Monaco seminar Migrants: mortality and morality in the Mediterranean 16 June 2016
Club update Colin Fowles, Underwriting Director 16 June 2016
Overview of the club: key financials Selective growth; breakeven underwriting; strong balance sheet Total tonnage Owned tonnage Premium income Combined ratio 138m gt 116m gt $322m 95% 20 February 2016 20 February 2016 Projected 2016/17 2015/16 +2.5% + 3.6% $354m 100% 20 Feb. 2015 – 20 Feb. 2016 20 Feb. 2015 – 20 Feb. 2016 2015/16 2014/15 Investment return Surplus Free reserves S&P rating -0.9% A (strong) $390 2015/16 financial year $10m 20 Feb 2016 2015/16 financial year AAA capital strength 1.8% $12m $380m Affirmed June 2015 2014/15 financial year 2015 financial year 20 Feb 2015 3
Membership Diverse spread of business by country of management and ship type Owned tonnage by ship type Owned tonnage by region 116m GT 116m GT Other 2% 7% Canada 1% Passenger & ferry USA 6% 13% 4% 26% Turkey Offshore Rest of world Middle East 3% 6% Rest of world 25% Dry bulk 8% Japan 7% Singapore 26% Asia-Pacific 4% Republic of Korea 7% Rest of Asia-Pacific Container & 28% 11% Greece gen. cargo Nordic countries 8% 6% Germany Italy 6% 48% Europe 4% Netherlands Tankers 31% 3% Monaco 3% United Kingdom 7% Rest of Europe 04
Financial security Leading capital strength; steady growth in reserves S&P ratings of IG clubs Free reserves, USDm RATING S&P CAPITAL CLUB STRENGTH 500 GARD A+ AA STANDARD A AAA 390 350 353 363 369 380 400 UK CLUB A AAA BRITANNIA A AAA 300 SKULD A AA NORTH OF ENGLAND A AA 200 STEAMSHIP MUTUAL A- AA SHIPOWNERS A- AAA 100 JAPAN BBB+ A WEST OF ENGLAND BBB+ AA 0 SWEDISH BBB+ AAA 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 LONDON BBB AAA AMERICAN BBB- BBB- No unbudgeted supplementary calls for over 20 years Release calls among the lowest in the IG 5
Investment policy The portfolio is low-risk, consistent with AAA capital strength Portfolio breakdown Approach • Aim to ‘ break even ’ on underwriting ; % of portfolio 20 February 2016 unaudited investment returns as a ‘buffer’ Gold • Prioritising capital preservation ; risk 1% Cash 8% profile has reduced over past 3 years to Alternatives 7% combat market volatility Equities 12% • Asset allocation criteria established by the board 35% Corporate bonds • Managers seek to maximise returns while operating within criteria and maintaining AAA capital strength Sovereign bonds 37% • Performance monitored actively by the board using agreed benchmarks 6 These numbers are approximate and based on CT estimates using data from Northern Trust and UBS Delta
Sustainable ‘breakeven’ underwriting Financial year combined ratio Key principles • Disciplined underwriting to align member 120% premiums with claims and risk 115% 113% - Assessment of risk profile 100% - Proprietary pricing tools 110% ‘Breakeven’ • Selection and management of risk based on 101% 100% a sound understanding of operating quality 99% 100% • Continuous improvement in efficiency to 95% 94% minimise rate rises required – e.g., 90% - Agreed rate reductions with lawyers and other 3rd-party suppliers - Centralised operational activit y 80% 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 • Diversification into profitable non-P&I lines to support P&I business 7
Track record of flexibility and innovation ‘TS21’ joint Dedicated Plan to Launch of Launch of Launch of venture with ‘offshore’ launch IG SWRM war Standard Syndicate Standard TMNF team COFRs* risks class at Lloyd’s Club Asia Ltd. 1997 2001 2006 2014 Feb. 2015 Apr. 2015 * Not supported by the International Group, but resulted in a competitive new entrant to this market “Owners could save close to $40m each year if International Group clubs support [Standard’s] move and guarantee US COFRs” – Tradewinds, January 2014 8
Meeting members’ insurance needs P&I War & defence Non-P&I liabilities* Assets* Specialist risks* • Mutual owned • War risks • Liability • Hull & machinery • Energy pooled ‒ IV, Loss of Hire ‒ Property – e.g., ‒ Ship owners / ‒ War P&I ‒ Mort’gee’s Interest offshore platforms, • Fixed premium operators ‒ War hull ‒ Builder’s Risks drilling rigs, FPSO’s. owned ‒ Ship builders • Defence ‒ Marine War Risks ‒ Oil, gas or • Fixed premium ‒ Port authorities • Cargo & specie (FD&D) condensate wells charterers ‒ Terminal ‒ Transport liability offshore / onshore • Tailored operators ‒ Loss or damage ‒ Construction extensions – e.g., ‒ Stevedores ‒ General / specialist, projects for offshore − Contractual cover logistics, ROVs, ‒ Wharfingers etc. installation − Crew specie, project • Political risk • Corporate lines • Property − Kidnap & Ransom & terrorism ‒ E&O − Passengers ‒ Marine property ‒ D&O − Salvors etc. ‒ Ports and terminals infrastructure ‒ Buildings, equipment ‒ Industrial / commercial property 9 ‒ Business interruption
The Standard Syndicate – overview • Launched as planned in April 2015 • Aims: to improve the financial strength of the club and to expand the range of marine and energy covers available to members • An alternative approach to other Lloyd’s syndicates, leveraging the relationships, knowledge, service of The Standard Club • Early performance has been highly encouraging, in terms of: Premium levels achieved ‒ Support from the club’s members and brokers ‒ • Ambitious plan for 2016 and beyond, in order to achieve scale; we will need to build further on the support from members A critical part of the strategic and financial success of the club 10
The Standard Syndicate – approach • Marine and energy covers tailored to operators’ needs • Lloyd’s insurance in local markets • Alignment of club and member interests in directing attractive business to the Syndicate • Underwriting excellence for long-term sustainability and profitability – based on knowledge of the risk • Club quality service and claims handling • Focus on low catastrophe risk A differentiated approach, leveraging the relationships, knowledge, service of The Standard Club 11
@StandardPandI @ctaylorplc The Standard P&I Club Charles Taylor plc www.standard-club.com www.ctplc.com
Migrants: morality and mortality in the Mediterranean Ewa Szteinduchert Senior Claims Executive 16 June 2016
Contents 01 Background 02 Legal framework 03 Legal obligations 05 Insurance & club cover 06 Additional covers 07 Practical points 14
Background • Migrants, refugees and distressed persons • People searching for work, escaping persecution or war zones and in need of asylum • Risk of criminals and smugglers • Not just a Mediterranean problem • Not a new problem 15
Background 205,287 219,000 1,015,078 Refugees/migrants are estimated to Refugees/migrants are estimated to have have crossed the Mediterranean in 2014 Arrivals by sea in 2016 crossed the Mediterranean in 2015 Demographics Based on arrivals since Jan 2016 16
Background • Search and Rescue operations (SAR) dependant upon international shipping companies to assist anyone in distress at sea • Shipowners under an obligation to assist through international law and convention Source: BBC World • Inevitably leads to questions regarding insurance Source: BBC World 17
Background Source: Italian Coast Guard 18
Background Source: Italian Coast Guard 19
Scenario • 14 August 2016 • Vessel: M/V “SAVIOUR” • Owner: Lucky Saviour Ltd. • Charterer: Busy Company S.p.A • Voyage: from Suez Canal to Agadir, Morocco • Location of vessel: 20NM South of Lampedusa • Notification from Italian Coast Guard to pick up 250 migrants • Disembarkation port: Pozzallo, Italy 20
@StandardPandI @ctaylorplc The Standard P&I Club Charles Taylor plc www.standard-club.com www.ctplc.com
Migrants: Morality and Mortality in the Mediterranean Ian Cranston – Managing Partner, Ince & Co Monaco SARL Ruth Monahan – Solicitor, Ince & Co Monaco SARL
The Legal Framework At Sea The UN Convention of the Law of the Sea 1982 (“UNCLOS”) The International Convention for the Safety of Life at Sea 1974 (“SOLAS”) The International The International Convention of Convention on Maritime Search Salvage 1989 and Rescue 1979 (“the Salvage (“SAR”) Convention”) 23
Master’s Duties UNCLOS: “render assistance” to persons “in danger of being lost” “proceed with all possible speed” insofar as this can be “reasonably expected” A master is only obliged to assist if “he can do so without serious danger to the ship, the crew or the passengers ” SOLAS: A ship that is “able to provide assistance” must “proceed with all speed” The master’s “professional judgement” cannot be interfered with Salvage Convention: The master is bound “to render assistance to persons in danger of being lost at sea” 24
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