ships (> 300 GT) 150% Hull premium deteriorates in line with ship values. 125% Global Marine Hull Premium 100% Increasing mismatch between fleet/vessel growth & income. Av. insured vessel 75% value (Renewals & newbuilds - Cefor) Sources: No. Ships/tonnage: IHS, Av. Ins. vessel value: Nordic Marine Insurance statistics 50% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 * Premium adjusted backwards for missing historical data.
And then…There’s the Hull Loss Ratio!
Hul ull l – Ultimat timate Lo Loss ss Ra Ratio* o* (UW Years s 1996-2017 17** **) 140% Substantial deterioration of ??? loss ratios since 2013. 120% Costa Concordia peak Overcapacity, dropping vessel 100% values and reduced activity influenced income negatively. 80% 60% Yachts impact 2017 results, but: 40% The income does not seem to cater for expected ‘normal’ repair 20% cost any more. 0% Since IUMI 2018, some London 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 markets have withdrawn from -20% Hull. as reported per December 2017 (paid+outstanding) IBNR estimate (normal pattern) * Technical break even: gross loss ratio does not exceed 100% minus the expense ratio (acquisition cost, capital cost, management expenses) ** Data: Belgium, France, Germany, Italy, Spain (until 2007), UK, USA
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