Management Highlights 2008

Highlights and Overview

• Financial year surplus of US$ 27.6 million as prior years improve
• Free reserves rise to US$ 185.8 million
• Financial year combined ratio falls to 97.9%
• Three year average combined ratio falls to 108.3%
• Total entered tonnage rises 9.1% to 72 million GT 
• Renewed premiums increase by 13.0%

Underwriting

• 13% increase in premium, inclusive of changes in terms, achieved on renewed tonnage
• New business entered at renewal will generate additional premium of US$ 15.7 million
• 3.3 million GT rise in owned tonnage, year on year, to 46.8 million GT
• Total tonnage, including chartered entries, rises by over 6 million GT, year on year, to 72 million GT
• 2007/08 policy year produces pure underwriting surplus

Safety and Loss Prevention

• Media Industry awards for the Club's "Sea News" and "Training Matters 2" DVDs
• Systematic monitoring of the results of Port State Control inspections improves oversight of quality and risk
• Loss Prevention posters introduced to raise risk awareness onboard ship
• Further onboard training programmes produced in association with Videotel Marine International
• Over 86,000 Steamship/Videotel safety videos distributed to date, worldwide

P&I Claims

• Three 2007/08 claims are estimated to exceed US$ 7 million, one pollution claim and two groundings
• Eleven claims in 2007/08 are estimated to exceed US$ 1 million, compared to 17 in 2006/07, and 13 in 2005/06
• The number of attritional claims estimated below US$ 250,000 is similar to 2006/07
• The average cost per entered ton of such attritional claims in 2007/08 is 2% higher than in 2006/07

Pooling and Reinsurance

• Total 2007 Pool claims, including Hydra, projected to be 3% lower than in 2006, at US$ 513.5 million
• Rise in Hydra costs causes Group Reinsurance costs to rise by 10% in 2008/09
• The structure of Group Reinsurance arrangements remain unchanged for 2008/09

Current Group Issues

• Bunker Convention comes into force in November 2008
• European Court of Justice upholds Ship Source Pollution Directive
• Solvency II Quantitative Impact Study (QIS) 4 due to be completed
  in July 2008

Investments

• Combined total return on investments of 4% or US$ 26.7 million
• Combined cash and investments rise by US$ 20.2 million to US$ 690.23 million
• Dollar weakness adds 2.7% to returns
• Combined three year average return remains at 6%
• Tactical investment positioning around the central strategic asset allocation produces positive contributions
• Equity exposure lowered to 18.6%