Management Highlights 2009

Q&A with the Chief Executive Officer  / Chief Operating Officer's Statement

"Since becoming CEO in August 2009 I have found that Members and brokers have very often raised the same or similar issues and I thought it might be helpful to address these in this publiction as a series of questions and answers" Gary Rynsard

• What do you see as the key challenges over the next three years?
• Governance is currently a key issue for companies - how do you view this in the context of Steamship Mutual?
• What effect has the recent financial crisis had on the Club?
• Would you like to see the Club grow in size?
• Do you think that we will see amalgamation of P&I Clubs in the near future?

Underwriting

• Over 3% increase in premium, inclusive of changes in terms, achieved on renewed tonnage
• Owned business increases by 6.2% year on year to 52.8 million GT 
• Total tonnage rises to approximately 83 million GT
• Three year average combined ratio improves to 93.2%

Safety and Loss Prevention

• Risk Alert bulletins published regularly, providing information on regulatory developments and topical issues
• Further Loss Prevention posters produced on Collision Avoidance and Safe Working Practices 
• "A Team Effort" DVD extensively revised with new video content and versions in Korean and Russian
• Further onboard training programmes produced in association with Videotel on "Offshore Supply Safety" and "Vessel General Permit"
• Condition Surveys continue to support the management of claims risk and vessel quality

P&I Claims

• Overall claims experience for 2009 similar to 2008
• Reduction in attritional claims counterbalanced by adverse large claims experience
• Pool claims return to levels experienced in 2006 and 2007
• Substantial reduction in frequency and severity of cargo claims in 2009
• Freight Demurrage and Defence claims return to historical levels

Pooling and Reinsurance

• 2009 Pool claims back up to normal level
• Club retention rises to US$ 8 million per claim 
• Average rates for Excess Loss steady, with dry cargo rates increasing for record

Current Group Issues

• Rotterdam Rules - remains open for signature
• Chinese Pollution Regulations - wide ranging regulations introduced in March 2010 
• US Salvage Regulations - implementation date set for February 2011
• International Sanctions - sanctions against Iran continue to escalate
• Piracy off Somalia - the threat persists 

Investments

• Investment strategy redesigned around a risk budget set relative to projected claims and capital requirements
• Combined gain on investments of US$ 45.1 million, a 7.5% return, with net cash inflow of US$ 85.1 million boosts combined cash and investments to US$ 721.0 million
• Fixed income and hedge fund of fund investments benefit from recovery as markets normalise
• Dollar weakness accounts for 1.95% of return
• Active fixed income manager outperforms benchmark by 7.5%