BOW WAVE 132

Three Years Later Edition

news and views on trade, insurance and risk

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(c)2002 WavyLine.com	Issue No 132 27 May 02
Published free of charge to Readers
Editor: Sam Ignarski
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In this issue:

1. Welcome
2. TT Results Confirm Market Rumours
3. CargoLaw Gallery of Marine and Transport Loss
4. Thousand Eyes Against Cargo Crime
5. China Airlines Flight CI611
6. And Finally...

1. Welcome

New Readers this week include:

Journalist David Eller
Marine broker Claudia Lekkerkerker of Marsh Berlgium Janet Fallon of Liverpool Lawyers Weightmans
Transport insurance broker David Frugtniet of Stuart Alexander Ltd Dirk Claeys of brokers Marsh
Sudesh Chaturvedi of GAC Dubai
Eric Heymans of Naviga in Belgium

News of Readers

Reader Julio Duran Araguás is a Lawyer practioner in Barcelona, Spain who is finishing his PHD thesis on the "Paramount Clause" in maritime transport (B/L, Seawaybills,Charter-parties, etc.).

He is looking for additional Judicial Cases related to the Paramount Clause, and wonders whether Readers could send him any information from judicial cases in their countries, related to the issue by way of reference or materials.

His contact details are:

e-mail:upcnet.es
Fax: + 34 3 218 02 84

This week finds your editor in splendid early summer weather enjoying an extended break by reason of the Golden Jubilee celebrations in the UK.

Enjoy.

2. TT Results Confirm Market Rumours

Rumours around the London Market about the condition of the TT Club were confirmed on Friday last with the announcement of the of the Club's annual result for the year 2001.

Here is Peta Miller's piece from Insurance Day, a sister paper of Lloyd's List:

MUTUAL transport insurer, the TT Club, has posted a massive $40.2m deficit for the full year 2001 and unveiled a quota share reinsurance contract it has set up with Swiss Re. This deficit, in part due to $23m extra reserving made for an expected increase in claims from the 2001 year, compares with a much smaller deficit of $383,000 in 2000.

But the club also suffered from falling investment returns that dropped year-on-year from a loss of $3m in 2000 to a loss of $4m last year.

The transport mutual, which is not the same as a protection & indemnity (P&I) club because its members do not come solely from the shipping industry but from the wider transport sector, said that the major catastrophes of last year did not affect it. But the soft market took its toll in the first nine months when rating levels were too low to support a projected increase in claims and in negative investment returns.

In its favour, the club stressed that its underlying operations are healthy, citing a 11% increase in gross premium income from $107.0m to $118.5m last year and an improvement in the business's expense ratio.

The club's total assets increased last year by $2.5m to more than $281m and it has assured that its total surplus and reserves are substantially in excess of requirements. It also said that extra reserving was based on conservative calculations and may not need to be fully utilised.

The club said since last year it has increased rates by more than 40% over fourth-quarter 2001 levels to counteract the effects of the soft market, has tightened up underwriting criteria and increased deductibles.

The deal reached by the TT club with an "A" rated member of the Swiss Re group is a five-year quota share reinsurance contract to smooth out volatility in claims. Under quota-share agreements, a reinsurer agrees to take on a percentage of the risk, in this case 10.5% in return for a premium.

TT Club spokesman, Ian Lush, said the deal is effective immediately but would not disclose the level of premium paid for the arrangement. He said that once the company noticed its claims position was worsening it considered reinsurance deals from a number of players. Rowena Potter, managing director of financial services ratings at Standard & Poor's, which has a public information rating of BBBpi on the TT Club, said the club's rating will come under pressure following yesterday's announcements because its capital looks stretched.

She said quota share, which is usually taken out by a business that does not have enough capital to support the level of its underwriting, is not a typical structure used by mutual clubs and is not akin to the deals P&I clubs have recently implemented.

Financial ratings agency, AM Best, which interactively rates the TT Club, said that it could not discuss anything until after its committee meeting today when it will put out a press release.

(end of article)

There are many thoughts that come to mind at the time of writing this edition of Bow Wave but most of them are probably best left unsaid here. The TT Club faces many of the same external and internal challenges it faced three years ago. Its best chance of mastering these will come by finding a way back to the values which made it such a force for so long in the transport and insurance industry and which also made it such a great outfit to work for.

3. CargoLaw Gallery of Marine and Transport Loss

It has been a while since we last visited the space maintained by the transport law firm Countryman and Macdonald in Law devoted to pictures and descriptions of casualties. This is the closest thing there is on-line which approximates the sorts of show and tell discussions which take place in the claims department corridors of marine and transport insurers. Even the claims handlers' tone of voice, the slightly dark humour and a sense of the absurdity of life can be heard here. Well worth a visit:

http://www.cargolaw.com/gallery.html

4. Thousand Eyes Against Cargo Crime

We ran across this reference in CargoLaw. MRC USA uses the modern ability to broadcast messages to alert those concerned of cargo crime loss. 20 000 faxes go out to police agencies, truck stops, towing companies, cab companies, freight forwarders and truckers, alerting them about lost cargo and equipment. Interesting idea.

http://www.mrciusa.com/mrcusa.htm

5. China Air Flight Flight CI611-A little local difficulty

According to our friends at the Insurance Insider, the recent loss of the 20 year old 747 between Taipei and Hong Kong was insured locally between 9 insurers in Taiwan for a combined hull and liability limit of only $20 million. Your editor recalls how flying with this line between Hong Kong and Taiwan seemed something to be avoided. Then it had something to do with a big accident at Kai Tak when a China Airlines flight slid off the runway into the sea. Little seems to have changed in this respect: the list of passengers included included 190 Taiwanese, 14 from Macau and Hong Kong, one Singaporean and one Swiss.

For a more scientific approach to the subject of safety in the US aviation industry go to:

http://www.airline-safety-records.com/

6. And Finally...

Many thanks to the wags of Crump & Co in Hong Kong for these:

Difficult words to say when you are drunk......

* Innovative
* Preliminary
* Proliferation
* I've lost my shoes

Impossible words to say when you are drunk.....

* Thanks, but I don't want sex
* No, I don't want another drink
* No Kebab for me thanks
* Sorry, but you are not quite good looking enough for me * Good evening officer

BOW WAVE is published each week to around 7200 Readers in the transport,insurance,shipping and finance industries.

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