UK P&I Club - Issue 26 - Winter 2000/2001

Retiring UK Club chairman Nils-Gustaf Palmgren (pictured right) was presented with a silver salver at the AGM in San Francisco in October by his successor Aleco Kairis (left). Mr. Palmgren, 64, who is managing director of Silja Oyj, Silja Line and Silja Line AB, will continue to serve as a deputy chairman. He was elected to the board in 1983, becoming deputy chairman for the first time in 1992 and chairman three years later.
Mr. Kairis said Mr. Palmgren had been “an authoritative and clear-sighted chairman, bringing exceptional tact, diplomacy and persistence to the management and leadership of Club and industry affairs. The Club and the P&I movement owe him a great deal”.

The UK Club has just been assigned an AA- rating by Standard & Poor’s, an improvement on the previous assessment of Api. S&P regard the outlook for the Club as “stable,” indicating that they expect the rating to remain at its new level for the next few years.

The verdict followed a detailed presentation to S&P in line with their “interactive” process. This allows them to form a view on expectations for two to three years ahead, rather than relying solely on public information (pi), the previous basis for assessing the Club.

The rating reflects S&P’s view of the Club’s capitalisation, financial flexibility and business position for the year ended February 20th 2000. It was assigned despite a dip in operating performance which was still classed as “good” and increasing competitive pressures from other clubs and fixed premium providers. The major rating factors were:

Strong capitalisation: The Club covered S&P’s risk-adjusted capital requirements approximately 2.5 times over. Free reserves were high and solvency, measured by the ratio of estimated premiums to free reserves, was 48.6 per cent.

Strong financial flexibility: This was also demonstrated by the high level of free reserves and the Club’s ability, as a last resort, to charge supplementary premiums.

Strong business position: As the largest P&I Club with 20 per cent of the world’s ocean going tonnage, the Club had a high quality, well diversified membership.

Strong operating performance: There had been an average annual strengthening of 18.6 per cent in free reserves over five years. However, lower premiums and increased claims in 1999/2000 had produced a deficit and a reduction in free reserves.

The UK P&I Club annual and board meetings in San Francisco in October were attended by 22 directors.

Aleco Kairis was elected as the new Club chairman. Retiring chairman Nils-Gustaf Palmgren was elected and Klas Kleberg and Tom Moore re-elected as deputy chairmen.

Koichi Suzumura of NYK Lines and Richard Paniguian of BP Shipping retired from the board after nine years and five years respectively. Four new directors were welcomed. They were Linda Adamany of BP Shipping, Mike Garvey of Saltchuk Investments, Tadamasa Ishida of NYK (Europe) and Alan Olivier of Unicorn Shipping.

Arrangements have been completed for the UK Club’s investment in Thomas Miller, which will take the form of a convertible loan through a trustee company. The UK Club Private Trust Company Ltd has been set up in Bermuda as a wholly owned subsidiary of the Club to administer the agreement. The directors of this trust company will be Messrs. Palmgren and Kleberg and Bermudian resident Warren Cabral. Mr Kleberg was confirmed as non-executive director of Thomas Miller Holdings Ltd., the parent company for the Miller businesses.

The concluding report of the Strategy Working Group was adopted by the Board. The Club’s main medium term focus will be on product, service and price. A new working group was formed to address the managers’ plans for improvements in these areas and market developments.

The Club’s overall financial position was currently strong with free reserves above the Board’s target. However, reserves had been falling after deficits on recent policy years. Although 1999 was showing a drop in claims, there were early indications that 2000 policy year claims would return to previous levels, thereby requiring future premiums to increase.

The Board reviewed performance projections of Club finances and decided the general increase for the 2001 policy year should be 7.5 per cent in accordance with the managers’ recommendations. The supplementary call for the 1999 policy year was reduced from 40 to 30 per cent. The Club’s formula for release calls remained unchanged.

The Board decided that seven members should not be offered terms at the forthcoming renewal.

The Managers reported progress in discussions with banking associations, aimed at agreeing standard terms on which banks would join in the indemnities used when cargo is delivered without production of a bill of lading. The new wordings have been developed in consultation with a wide spectrum of industry bodies and are expected to be ready for circulation by the end of the year.

The Managers reported on the ‘tacit acceptance’ process by which the current 1992 CLC and IOPC Fund limits would be raised by 50 per cent from November 2003, unless sufficient states oppose the increase within the time permitted.

There was also discussion of other possible measures to strengthen confidence in the international convention system and so reduce the need for regional initiatives, such as those proposed by the EC following the Erika incident.

These favourable revisions have been due primarily to a better than expected claims performance. Claims have been lower than anticipated in ‘high value’ areas, such as collisions with fixed and floating objects. However, cargo loss and damage claims have continued to affect members significantly over recent years and analysis does not suggest the start of an improving trend.

A very strong investment performance yielded US$ 79 million, a return of 7.8 per cent.

Funds totalled US$1,182 million. Against this, non-discounted outstanding claims were just under US$799 million. This produced a non-discounted free reserve of US$383 million, slightly down on the previous year but well above the benchmark set by the Board.

The UK Club’s directors confirmed that the Association would take a 10 per cent stake in the managers’ business, Thomas Miller Holdings.

It takes the form of loan stock, fully convertible into shares in five years’ time. The principal terms have been endorsed by the existing shareholders, all of whom are current or former employees of Thomas Miller. The Club’s deputy chairman Klas Kleberg will be a member of the Thomas Miller Holdings board.

The company was set up in April 1999 to replace a series of partnerships, partly because a fully corporate structure would be more appropriate for an organisation with diversifying interests. Having decided to remain independent, Thomas Miller has been keen to find capital providers and other partners to help develop products and services.

Management of the UK P&I, Through Transport and International Transport Intermediaries, UK Defence, and Hellenic and UK War Risk clubs and the professional indemnity mutuals will continue to form the core of the business. However, the company has variously invested in and provided management skills to a range of undertakings:

Peter Donnellan will extend his role as chief executive, with overall direction of strategy and activities worldwide. On March 1st, he will take over leadership of the Thomas Miller & Co board, which co-ordinates all Thomas Miller operations.

Mr. Coghlin explained: “Stephen and Peter are the ideal pairing at the top of Millers, as we continue to blend an exceptionally strong focus on clients’ traditional needs with aggressive investment in the creation of new products and services.”

Some 30 members of the UK, TT and International Transport Intermediaries clubs from all over the world attended the recent four-day Insight into Transport Law and Insurance workshop at International House in London.

Delegates, mainly London-based, represented shipping and transport operations in the UK, Switzerland, Croatia, Greece, Turkey, Russia, West Africa, Dubai and Japan. Some were new to the industry but most were seeking to refresh their knowledge.

The workshop covered the history of marine insurance, underwriting principles, dispute resolution, court proceedings, ADR and mediation, contracts of carriage, bills of lading, charter parties, cargo conventions, and people, collision and pollution claims. A major claims handling exercise dealt with a marine casualty scenario. A tour of Lloyd’s and a formal dinner completed the programme.

Subject leaders included Miller managers Herry Lawford, Charles Fenton, Nigel Long, Karl Lumbers, Paul Mallon, George Fawcett and Ernie Foster, and Patrick Shaw of Ince & Co.

Thomas Miller P&I director Angela Gamblin said the workshop had been oversubscribed, thanks partly to the reputation established by similar events over the past three years.

“It was a huge success, due partly to the subject material which would be very difficult to obtain elsewhere and partly to lecturing standards. However, the balance of businesses and delegate expertise was a major advantage in group exercises. Delegates welcomed the networking opportunities.”

Said one course participant, “In a nutshell, this course was superb and sharpened my skills.”

Readers wanting to participate in the workshop planned for next year should contact Angela Gamblin (tel: +44 (0)20 7283 4646); email: angela.gamblin@thomasmiller.com

For the second year running, the UK P&I Club has won Lloyd’s List Maritime Asia’s Best P&I Club Award. A crystal sculpture was presented to Herry Lawford, Service Director, at the Maritime Asia Awards ceremony in September.

The finalists were chosen by the readers of Lloyd’s List and Maritime Asia and judged by shipowners and shipping experts from the region. They acknowledged the UK Club’s commitment to Asia, strong service culture, thorough approach to loss prevention and IT and e-commerce advances.

Herry Lawford believes that having seven offices in the region (including three licensed branches) allows the managers to provide the level of personal contact essential to helping Club members deal with problems and claims.

The Crew Fitness Programme has been developed with regional claims problems in mind. The Club’s role in developing guidelines for dealing with illegal stowaways on container ships stemmed directly from the flow of illegal immigrants from the Fukian region of China.

The Directors agreed the UK Club should support the signing by the International Group of the Maritime Industry Charter on Quality.

The Charter, promoted by the European Commission's Transport Directorate, defines quality standards in respect of safety and protection of marine environment and crew. The standards, which are advisory rather than obligatory, are similar to those already imposed under Club rules. Some 15 organisations have already signed the Charter, including BIMCO, Intertanko, the International Parcel Tankers Association, the European Community Shipowners' Association and IACS.

The Managers had also met with a representative of the self-styled 'International Commission on Sub-Standard Shipping,' announced by the International Trade Federation. While sympathising with the Commission's broad objective of promoting quality among sub-standard shipping, the Managers questioned whether it was better placed to make progress on this issue than the established bodies already involved.

I would not wish to leave the post of Chairman of the Board without paying tribute to the firm support that I have received from both the Board and the Directors during my five-year term. The period has certainly been one of challenge for the P&I industry, with the UK Club, as the largest marine mutual, carrying a special responsibility. I believe the combination of a strong Board of Directors and excellent dialogue between those shipowner directors and our highly professional and independent Club managers has served Club and industry well during those years.

There is no doubt that the threat to the P & I club system posed by the European Commission has caused a sharp reappraisal by all clubs of their future role. Fortunately, all the other International Group clubs have agreed with us that the mutual system is to be preserved - and that the best route to preservation lies in measures to strengthen it.

Through the Group, the UK Club has played a leading role in limiting club cover and increasing the oil pollution limit. We have worked closely with international bodies on ISM compliance, Y2K safety, Port State Control and other matters. Throughout the period, the Club has concentrated on the basic virtues of service and value for money, developing loss prevention information and advice to members and leading the way in the use of electronic communication.

The UK Club’s reinsurance contract with the Swiss Re and the investment by the Club in its managers’ business have been major developments which have not only further underpinned our healthy finances but, in the latter case, have cemented the Club/management relationship. This has been a successful and happy time.

The chairmanship now passes to Aleco Kairis. No one could be more experienced, as he has served as my deputy throughout my five years. I am delighted that he has agreed to accept this position and I am sure that he will serve the best interests of the Club and its members.

Aleco Kairis was elected Chairman of the UK P&I Club at the annual general meeting in San Francisco in October.

He became a director of the Club in 1988 and deputy chairman in 1993, serving first under Miles Kulukundis and, for the past five years, under Nils-Gustaf Palmgren. Most recently, he has played a leading role in the Board’s strategy working group.

Mr Kairis, 54, has spent his entire career with N J Goulandris, joining them in 1970 and becoming a director two years later. He now concentrates on commercial activities, liaising closely with the Andriaki Shipping Company in Greece, which operates a mixed fleet of tankers and bulkers. He is a citizen of both Greece and Canada, where he was brought up. He graduated in history from Trinity College, Hartford and gained an MBA from Harvard. He is a director of the Hellenic Mutual War Risks Association, a member of the Baltic Exchange, a liveryman with the Shipwrights Company and a fellow of Trinity College.

After his election, Mr Kairis commented: “The Club has generated a considerable momentum in recent times. We have advanced significantly in terms of products and services with a close-knit worldwide structure to serve members’ interests as quickly, efficiently and effectively as possible. Successful financial stewardship has provided a vital foundation for these developments.

“On the wider industry front, we have worked closely with the International Group - co-operation which is essential to the maintenance and enhancement of the mutuality principle.

“My recent contacts with shipowners have underlined my firm belief that service has never been more important. I would anticipate more developments on this front during the next five years, complemented by a personable, accessible style on the part of directors and managers. I am very much looking forward to the challenges.”

Linda Adamany was appointed Chief Executive of BP Shipping in 1999. An American certified public accountant, she joined BP (Sohio) in 1980 in Cleveland, holding a succession of management appointments in accounting research and planning, financial planning and control, performance reporting, operational planning and trading and transport.

In 1991, Ms Adamany became a vice-president with responsibilities for trading and transport. Four years later, she moved to London and was successively business control manager, chief of staff to the deputy chief executive, director and vice-president, procurement and senior vice-president, commercial development. She is a director of the Oil Companies International Marine Forum, the International Tanker Owners Pollution Federation, Lloyd’s Register and the UK Chamber of Shipping.

Mike Garvey is Co-Chairman and Co-Chief Executive of Saltchuk Inc. Admitted to the bar in Washington and the District of Columbia, he is counsel to Garvey Shubert and a member of the firm’s advisory committee. He is also a director of Stimson Lane, Totem Ocean Trailer Express, Foss Maritime Company, The Commerce Bank of Washington, PeaceHealth, Ugland International Holdings and Seabear.

Tadamasa Ishida was appointed Director and Chairman of NYK UK Holding and Chairman of NYK Line (Europe) in June and is a main board director of NYK.

Mr. Ishida has spent his entire career with the organisation. From 1991 to 1995, he held a series of deputy general manager posts, covering Europe, Oceania, business planning and harbour and multi-modal transport. During the next three years, he was general manager for No 1 cargo operation, container operation and liner management groups. In 1998, he was appointed chairman of NYK Line (Asia) Pte. He is vice-chairman of the London-based Japan Chamber of Commerce.

Alan Olivier is Managing Director of Griffin Shipping Holdings and Chief Executive of Unicorn Tankers, both subsidiaries of the Grindrod Unicorn Group. He is responsible for Grindrod’s shipowning and operating business.

A South African-qualified chartered accountant, Mr. Olivier joined Unicorn Lines in 1986. He was successively manager of internal audit, information systems and treasury services. He became financial manager in 1991 and financial director of Unicorn and its subsidiaries the following year. When the group was restructured in 1995, he was appointed chief executive of Unicorn Tankers.

Koichi Suzumura of NYK and Richard Paniguian of BP Shipping retired. They were warmly thanked for their input to the strategy working party and their considerable contributions to the Club. Mr Suzumura was the sixth successive NYK director on the UK Club board and had served for nine years. Mr Paniguian had been on the board for five years.

Different twistlocks meant two containers remained attached on one corner when the crane lifted the top one. The lower container quickly crashed back onto other containers (Rotterdam).

A scrap cargo included defused mines (Ukraine)

From steel lashing problems in Indonesia to bagged cargo shortages in the Yemen, and from ballast legislation in Washington State to port state control requirements in Goa, the UK P&I Club regularly circulates information to its correspondents and members about incidents, dubious and illegal activities, and official proposals and decisions within the maritime world. The material is derived from members’ claims and generally has ramifications for many shipping operations.

Summaries are published in the Club’s Loss Prevention Bulletins, which have been produced once a week since early 1997. Over 170 have been produced so far and are available on the website.

In November and December, the bulletins informed members about a piracy incident off Lagos, recommendations on the carriage of calcium hypochlorite, cargo theft at Conakry, berthing problems at Port Berbera, Port State control irregularities at Abidjan, pre-loading survey practices in Novorossiysk, customs dues settlements in Syria and bulk cargo discharge disputes in China.

Loss Prevention Manager Karl Lumbers says the primary purpose of the bulletins is to convey claims-related information to UK Club members as quickly as possible.

“These weekly website communications help to highlight the experiences of shipowners all over the world, reaching others facing similar situations. We put the facts before the readers. They can then make up their own minds about adjusting their operations to accommodate what they read in the bulletins. The messages are ‘take it into account’ and ‘don’t let it happen to you.’ It’s not quite a real time loss prevention service but it’s pretty close.”

With such diverse subject matter, it is difficult to read much statistical significance into the material but some general points have emerged. A major theme is regulatory changes and the pronouncements and initiatives of official bodies. Many emanate from the United States and Australia, for example in regard to ballasting, and from Port State Control authorities around the world.

According to Mr. Lumbers: “Some of our members somewhere will have an interest in vessel passage plans for Singapore, containership safety regulations in the USA and garbage management obligations in Venezuela and Germany. However, it is not just a question of circulating members on new regulations and reminding them of existing ones. Incidents often provoke reactions from official bodies, whereby zealous interpretations of the rules and regulations are intensified and disputes, detentions and fines result.”

Cargo matters, such as loading and discharging problems and damage, infestation and short measure, are another prominent source of bulletin material. Stowaways have proved a growing concern in recent months, with the Club passing on information from Canada, the United States, China, Tanzania, Brazil and Italy, as well as issuing general guidelines to members.

Steel shipment irregularities keep cropping up, highlighting unsatisfactory cargo conditions, stowage, security and documentation. Other recurring concerns include drug smuggling, crime, contamination and not keeping oil record books properly up to date. From time to time, the Club issues advice to members on how to avoid situations and what to do when confronted by them.

While a minority of the bulletins have general or worldwide application, most concern specific countries and ports. The regional breakdown for source material has been as follows:

Mr Lumbers concluded: “If we are to reduce our members’ exposure to liability claims, fraudulent or otherwise, we need to keep them advised as these incidents and official initiatives occur. The sooner they are aware, the sooner they can take preventive action.”

Apparent lack of fendering produced a potential damage claim when vessel and quayside came together (Somalia)

A pat on the back for the team behind the UK Club’s loss prevention materials has been enthusiastically delivered by the October issue of Newslink, the newsletter of The Society of Consulting Marine Engineers and Ship Surveyors.

The September edition of Loss Prevention News is commended for being “all about the safe and sensible way to stuff, carry and secure ISO containers. Beautifully presented with clear text, line drawings and photographs. A much needed refresher and update on the ongoing problems of container carriage.”

The recent Analysis of Major Claims and the Loss Prevention Initiatives video are described as “brief, succinct, informative and educational.” However, the strongest eulogy is reserved for the videos Container Matters and Any Fool Can Stuff a Container. “Nothing short of viewing those videos can possibly do them justice.”

Editor John Knott felt they were “a cross section of my own 30-year journey investigating container casualties and the ongoing attempts of myself and others to persuade shippers, shipowners, charterers, supercargoes, stevedores, ships’ personnel and the like to just please read and follow the goddam instructions! A must for arbitration and court presentation, these tapes get the real feel of the subject.”

To enable Loss Prevention Bulletins to be understood by a wider audience, the UK Club has decided to publish them in Chinese as well as English. Bulletin no 164 on the International Group’s recommendations re the carriage of calcium hypochlorite cargoes, published in November, was the first to appear in both languages.

The Club’s Hong Kong branch says the impetus stems from Chinese members who wish to distribute bulletins to masters and crews whose first language is Chinese. Like the English versions, they are posted on the Club’s website.

In the past, less information has been received from Asia Pacific than other parts of the world. It is hoped that bulletins in Chinese will stimulate more response from the region.

Danny Ng, UK Club loss prevention co-ordinator for Asia Pacific based in Hong Kong, said the Club would be considering translating other materials from English. “We regard this exercise as part of an ongoing policy of giving members in this part of the world what they want, in the form they require it and quickly enough for them to make real use of it.”

ClaimsTrac, the UK Club’s highly innovative online claims information system, has been upgraded to provide a greater range of information virtually in ‘real time’. The direct link between this service to members and the Club’s claims handling systems enables members to track both the progress of individual claims files and the overall effect on their underwriting records.

The claims report section of ClaimsTrac provides members with details of all their claims files online in a variety of formats. The options include full claims reports, updates on claims that have recently changed in value, estimates and nil value claims. Each claims file title now has a “hot link” to more detail, such as individual payments and estimates, claims handler’s name and date of incident.

The member can also access the terms and conditions of entry which applied at the time of the incident in question. He can then generate emails to the claims handler, reflecting on the facts and commenting on the claim, copying them to colleagues or broker as appropriate.

The analysis section enables the member to take a more strategic view of the claims performance of his entered fleet. This can be viewed by ship, voyage, incident date, claims handler etc. Analysis can be extended further: any ClaimsTrac report can be downloaded in a universal file format. For example, the member’s own management spreadsheets in Microsoft Excel or Lotus 1-2-3 can be immediately supplied with up to the minute claims data.

The underwriting section comes into its own towards the renewal season. It combines premium and claims information to show loss record performance over the years - a marked improvement on waiting for a hard copy of the report to be printed and despatched. Again, claims files and entered ship lists are “hot links” to greater detail and the reports can be downloaded to the member’s spreadsheets.

The Club has devised a careful procedure to protect the security of each member’s data from unauthorised access. To obtain access, users must apply as individuals for ID and password since these are not supplied on a corporate basis. If access has to be withdrawn from an individual, it can be done quickly and without inconveniencing other users at the member’s offices. This places a duty of responsibility for password security on the individual staff member.

The expansion of ClaimsTrac is timely for annual reviews. Regardless of location or time zone, it will now be possible to gain a deeper insight into the performance of the various trades, ships, locations and policy years in order to review the Club’s renewal terms more effectively.

The UK Club will continue to improve and develop the ClaimsTrac system. Future options should include statements of account, premium payment information and online access to routine documentary procedures. Members wishing to obtain more information on ClaimsTrac should contact their UK Club account executive or Nick Whitear (tel: +44 (0)20 7204 2334); email: nick.whitear@thomasmiller.com

To establish your unique user identification for ClaimsTrac, simply select Online Services from the menu on the left of the screen. Take the registration option which will present you with an online application form. Please complete this fully and despatch it through the e-mail facility. Personal contact is an important part of the verification process, so please indicate your usual contact at the Club/Thomas Miller.

After nearly four years of helping to manage professional indemnity mutuals for Millers, Luke Readman has returned to the P&I fold. He joins Hugo Wynn-Williams as a deputy chairman of Thomas Miller P&I with special responsibility for P&I strategy.

Stephen James, chairman of Thomas Miller P&I, has been elected chairman of the International Group of P&I Clubs for a three-year period. He relinquishes the chairmanship of the Group’s reinsurance sub-committee which he has held for the past seven years.

The UK Club has made a Christmas donation to The Mission To Seafarers, the organisation which cares for seafarers of all nationalities and creeds in some 300 ports around the world. This is in place of Christmas cards.

The organisation maintains a network of chaplains, lay staff and volunteers who offer seafarers a welcome, friendship and practical and spiritual help. Details of their work and how you can help can be obtained on the web at www.missiontoseafarers.org and by email: pr@missiontoseafarers.org

Thomas Miller staff would like to wish Club members and friends seasonal greetings and very best wishes for 2001.

Registered users of the UK Club’s on-line services can now access the information directly through setting their browsers to www.epandi.com

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UK CLUB NEWS is published by
Thomas Miller & Co. Ltd.

International House
26 Creechurch Lane
London EC3A 5BA

Tel +44 20 7283 4646
Fax +44 20 7283 5614

Editor: Nick Whitear

Tel +44 20 7204 2334
Fax +44 20 7621 9761
e-mail: nick.whitear@thomasmiller.com

For and on behalf of the Managers of

The United Kingdom Mutual Steam Ship Assurance Association (Bermuda) Limited

Issue 26 - Winter 2000/2001

Thank you, Mr Palmgren

AA- for UK Club

Investment, calls and strategy

Club finances further strengthened

Club's ten per cent stake in Millers confirmed

Gaining an insight

UK Club Best in Asia

Club backing for maritime industry charter

A successful and happy time

Aleco Kairis elected chairman

New directors join the board

Don't let it happen to you

Club materials commended to marine engineers

Read about losses in Chinese

Keeping Trac of claims

New Posts


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