BOW WAVE 146

Noting and Remembering Edition

news and views on trade, insurance and risk

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Wavy Line	sam@wavyline.com
(c)2002 WavyLine.com	Issue No 146 09 Sep 02
Published free of charge to Readers
Editor: Sam Ignarski
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In this issue:

1. Welcome
2. Remembering 911
3. Ports Security
4. Style Guide
5. CF Goes Chapter 11
6. And Finally...

1. Welcome

Readers may recall the vigorous exchanges in these columns of those people in the world of marine liabilities who knew of someone in the industry who had a previous career in the police, also known as the thin blue line.

We have had a belated response from Mr Hugh Dyer, who hastens to correct a previous edition. Shame how the truth gets in the way of a good story:

"I have been sent a copy of Bow Wave Issue 135 and feel that it would only be right to put the record straight in response to the scurrilous allegations put forward by my old friend Hugh Bryant.Given his reputation as a lawyer caution prevents me from relaying one or two stories involving his own past. I jest !!! The fact is that I was granted an interview with Sidney Fowler (the then Senior Partner of Thomas Miller) having taken a statement from an employee at Millers involving a possible dangerous driving offence which resulted in a lorry shedding a load of timber over a road in Essex.I am pleased to say that I got the job and nothing more was heard of the possible offence. Winners all round!

As a matter of interest I am now fully retired and enjoying life in Hertfordshire with wife and daughter.

Best rgds
Hugh Dyer"

Contact him at:

home@hughdyer.fsnet.co.uk

New Readers this week include:

Julius Bannister of Bannister International Research Organisation, Rod Gilbert of European Specialty Reinsurance (Ireland) Ltd Damian Connolly of Ince & Co in London
Broker David Jackson of Alston Gaynor
Kamal Mukhi of Middleton Potts in London
Ping Hu, Business Manager - Bulk Carriers of Lloyd's Register Analyst Craig Kersey of Guildhall in the UK

News of Readers

Reader Sam Chambers as of September 1 has been translated from deputy editor of Lloyd's List Maritime Asia to the Editor. May he prosper there and continue the work of that estimable journal describing the maritime industry of the future.

A Reader has suggested it would be a good idea to hold Bow Wave parties in various locations. Is this a good idea dear Readers, or should we remain in virtual mode? Please let your editor have your views.

This weeks edition is full of remembering and noting.

Enjoy.

2. Remembering 911

Your Editor's Quarterpoints Column in Lloyd's List this week attempted to put into perspective the effect of the outrage on the affairs of the marine insurance world.

It is the ordinary wisdom of the insurance world that a big claim is good for business. It helps to remind the buyers why they should pay premiums and it should demonstrate the durability of the industry in the face of adversity.

I watched the events of the 9th of September in the Charles Taylor investment department, the only place in the building with working televisions, normally tuned to Bloomberg. Reuters and CNN. It soon spread around the little office in Essex Street that something extraordinary was going on. We all saw both towers collapse as the day unfolded. I watched in horror. I range my wife Mary and told her to turn on the TV. As a former stalwart of the BBC World Service Newsroom, my wife normally has some sort of news feed going on in the background, radio, television or internet, but this day for a variety of reasons not. She was concentrating on domestic admin, she says.

What did 911 do for those of us who work in the insurance business? Quite a few things, it seems in retrospect

911 increased the ability of insurers to imagine a different order of loss. Thinking back to those debates in the P&I industry on how high a fixed limit loss should be insured which was tantamount to unlimited liability, the industry came up with a figure of somewhat over $4 billion. At the time, say around 1996, this was thought to be an unimaginably high loss amount. 911 certainly changed this part of the thinking.

911 tilted the table to such an acute angle that many things which were holding on by a comparative thread tumbled down. Who would have thought that the sleek and polished outfit that was SwissAir would be the first to go? And who would thought how vulnerable the United States was to the acute and poisonous asynchronous psychological warfare of Al Quaeda?

After a long and strength sapping soft market in the world of marine insurance which lasted for at least 5 years, 911 was the catastrophe which typically brings down the curtain at this point in the insurance cycle.

Underwriters who had suffered years of attritional loss faced the largest insured claim in history with empty coffers.

911 was after all, so far as the primary layers of insurance are concerned, an event within the marine insurance market. The twin towers, albeit under new leasehold management was a constituent part of a risk which was traditionally taken around the marine market. A few years ago when I worked at the TT Club I remember the NY Port Authority slip which did the rounds. Not only did it include the waterfront risks for the NY/NJ port community, but it also included the risks of the Bus Depot, JFK Airport and the World Trade Centre. It was much to rich for our blood in those days and, in truth, it was a challenge for even the largest money bags in the international marine insurance industry.

So like the over-leveraged airlines, the marine insurers who had been quietly fudging their waning financial strength during the late 1990s suddenly had to face up to a world where the reinsurers were again becoming laconic, take it or leave it types-- men of steel again, after years of accepting the reality of falling rates and cash flow underwriting from those they were reinsuring.

No more laying off of risk real cheap and also,
unbelievably, no more investment returns. During the underwriting years of 2000 and 2001, insurers with hundreds of millions of dollars in their investment accounts reported year on year losses. They pointed to their investment consultants’ benchmarks to demonstrate how close to the industry average their losses were. A lot of pension plans began to look --well-- over optimistic. Many people had to plan to work on.

I have never seen such disarray in the marine insurance world as emerged during the months following 911. For a while we wondered whether the industry would turn turtle. After many months in planning bunkers, most organisations did not in fact go under and the comparatively well spread loss showed the basic laying off of risk in the industry was on the whole well conceived. Even the really wealthy outfits, the so-called Professional Reinsurers got well and truly scorched, which was not at all the understanding of how they should play the game.

Yet what comes next is not so clear. Those who are waiting for the marine insurance industry to float upwards on rising rates like corks, as if nothing happened are whistling in the dark. Those who have depended on slow moving accommodating reinsurers in Bavarian and Swiss locations are also running out of rope. A new era of sophistication, much lower costs and wiser customer service is coming, as the shocked but surprisingly robust survivors of 911 wake up to fight another day.

3. Ports Security

We understand the IMO martime safety committee's intersessional working group meets this coming week. The agenda papers are full of items on port security. More on these in later issues.

http://www.imo.org/Newsroom/mainframe.asp?topic_id=583&doc_id=2140

4. Style Guide

Your editor is always much indebted to American Janet Roberts who publishes an e-zine for e-zine writers which simply has to be read from one week to the next. Her latest edition offers some help for people in need of style guidance:

"When do you imply something and when do you infer it? Is being notorious a good thing or a bad thing? What's the difference between "zoom" and "swoop?"

When you're in doubt about a word choice, or whether your grammar is correct, check it fast with the Public Radio Online Styleguide for Pronunciation, Usage and Grammar, hosted at the National Public Radio Web site.

Just click on the letter that corresponds with your word question, and you'll probably find your answer. The Online Guide follows the style of other style guides such as the Associated Press style manual, but it lists some style exceptions.

Yes, you can dig out your dog-eared copy of "The Elements of Style" by Strunk & White, but when you're on deadline, this is faster and a little more up to date."

http://www.npr.org/inside/styleguide/pug.htm

To subscribe to "e-zine tips":

join-ezine-tips@ezine-tips.com

5. CF Goes Chapter 11

The week past was notable for the going under of the USA's third largest trucker, Consolidated Freightways. Save a short item under Misc in the Lloyd's List Casualty Reports, your editor failed to spot any reportage of this going under of one of the leviathans of transportation.

The best story we ran across described how the event looked from a Mid Western Perspective. And, as is surprisingly often the case these days, there was an insurance straw which helped to break the camel's back:
" At 6 a.m. on Labor Day, security guards showed up at the company's Chicago-area terminals to tell workers to stop work immediately. In letters handed to on-the-job workers or recorded messages provided to others at home, CEO John Brincko said the company will ask a bankruptcy court to approve mailing out paychecks owed workers for their last two weeks at work.

Some workers said they suspected something was wrong because no drivers were sent out on the road Sunday.

Headquartered in Vancouver, Wash., Consolidated Freightways stock had tumbled since it requested an extension in filing its second-quarter earnings two weeks ago and announced that it might be delisted from the Nasdaq stock market. Company stock closed at 71 cents a share Friday.

In the first quarter this year, Consolidated Freightways lost $36.5 million on $463 million in revenue. The company lost $104.3 million last year and $7.6 million in 2000.

The 73-year-old company had 350 terminals and 30,000 vehicles on the road across the U.S., Canada and Mexico. Its payroll was $53 million per week.

Along with letters, workers were phoned Monday and told to call a toll-free recorded message from CEO Brincko telling them of the company's demise.

"Thank you for dialing in on this holiday weekend. I hope you and your family are enjoying the time together," said Brincko, who was named chief executive three months ago. "I have some extremely urgent and sad news to share with you today. ... Your employment ends immediately."

"The news that CF must cease operations undoubtedly comes as a shock," Brincko wrote. "It is a reality, however, that the tough economic climate, especially since the events of Sept. 11, has severely restricted the credit, insurance and real estate markets, seriously affecting the company's ability to obtain timely and critical financing. Nevertheless, despite the very short three-month time frame, I was hopeful that ? with all the right moves at all the right times ? we could be successful in turning the company around.

"However, the situation became critical during the past few weeks when one of our insurance surety bondholders summarily cancelled coverage related to our self-insurance programs covering workers compensation and vehicular casualty.

"We immediately went to our lenders and other institutions in an effort to bridge this gap, but we found we were unable to secure the necessary financing," Brincko wrote.

He said the company was able only to secure enough financing to allow the company to shutdown operations and liquidate assets.

Eighty percent of workers are laid off immediately. The remaining management positions will be phased out soon.

The company billed itself as the nation's third largest "less than truckload" carrier, meaning it sought partial shipments from multiple companies, loaded them together and trucked them throughout North America."

See the full story in Chicago's Daily SouthTown at:

http://www.dailysouthtown.com/southtown/dsnews/031nd3.htm

6. And Finally...

Many thanks to Reader Trevor Jones for these

Good Questions

Is atheism a non-prophet organization?

I went to a bookstore and asked the saleswoman, "Where's the self-help section?" She said if she told me, it would defeat the purpose.

What if there were no hypothetical questions?

If a deaf person swears, does his mother wash his hands with soap?

If a man is standing in the middle of the forest speaking and there is no woman around to hear him ... is he still wrong?

If someone with multiple personalities threatens to kill himself, is it considered a hostage situation?

Where do forest rangers go to "get away from it all?"

What do you do when you see an endangered animal eating an endangered plant?

Why do they lock gas station bathrooms? Are they afraid someone will clean them?

If a turtle doesn't have a shell, is he homeless or naked?

Is there another word for synonym?

Why do they put Braille on the drive-through bank machines?

Why don't sheep shrink when it rains?

If you try to fail, and succeed, which have you done?

What was the best thing before sliced bread?

One nice thing about egotists: they don't talk about other people.

Can vegetarians eat animal crackers?

If the police arrest a mime, do they tell him he has the right to remain silent?

Do infants enjoy infancy as much as adults enjoy adultery?

Why is there an expiration date on sour cream?

How is it possible to have a civil war?

If you ate pasta and antipasto, would you still be hungry?

Whose cruel idea was it for the word "lisp"; to have an "S" in it?

Why is it called tourist season if we can't shoot at them?

Why is the alphabet in that order? Is it because of that song?

If the "black box" flight recorder is never damaged during a plane crash, why isn't the whole airplane made out of that stuff?

BOW WAVE is published each week to around 7450 Readers in the transport,insurance,shipping and finance industries.

Thanks for reading BOW WAVE