BOW WAVE 313

Bow Wave Issue 313--Passing Through Edition

news and views on trade, insurance and risk

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Wavy Line	sam@wavyline.com
(c)2005 WavyLine.com	Issue No 313 21 Nov 05
Published free of charge to Readers
Editor: Sam Ignarski
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In this issue:

1. Welcome
2. Is Paris Burning?
3. Conference Report
4. Which Policy Pays?
5. Passing Through
6. And Finally...

1. Welcome

Poem of the Week

THE PLIMSOLL LINE

Tropical Fresh

Endless summer, far
From sea, gives thinner water.
Deepest mark of all.

Tropical

The calm of heat-haze
Stills waves through all seasons.
Deeper loading safe.

Fresh

No salt density
On enclosed waters; summer,
Winter, deep is safe.

Summer

Quiet season, warm
And kindly - no waves attack.
Less freeboard needed.

Winter

The wrath of winter
Scowls, drives down. Pitiless storms
Threaten. Need decks up.

Winter North Atlantic

Storming beast runs free
On Western Ocean. Tiny
Chips of steel struggle.

Lloyd’s Register

Lloyd’s Register marks
My ship’s safety. Bulwark
For seamen from death.

Douglas Lindsay

New Readers this Week Include:-

Marine Transport Consultant Alain Genty in Orbey, France Donald Harrell of the AIG
Broker Jason.R.Holmes of Marsh
Marine Hull Underwriter Keith Rosso of Houston Casualty in London Robert Hash of Proactive Logistics

News of Readers

Attorney Jacobus Bracker writes:-

Dr. Alexander Mittmann, DEA (Paris I) has joined the The Hamburg law firm of BBL Rechtsanwälte as its fifth partner . He joined the firm on 01OCT05. He is an expert on the law of the international sale of goods and holds a Ph.D from the University of Hamburg. At BBL Rechtsanwälte Dr. Mittmann will head the International Trade and Company Law Dept. Dr. Mittmann has a particular expertise in French Business Law as prior to joining BBL Rechtsanwälte, he worked as an associate attorney for the law firm of SCP Louis & Joseph VOGEL in Paris. He is also qualified as a French attorney and is admitted to the Paris bar.

http://www.bbl-law.com

Our Readers Offer this week comes from a company led by one of the earliest contributers to Bow Wave, Roy Campbell who left the world of marine insurance many years ago for the life of a global coffee merchant based in Edinburgh. His coffee is a cut above the usual and deserves the widest distribution.

This week saw your editor in the audience at Charlies on Crosswall for HoneyBoy Edwards, a 90 year old living legend and one of the last of the original Mississippi Delta Blues players. It may be noted that the promoter was a P&I man and the host the marine consultant Nigel Rogers who was celebrating the 1st Anniversary of his new firm Rogers Wilkin. Says Honeyboy : "I stayed on the road all the time and the only thing I carried with me was my guitar and harp. And those dice in my pocket." Give or take an instrument or two this sounds not unlike the lives of some of the travelling underwriters we have known.....

Enjoy.

2. Is Paris Burning?

Our Correspondent Didier Jouin writes:-

Judging by the reports from the media, you could have the impression that Paris has been ablaze. We had friends visiting us from England two weeks ago asking if it was safe to actually come to Paris. We also received an email from an former au pair from America saying she was worried about us we were in her prayers! It has to be said that when she was staying with us in France she was an enthusiastic viewer of CNN and Fox TV and a strong supporter of Mr Bush. This may explain a lot.

The truth is a bit different. Neither France nor the suburbs themselves were in flames and although a lot of physical damage was done very few people were seriously injured and hardly any died. This says a lot about the power of the media. If our American or, closer to home, our English friends have the impression that a new revolution is happening in France more than two centuries after the original one, it is more than probable that we receive the same distorted picture about what has been happening in New Orleans or in Iraq.

The lesson is that with the possible exception of Bow Wave the media should be handled with care! Coming back to the events in France, now that the dust is starting to settle, the time has come to count the damage. As usual in this country, this exercise is taken as an opportunity to have an argument, which is always welcome. The French government is basically saying that any damage to private property is not its responsibility. The Opposition is outraged ,in a "comedia del arte" kind of of a way and is adamant that the State cannot escape its liability. My own prediction is that in one way or in another the State will actually foot the bill for things which are not reimbursed by Insurers. France would not be France otherwise! The current estimate by the French Association of Insurance Companies for insured damage is around 200 million Euros, of which 20 million Euros is for cars. About 6000 vehicles were burnt and tens of public buildings (schools, kindergardens, gymnasiums..) shops and wharehouses were also damaged or destroyed. Insurance companies are showing solidarity with the victims and have decided that damage to cars will be setteled without deductible and whether or not their cover included Property Damage . Their generosity, for which they should be thanked, might also be explained by uncommonly good results for 2005.

As always, there are also silver linings in the clouds enclosing these events: the first one is that the French people in general and French politicians in particular will no longer be able to ignore a problem that everybody knew existed. The second one is that capitalism works in such a way that destroying property is also creating value: I am pretty sure that the bosses of Peugeot and Renault were not entirely unhappy to see all those cars in flames!

A word of conclusion about the causes of these events, which are directly linked to Discrimination which is the French version of Apartheid. From my own experience as the General Manager of Royal & SunAlliance's international operation in France from 1999 to 2004, I am convinced that the "banlieues" should be seen as an opportunity and not a problem and any money spent as an
investeent and not an expense. At Royal & SunAlliance, we were a team of 30 people. Four of our team came from the banlieues and were of North African origin.They included my own personal assistant and at 25, the very young Manager of our largest Business Unit. We also had sons or daughters of second or third generation immigrants from Portugal. This melting pot worked very well and I am very proud to have been involved in the creation of this unit. Vive la différence!

Editorial Note:-Didier is busy creating his own one man company. It will be called C.S.A.R.E which stands for Conseil et Support en Assurances et Risques d'Entreprise or in English: Support and Advice in Commercial Insurance and Risks. The business rationale behind it is that large brokers no longer have clients as their main priority but (in this order): shareholders, potential clients, internal politics and then the employees--and that a more personal focus will be of interest to the market.

Contact him at:-

cd.chatjouin@noos.fr>

3. Conference Report

Douglas Lindsay has written in with this overview:-

The Lloyd's Shipping Economist Ship Finance conference is the major event of its sort in the year. All the major bankers and lawyers are there, plus good representation from shipowners and the likes. Last week's was no exception.
Two clear questions emerged, neither of which was entirely answered. First, was there a new paradigm emerging in shipping markets, to the extent that China and its demands were propelling shipping markets beyond the reach of everyday market cycles?: And second, was there a 'supercycle' going on which transcended any previous upwaves?

The answer to both seems to be 'no' but a somewhat uncertain and cautious 'no'. The whole feel of the conference was of deepseated uncertainty - weren't things wonderful, owners and bankers awash with cash so that even if markets do turn down again owners will be able to survive for a long time on their fat.
And yet, and yet.......modern second hand ships are changing hands at above newbuilding prices - the value of 'earnings now' driving that. But it was clearly demonstrated that at current price levels almost any falling off of markets could very rapidly produce losses - and serious losses - for owners paying current prices. The knife edge looks very sharp indeed at the moment.

So will FFA's be able to help? Welll, hedging is all the rage to the extent that many feel it is the tail starting to wag the dog - that rates in the physical market are being, at the least influenced, by forward contracts. But ship markets have always had a nasty habit of catching us by surprise. Consensus gives us another eighteen months - two years at most - of the present bull run. I will make only one prediction: that when the drop comes it could be off a cliff, its timing will take us all by surprise and some punters in the FFA market will be very badly burned indeed.
Interesting times indeed.

4. Which Policy Pays?

How claims are allocated to different policy years is important in shipping and energy hull losses and can be responsible for unpleasant surprises. The Average Adjusters Association (AAA) invites Bow Wave Reader interested in such issues to join them for a free seminar that that will examine how they have been dealt with in the past and consider whether a new market consensus is needed.

Richard Cornah, Vice-Chairman of the Association, will review the law and practice relating to total and partial losses and current problem areas, following which a market panel will discuss the issues and take questions from the audience.

Thursday 24 November 2005

13-00 to 14-30

Hospitality Suite

7th Floor of the London Underwriting Centre,

3 Minster Court, Mincing Lane, London EC3R 7DD

Refreshments

Editorial Note: Lee Coppack has taken over from Bridget Hogan as media relations adviser to the AAA. If you would like to attend, contact her at:-

lee.coppack@insurance-research.com

or

+44 (0) 208 318 0330.

5. Passing Through

Many years ago in the early years of your editor's career in insurance, the Swiss-based Sandoz company spilt a very toxic load into the Rhine which load continued on to the sea, causing consternation throughout its journey. The liability insurer at the time, the Gerling Konzern admitted it was on the hook for the loss, but announced to the world that the vast majority of the risk was reinsured and the shareholders need not worry. It seemed at the time a strange way for an insurer to respond (a loss but not really our loss) and it seems strange today.

So it was strange again to this observer to read this week the TT Club announcing that although it has taken a large hit on the American Gulf Storm season, only $ 2.5 million of the $ 64 million dollar loss was retained. The rest will go to reinsurers. Ordinarily well informed sources say that these figures might have been stateable as a higher number had they been expressed as mere total estimated claims.

Such things go to the purpose and philosophy of the collective self-insurance that is mutuality . What can one say about a mutual which has eschewed the insurance of the hard to insure freight forwarding industry (as small and uneconomic fry) and yet takes repeated hits on the nose from the largest and most solvent terminal groups in the world (eg Hutch, P&O and APM Terminals) at rates which commercial market underwriters cannot approach, only to pass unprecedentedly large claims back to the reinsurers? Lost or just passing through a phase?

6. And Finally...

Many thanks to Jeff Blum for telling why:-

Men Are Just Happier People!

What do you expect from such simple creatures?

Here’s why..

Their last name stays put. The garage is all theirs. Wedding plans take care of themselves. Chocolate is just another snack.

They can never be pregnant. They can wear a white T-shirt to a water park. They can wear NO shirt to a water park.

Car mechanics tell them the truth.

The world is their urinal. They never have to drive to another petrol station toilet because this one is just too icky. They don't have to stop and think of which way to turn a nut on a bolt.

Same work, more pay.

Wrinkles add character.

People never stare at their chest when they’re talking to them.

The occasional well-rendered burp is practically expected.

New shoes don't cut, blister, or mangle their feet. Phone conversations are over in 30 seconds flat. They know stuff about tanks. A five-day holiday requires only one suitcase. They can open all their own jars. They get extra credit for the slightest act of thoughtfulness. If someone forgets to invite them, he or she can still be their friend.

Their underwear is £7.50 for a three-pack. Three pairs of shoes are more than enough. They almost never have strap problems in public. They are unable to see wrinkles in their clothes. Everything on their face stays its original colour. The same hairstyle lasts for years, maybe decades.

They only have to shave their face and neck.

They can play with toys all their life. Their belly usually hides their big hips. One wallet and one pair of shoes one colour for all seasons. They can wear shorts no matter how their legs look.

They can "do" their nails with a pocket knife. They have freedom of choice concerning growing a moustache.

They can do Christmas shopping for 25 relatives on December 24 in 25 minutes.

No wonder men are happier!!!!

BOW WAVE is published each week to over 12 500 Readers in the transport,insurance,shipping and finance industries.

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