BOW WAVE 172

Shipping's Great One Edition

news and views on trade, insurance and risk

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(c)2003 WavyLine.com	Issue No 172 10 Mar 03
Published free of charge to Readers
Editor: Sam Ignarski
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In this issue:

1. Welcome
2. Warren Buffett on Insurance
3. New Hull Clauses
4. Talking Lloyd's of London
5. Who has Most Shaped Shipping?
6. And Finally...

1. Welcome

To the many Readers who kindly sent messages of consolation to your editor, thank you for your thoughtfulness.

Signs from the office wall of Paul Flowers:

Teach me to live so that I dread
The grave as little as my bed

Bishop Thomas Ken

In dwelling live close to the ground
In thinking keep to the simple
In conflict be fair and generous
In governing don't try to control
In work do it with all your heart
In family life be completely present

Lao Tse

New Readers this week include:

Keith Hurst of insurers Yachtline
Savraj Mehta of the North of England Club
Patrick Fu
Ousman BK Jabang of Lloyds Agency S. Madi (Gambia) Ltd. Richard Fistrovic of the Intersea Agency in Peru

News of Readers

Jan Hoffman whose splendidly irregular Spanish/English e-zine "Maritime Transport in LAC" has for years educated and informed readers who follow the industry in South America and the Caribbean is moving from Santiago to pastures new at UNCTAD and Switzerland. We hope his new life will also flow into his publications.

Contact him at:

JH@JanHoffmann.info

In this week's item 5 editor Paul Gunton of Fairplay Shipping Weekly is looking for nominations from Bow Wave Readers. I hope many Readers respond.

Enjoy.

2. Warren Buffett on Insurance

It is a rare skill to write well about insurance in documents like Annual Reports to Shareholders. One man who writes good prose about big money is Warren Buffett and his latest letter to shareholders is well up to scratch.

Here is a sample from the sage of Omaha:

"The Economics of Property/Casualty Insurance

Our core business, though we have others of great importance, is insurance. To understand Berkshire, therefore, it is necessary that you understand how to evaluate an insurance company. The key determinants are: (1) the amount of float that the business generates; (2) its cost; and (3) most critical of all, the long-term outlook for both of these factors.

To begin with, float is money we hold but don't own. In an insurance operation, float arises because premiums are received before losses are paid, an interval that sometimes extends over many years. During that time, the insurer invests the money. This pleasant activity typically carries with it a downside:

The premiums that an insurer takes in usually do not cover the losses and expenses it eventually must pay. That leaves it running an "underwriting loss", which is the cost of float. An insurance business has value if its cost of float over time is less than the cost the company would otherwise incur to obtain funds. But the business is a lemon if its cost of float is higher than market rates for money. Moreover, the downward trend of interest rates in recent years has transformed
underwriting losses that formerly were tolerable into burdens that move insurance businesses deeply into the lemon category.

Historically, Berkshire has obtained its float at a very low cost. Indeed, our cost has been less than zero in many years; that is, we’ve actually been paid for holding other people’s money. In 2001, however, our cost was terrible, coming in at 12.8%, about half of which was attributable to World Trade Center losses. Back in 1983-84, we had years that were even worse. There’s nothing automatic about cheap float."

Read the whole report at:

http://www.berkshirehathaway.com/letters/2002pdf.pdf

3. New Hull Clauses

Courtesy of Christopher Barstow we learn:-

As your Readers may know, the Association of Average Adjusters recently held a successful seminar on claims aspects on the new International Hull Clauses 01/11/02.

A transcript of the seminar can be sighted and downloaded from our Association's website which also shows details of earlier seminars. Details of forthcoming events,will be shown on this site in due course.

Go to:

http://www.average-adjusters.com

4. Talking Lloyd's of London

Reader Michael Holman recommends the website set up by old Lloyd's hand Tim Nichols which casts a dry eye over the marketplace.

http://www.onelimestreet.com

5. Who has Most Shaped Shipping?

Fairplay Shipping Weekly will be marking its 120th anniversary this May with a readers’ poll to name the most influential person in shipping over the past 120 years. It is a wide field, spanning every significant development that has made shipping what it is today.

From Samuel Plimsoll, Rudolf Diesel, Ferdinand de Lesseps and Guglielmo Marconi to Malcolm McLean, AP Møller, Stuart Townsend and Capt Joseph Hazelwood: there is no shortage of candidates.

But Fairplay’s editor Paul Gunton wants to narrow the choice down to about 20 names, and readers will be invited to vote for one of them, with the final results being published in a special supplement with its May 22 issue.

So he has invited the erudite Readers of Bow Wave to suggest their nominations, and their reasons, for the most influential person of the past 120 years. And, before all those in the UK who rigged the vote in the BBC’s recent ‘Greatest Briton’ poll get to work, Brunel died in 1859 so is not eligible.

But the supplement will also be forward-looking, and he is also seeking nominations for those who will be shaping the industry in the coming years. They may be little-known figures now, but whom you feel are ‘the ones to watch’ for the future. Or they might be already well known, but whose influence is yet to be fully realised. Again, names and reasons please.

Readers are kindly requested to e-mail their thoughts to Paul. He will be publishing the shortlist for final voting later this month.

Contact him at:

paul.gunton@fairplay.co.uk

6. And Finally.....

Addy Buna sent in these reflections on time past:-

15 Years Ago

An application was for employment
A program was a television show
Windows were something you hated to clean
A keyboard was a piano
A cursor used profanity
Memory was something you lost with age
A CD was a bank account
And if you had a 3 1/2" floppy you hoped no
one found out
Compress was something you did to garbage
If you unzipped in public you went to jail
Log on was adding wood to a fire
A hard drive was a long trip on the road
A mouse pad was where a mouse lived
And a backup happened to your toilet
A web was a spider's home
Cut you did with scissors
Paste you did with glue
A virus was the flu
And IT was Inland Transportation

How times have changed

PS passed on by Dave Letteney on why men do not do much laundry:-

One day my housework-challenged husband decided to wash his sweatshirt. Seconds after he stepped into the laundry room, he shouted to me, "What setting do I use on the washing machine?" "It depends," I replied. "What does it say on your shirt?" He yelled back, "University of Oklahoma." And they say blondes are dumb....!

BOW WAVE is published each week to around 7550 Readers in the transport,insurance,shipping and finance industries.

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