WIXLIB

“MARINE” IN COMPANY NAMESYou might remember Tokio Marine (the largest insurer in Japan)There are a few other companies with “Marine” in their names:in JapanMitsui Marine and Fire Insurance Co. Ltd. (3rd largest in Japan)The Fuji Fire & Marine Insurance Co. (AIG in Japan)The Asahi Fire & Marine Insurance Co.The Daido Fire & Marine Insurance Co.The Kyoei Fire & Marine Insurance Co.The Nisshin Fire & Marine Insurance Co.in South KoreaSamsung Fire & Marine Insurance Co.Hyundai Marine & Fire Insurance Co.Meritz Fire and Marine Insurance Co.in the USASt. Paul Fire & Marine Insurance Co.International Marine UnderwritersSamsung Fire & Marine Management Corporation, New JerseyNavigators Group, Inc. (also at Lloyd’s)and in EuropeMarine Insurance Co. (subsidiary of RSA) (UK)Sunderland Marine Mutual Insurance Co.Samsung Fire & Marine Insurance Company of Europe Ltd, London

INDUSTRIAL INSURANCE PENETRATION20122018

MARINE PREMIUMS - WORLD-WIDE(*)( )( )

PREMIUMS IN 2017BY REGION

ITALY AND THE MARITIME WORLD - 1

ITALY AND THE MARITIME WORLD - 2

MarketMARINEINSURANCEMARKETSIN 2006(*) London Market: 5,5075 times 16.17.18.19.20.Lloyd’s (UK)JapanUSAGermanyFranceItalyNorwayIUA (UK) (former ILU)SpainNetherlandsSouth ndIndiaCanadaSingaporeTOTAL (excluding P&I)2006 Premiums ( 54953341232028627927826024120522,3304.39 times Italy0.66 times Italy

MarketMARINEINSURANCEMARKETSIN 2017Total US 28,444m(*) Total UK: 7,083m8.3 times Italy01. Lloyd’s (UK)02. IUA (UK)03. China04. Japan05. USA06. Germany07. Singapore08. Brazil09. France10. Mexico11. Italy12. Nordic (NO-SE-DK-FI: mainly Hull)13. South Korea14. India15. Russia16. Netherlands17. United Arab Emirates18. Belgium19. Spain20. Indonesia20. Australia21. Qatar22. Malaysia23. Switzerland24. Turkey25. Saudi Arabia26. SwedenPremiums ( 71951786 times Italy2.3 times Italy(estimated)(estimated)(estimated)(estimated)

IMPORTANT ORGANIZATIONS - 1LLOYD’SI. L. U.(1688)(1884)(now part of IUA)SALVAGE ASSOCIATIONI. U. M. I.(1856)(incorporated by Royal Charter, non-profit)(in 2001 acquired by BMT Ltd.)(Berlin, 1874)- conducts surveys- supervises salvageoperations- available to underwriters,shipowners and others- to provide a forum for theimprovement of the business- to defend common interests- to make contactsbetween markets- to exchangeinformation

IMPORTANT ORGANIZATIONS - 2ASSOCIATION OF AVERAGE ADJUSTERS (1876)- to insure uniformity in the preparation and statement of claims- great influence on the law and practice of marine insuranceCLASSIFICATION SOCIETIES (Lloyd's Register of Shipping - 1764)- set up by underwriters to be supplied with information on ships- now controlled by impartial committees representing all shipping interestsINTERNATIONAL MARITIME BUREAU (1981)(London) (ICC Commercial Crime Services)Commercial crime is growing faster than international trade.Frauds are more complex and involve larger sums than ever before.IMB has saved companies and individual investors billions ofdollars in potential fraud and theft through its ability to recognizeearly warning signs. IMB has observer status with Interpol.

AVERAGE ADJUSTERS18691879Average Adjusters are expert in the law andpractice of general average and marine insurance.Average Adjusters may be appointed by any party involvedin a marine claim.However, irrespective of the identity of that party, theAverage Adjuster is bound to act in an impartial andindependent manner.Members of the Association of Average Adjustershave taken exacting examinations to ensure theymeet the standards required byindustry and then pledge to adhereto strict codes of conduct.Marine only

LONDON - Today - 1- Lloyd's of London- Institute of London Underwriters (now : IUA)- Lloyd’s Register of Shipping- Salvage Association- IMO (International Maritime Organisation)- LLP (formerly Lloyd’s ofLondon Press)- Chartered InsuranceInstitute

LONDON - Today - 2- The Baltic Exchange (18th Century)- Institute of Chartered Shipbrokers- Chartered Institute of Arbitrators- International Association of Classification Societies- International Salvage Union- International Chamber of Shipping- Witherby’s

LLOYD’S OF LONDON - 1Years of underwritingexperience: 330The Corporation of Lloyd’sdoes not accept insurance.It provides premises,administration and services.It is financed mainly bysubscriptions from theunderwriting members.The elected Council appointsthe Chairman and (also through the Franchise Board)oversees the Market, sets standards, approves businessplans and manages the Central Fund.Each member of a syndicate provides capital to supportits underwriting.2017: 95 Lloyd’s syndicates (the insurers)are run by 56 managing agents (in somecases they are also the capital providers).Lloyd’s and Managing Agents are regulated by the PRAand the FCA.Lutine Bell: one stroke for bad news and two for good

LLOYD’S OF LONDON - 2CAPITAL AT RISK AT LLOYD’SFor about 300 years: only “Names” with unlimitedliability. In 1994 corporate capital was introduced.Some examplesLloyd’s capital providers 2018US insurance industry20.5%Japan insurance industry13.7%UK insurance industry13.4%European insurance industry12.8%Bermudian insurance industry12.6%Private capital - limited and unlimited10.5%Rest of the World insurance industry9.9%Worldwide non-insurance3.3%Middle/Far East insurance industry3.3%Mitsui Sumitomo (JP),

LLOYD’S OF LONDON - 3Premium Income (2017)?50% from USA & Canada15% from UK14% rest of Europe10% Central Asia &Asia Pacific6% other Americas5% rest of the WorldThese are the principalcategories of businessat Lloyd’s (2016).All Regions Reinsurance31% Property27% Casualty24% Marine8% Energy4% Motor4% Aviation2%Rest of Europe29%20%22%18%4%3%4%Marine Insurance premium at Lloyd’s (% of totalincome), including Aviation, Energy (estim. 75%) andReinsurance (21%): 19,51%. From Rest of Europe: 31.09%Licensed to underwrite direct insurance in over 75 countries.It can accept reinsurance from 220 countries and territories.

LLOYD’S OF LONDON - 4Why so much (50%) from (mainly) the USA ?For some obviousreasons, like the sizeof the US economy.And for a less obvious,but not less important,historical reason: trust.On 18 April 1906, San Francisco shook, crumbled and then burned to the ground.A massive earthquake brought the city to its knees, sparking fires that raged out ofcontrol for 3 days, taking several thousand livesand making half of the population homeless.Cuthbert E. Heath“Pay all of ourpolicy holders in full,irrespectiveof the termsof their policies”

LLOYD’S OF LONDON - 5LLOYD’S BROKERSThe only brokers who can place businessdirectly at Lloyd’s. All other brokers mayobtain a Lloyd’s policy only through a Lloyd’s Broker.They are regulated by the FCA.2001Broker accreditation process: to encouragemore brokers to access the market. Fromthe regions of the UK and from overseas.40 brokers applied, 18 (6 from overseas)were accredited.End of 2017 - Number of Lloyd’s Brokers : 287Brokers are directly responsible to the insurer for the premium(this applies only to Marine Insurance)

THE ACTUAL PLACING OF A RISKA slip is a piece of light cardboard, bent many times to make it easier to handle.In a standard form it contains all the details of a risk to be placed in the market.The Broker opens the placing slip in front of the prospective LeadingUnderwriter and can add any further information on paper, so that theunderwriter can decide whether to “write it” (participate in the contract)at his conditions and premium rates and what “line” (participation inpercentage) to write. The leader will stamp the slip and write his “line”.The Broker reports progress to his client: he has an interested underwriter at such andsuch conditions and rates. If the client is happy with that, the Broker continues theplacement. He offers other underwriters to participate at the conditions and rates agreedwith the Leader. If they also agree, they will stamp the slip and write their “lines”.When he has reached a reasonable percentage of placement and is sure tocomplete it, he asks his client for a firm order (definite), after which hecompletes the placement. Sometimes the slip “signs down” (more than100% is placed): a proportional adjustment will be made.A signing slip will be prepared, a copy of the placing slip, but all typed and containing the finalshare of each participant. This slip will be signed only by the leader and then will be taken to thePolicy Signing Office to have the policy issued and to prepare all the consequent administrativework (endorsements, certificates, premiums, claims, etc.).

LLOYD’S OF LONDON - 6BINDER BUSINESSCoverholders (3,797 in 2017) are local agents with authority towrite insurance on behalf of Lloyd’s syndicates, allowing them tooperate in countries as if they were a local insurer. A Lloyd’sBroker may act as a Coverholder.Service Companies (381 in 2017) are wholly owned subsidiariesof managing agents. Unlike Coverholders, the can sub-delegateunderwriting authority to other Coverholders.2002: Underwriters who “give away their pens” will need tocarry out regular reviews and audits on their coverholders.Reports should consider underwriting, financialmanagement, staff experience, reserving system.In 2010 Lloyd’s undertook initiatives to improve market accessfor coverholders.From the Annual Report 2012: Lloyd’s developed a revised application process with the aim ofcompleting branch approvals within a maximum target of one working week.2015: 4,008 Coverholders generated 31% of total premium incomewritten by the Lloyd’s market.

LLOYD’S OF LONDON - 7UNDERWRITING :::::::: 11,100m 12,300m 14,900m 14,960m 13,720m 14,800m 16,100m 15,950m 17,000m (est.) 23,000m “ 2014 : 31,680m “2015 : 26,000m “The underwriting capacity of a member ofLloyd’s is the maximum amount of premiumincome (net of brokerage) which maybe accepted by the member for anyunderwriting year.Also called the “Overall Premium Limit” (OPL).

LLOYD’S OF LONDON - 8RESULTS - 1Year 2000 : 1,211 million loss2001 (including Sept. 11) : 3,110 million lossNo. of “Names”: In the early 90’s : 34,000. In 2002 : 2,490.No. of syndicates :1992 : 3541998 : 1561999 : 1392001 : 862009 : 8020102012201420152017:::::8587949795In the period 1992-2002 Names have often lost less than corporate capital.They usually spread risks over many syndicates, which they often know personally.They can balance the loss of one year with the profit from another (tax advantage).Results 1992-2002 : “Names” : 24% of capacity ; Corporates - 23%.

LLOYD’S OF LONDON - 9YearGross written premiumProfit/(loss) before tax2006 16,414 3,6622007 16,366 3,8462008 17,985 1,8992009 21,973 3,8682010 22,425 2,1952011 23,337 (516) (*)2012 25,173 2,7712013 25,615 3,2052014 25,259 3,0162015 26,690 2,1222016 29,862 2,1072017 33,600( 2,000) (*)2018RESULTS - 2In million Sterling( 1,300) (*)(*) exceptional catastrophes: 2011 (earthquake and tsunami in Japan)2017 (hurricanes in the Caribbean, earthquake in Mexico, wildfires in California)2018 (“Florence and Michael, typhoon Jebi in Japan and California wildfires

International Marine Underwriters Samsung Fire & Marine Management Corporation, New Jersey Navigators Group, Inc. (also at Lloyd's) There are a few other companies with "Marine" in their names: in Japan. INDUSTRIAL INSURANCE PENETRATION 2012 2018. MARINE PREMIUMS - WORLD-WIDE (*) ( ) ( )