the marine insurance market 2002

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