2011 Global Marine 2011 Global Marine Insurance Report Astrid Seltmann Astrid Seltmann Vice chairman IUMI Facts and Figures Committee Analyst/Actuary @ Cefor, The Nordic Association of Marine Insurers
Global Marine Insurance Report 2011 • Global Marine Insurance – Market overview l b l k • Global Hull and Cargo market and results • Global Offshore Energy market • Addendum (for download only): Tables with underlying reported figures Tables with underlying reported figures
Global Marine Premium 2010, by line of business Total reported: 25.3 USD billion 2010 New: China included. Impact: 1.96 USD billion 13.2% 29.9% 6.2% Global Hull Transport/Cargo Marine Liability Offshore/Energy / gy 50.7% 50.7% Total estimate of global marine market: <= 30 USD billion
Global Marine premiums reported 2008 to 2010 New: all figures including China +2.6% +2 6% Total +5.6% Offshore/Energy Reported change 2009 ‐ >2010 2009 2010 2010 ‐ 0.7% Marine Liability 2009 2008 +2.6% Transport/Cargo In 2009 reduction in global cargo volume, following the financial crisis. g +1.9% Global Hull 0.000 5.000 10.000 15.000 20.000 25.000 30.000
Market Shares 2010 Total reported: 25.3 USD billion Europe Total estimate of global marine market: <= 30 USD billion Asia/Pacific A i /P ifi North America 7.4% 8.4% Other New: including China 54 3% 54.3% 29.9% Europe : Albania, Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Netherlands, Nordic (Cefor), Poland, Portugal (2010 est.), Romania, Russia, Slovenia, Spain, Sweden, Switzerland, Turkey, Ukraine , UK (IUA + Lloyds) Asia/Pacific : Australia, China (new!), Chinese Taipei, Hong Kong, India, Japan, Korea DPR, South Korea , Malaysia, New Zealand, Singapore i / ifi l h ( !) h d h l l d North America : Bermuda, Canada, USA Other : Bahrain, Brasil, Congo , Egypt, Israel, Jordan (new!), Kazakhstan , Kenya, Lebanon, Morocco, Nigeria, South Africa, Tunisia , United Arab Emirates Countries in italics did not report in 2011
P&I Clubs International Group – Gross Calls 2010 (Premium) – Operational location Gross Calls 2010 (Premium) Operational location 3% Source: I nternational Group of P&I Clubs 7% 28% 62% UK Calls 2010: UK: UK: 2.07 2 07 Nordic N di Nordic: 0.92 Japan p Japan: Japan: 0.23 0.23 US: 0.11 US Total: 3.33 (USD billion)
Global Cargo Premium by markets 2010 Total: 12.8 USD billion Brasil Belgium 2010 0 0 2,5% New: China New: China 4 9% 4,9% Other markets 9% 24,3% France 6,3% USA Germany Germany 5,6% 9% UK (Lloyds)** Italy 6% 3,8% , Spain UK (IUA)*** 2,1% 2% Russia Japan Japan Nordic Nordic * 3,3% 3,3% Netherlands 2,6% 3,3% ** Lloyds: includes fac. 14,6% and prop. reinsurance *** IUA: data from Xchanging * Denmark, Finland, Norway, Sweden
Global Hull Premium by markets 2010 Total: 7.5 USD billion 2010 2010 New:China New:China 10% Other markets France 23 % 6 % Italy 5 % Japan 9 % USA 5 % 5 % Korea, Republic UK (Lloyds) ( y ) ** 4 % 4 % 13 % Netherlands 4 % UK (IUA) UK (IUA) *** N Nordic di S Spain i * ** includes facultative 4 % 3 % and prop. reinsurance 14 % * Nordic countries (Norway, *** data from Xchanging Sweden, Denmark, Finland)
World Seaborne Trade Volume and Trade Values, Global Cargo Premium, Index of evolution, 1995 = 100% Global Cargo Premium Index of evolution 1995 = 100% 4.00 2010/ 2011 upswing in trade, but 3.50 unstable market conditions: World Trade Values 3.00 3 00 Which effect on cargo market? 2.50 World Export Volume 2.00 1 50 1.50 Global Cargo Premium Global Cargo Premium 1.00 0.50 S ome cycle irregularities due to exchange rates. 0 00 0.00 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 S ource: World Trade Values: IMF
Index of Evolution of USD Exchange rate against selected currencies g (exchange rates as of December each year, 2011 as of June 11) 180% 160% 140% EUR 120% GBP JPY JPY 100% NOK 80% Since Financial crisi s less correlation between exchange rates g 60% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 S ource: Norges Bank Exchange Rates S tatistics
World Merchant Fleet and Global Marine Hull & Liability Premium, Index of evolution, 1995 = 100% Hull & Liability Premium Index of evolution 1995 = 100% 230% Average insured Average insured 210% value per vessel (Cefor ‐ newbuilds 190% and renewed vessels) vessels) 170% Gross tonnage (> 300 GT) 150% 150% 130% No Ships No. Ships 110% (> 300 GT) 90% 70% Global Marine Hull & Liab. Premium 50% 50% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 S ources: Indicators for World Fleet from IS L Bremen, Vessel value index: Cefor data as of 30.06.11
Change in insured values on renewed vessels , by year of renewal by year of renewal (= insured value on renewal / insured value previous year) Average annual change in insured values on renewed vessels on renewed vessels 15.0% Insured values decrease since 4Q 2008 with since 4Q 2008, with 10.0% 8.3% stabilization in 2011 7.0% 5.4% 5.4% 5.0% 2 4% 2.4% 0.0% 04 05 06 07 08 09 10 11 200 200 200 200 200 200 20 20 -2.5% -5.0% -10.0% 10 0% -9.1% -15.0% -14 5% 14.5% -20.0% Source: Cefor, The Nordic Association of Marine I nsurers, figures as of 30 June 2011
Marine Hull and Cargo/Transport Gross* Ultimate Loss Ratio U/W Years 1998 to 2010 Gross Ultimate Loss Ratio, U/W Years 1998 to 2010 140% Hull 2009/2010: Hull ‐ 2009/2010: Marine Hull 120% Some improvement Cargo/Transport compared to peak compared to peak years 2006 to 2008. 100% But: Claim cost and But: Claim cost and 80% loss ratios stabilize at high levels . 60% No technical profit. 40% 20% * Technical break even: gross loss ratio does not exceed 100% minus the expense ratio 100% minus the expense ratio 0% (usually 20% ‐ 30% acquisition cost, capital cost, management 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 expenses)
Marine Hull ‐ Gross* Loss Ratio Underwriting years 2003 ‐ 2010 as reported after 1 2 3 4 and 5 years Underwriting years 2003 ‐ 2010 as reported after 1, 2, 3, 4 and 5 years 90% Recent loss ratio level 2006-2008: 2003 Repair cost driven up 80% by changing frame by changing frame 2004 2009/2010 loss ratio conditions => Change in claims 2005 p pattern! 70% 70% 2006 Previous loss ratio level 2007 2009/ 2010: 60% 60% 2008 Price-driving factors turn back to ” normal” 2009 levels, but no stable 50% 50% environment 2010 => difficult to estimate 2010 effect on results. 40% 1 2 3 4 5
Summing up Hull Unstable frame conditions continue Steel prices / repair yard capacity / exchange rates / commodity prices / vessel utilization /newbuildings / world trade /... Changes in market environment influence both income (vessel values) and cost (claim frequency and repair cost). Repair cost and claims frequency reached a peak in 2007/2008. Some improvement in 2009/2010, especially with regard to claims frequency, but loss ratios and claims costs stabilize at high levels. Catching up of trade in 2010 and higher utilization rates may cause repair cost to rise again. p g Major claims may smash a year’s result and occur at any time!
Summing up Hull Hull technically at loss for 15 consecutive years! 15 Something’s stable after all… Future Global Hull Market depends on Understanding of dependencies between macroeconomic U d t di f d d i b t i parameters and repair cost Good models to estimate expected claim cost (= risk premium) Good models to estimate expected claim cost (= risk premium) Trade / Fleet development Market discipline / capacity Market discipline / capacity and as always: the impact of major claims
Marine Hull and Cargo/Transport Gross Ultimate Loss Ratio, U/W Years 1998 to 2010 Gross* Ultimate Loss Ratio U/W Years 1998 to 2010 2011: 140% New Zealand New Zealand Marine Hull earthquake – 120% Japan earthquake Cargo/Transport & tsunami – & tsunami Floods – Tornados 100% – New York storm 80% 2011 level? 2007 to 2010 : 60% Clear deterioration of results – 40% profitability not ensured. d 20% * Technical break even: gross loss 2002 to 2006: ratio does not exceed 100% minus the expense ratio Gross loss ratios Gross loss ratios (usually 20% ‐ 30% acquisition cost, 0% keep below 60% ‐ capital cost, management expenses) 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 technical profit.
Marine Cargo ‐ Gross* Loss Ratio Underwriting years 2003 ‐ 2010 as reported after 1, 2, 3, 4 and 5 years Underwriting years 2003 ‐ 2010 as reported after 1 2 3 4 and 5 years 80% 80% 2007 2009 2007-2009: Changing market Recent loss ratio level demands upwards 2003 adj ustment of claims adj stment of claims 2010 loss ratio? 70% 2004 reserves 2010 => Change in typical 2005 claims pattern claims pattern 2006 60% 2007 As of December 2010: Previous loss ratio level Previous loss ratio level 2007/ 2008 improved 2007/ 2008 improved, 2008 2008 but still at high levels 2009 50% 2010 2010 2010: 2010: starts high – will end above 70% , if new pattern continues pattern continues 40% 1 2 3 4 5 6
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