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The Aviation Insurance Market

The Aviation Insurance Market. Presented By Mr.Vijay Thakur. Contents. Airline Hull All Risks and Liability Market Capacity Airline Hull Deductible Market AVN52E and Excess Third Party War Risks Hull War Risks Cover Summary.

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The Aviation Insurance Market

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  1. The Aviation Insurance Market Presented By Mr.Vijay Thakur

  2. Contents • Airline Hull All Risks and Liability • Market Capacity • Airline Hull Deductible Market • AVN52E and Excess Third Party War Risks • Hull War Risks Cover • Summary

  3. Airline Insurance Industry Cycle:Airline Hull/Liability Premiums 1982-2009 Soft Hard Soft Soft Hard Hard Hard

  4. World Airline Premium and Claims 2000-2010

  5. Maximum Limit Progression 1985-2008

  6. 2009 Airline Premium & Rate Movements

  7. 2010 Airline Premium & Rate Movements

  8. Losses • Awards and minor claim levels are constantly increasing • Recent passenger liability awards have been influenced by US lawyers and jurisdiction • This has meant awards exceeding US$1m per passenger in countries where they would have previously been substantially less • Increases in minor losses are also having a significant impact on underwriters bottom line

  9. 2009/10 Airline Losses:Nett Hull losses in Excess of US$10m Shown Avient ($67m) THY ($47m) Air France ($93m) Colgan Air ($19m) US Airways ($40m) FedEx Air India ($17m & $50m) Afriqiyah Airways ($123m) Emirates ($19m) American Airlines ($28m) Saudi Arabian ($19m & $14.3) Kingfisher ($18m) Royal Air Maroc ($10m) Bangkok Airways ($15m) Yemenia ($34m) Ethiopian Airlines ($39m) Satena ($18m) Lion Air ($28m) 2009 Losses 2010 Losses Total Hull/Liability Losses 2009 (including minor losses) – US$2.343bn 2010 (including minor losses) – US$0.733bn

  10. Five Year Premium and Claims by Region(based on declared figures for 2009 renewals)

  11. Five year Loss Ratios by Region(based on declared figures for 2009 renewals)

  12. Airline Capacity to Accept Airline Risk:Non-US Airline with a US$1.5 Billion Limit Allianz (10%) AXA (8%) Tokio (1.5%) Munich Re (10%) GAUM (7.5%) Inter Hannover (5%) Partner Re. (3.5%) Generali (1%) Chartis (12.5%) Ace, Catlin, Swiss Re (10%) Mitsui (6%) Amlin, Starr, Talbot, XL (5%) QBE (4%) Faraday, (3%) Antares, St Paul (2.5%) Atrium (2%) Kiln, Samsung (1.5%) Axis (1%) It should be noted that underwriters are unlikely to participate up to their maximum capacity. The actual available capacity is dependant on a number of variables and underwriters desire to participate on any particular risk. Aspen (3.3%) Inter Aero (2.5%) SCOR (1.5%) LRA (13%) Asia Capital (5%) KRIC (2%) Maxs Re (4%) Sirius (1.5%) Aviabel (1%) ADNIC (0.1%) SCR (0.50%) GIC, Ironshore (5%) Glacier Re (3%) MISR (1.25%) PICC, New India (1%) Oriental, (0.75%) Nissay (0.15% Oman (2.5%)

  13. Secondary Markets St Paul HCC Aviation Hull Deductible Market Principal Markets Chartis ACE Allianz Aspen Kiln Talbot Travelers XLInsurance • Talbot and Kiln have recently entered the deductible market • Rating is reasonably stable • Very loss active (large number of claims but restricted limits) • Marginally profitable area to some underwriters • All markets write 100% of any individual risk

  14. AVN52E and Excess Third Party Liability War Risks

  15. Excess AVN52: Third Party Liability • Premiums are now at their lowest level since the introduction of this cover and reductions are now minimal • Premium levels are significantly short of the maximum insured limits • Limits of US$1 billion or more being covered for an estimated total market premium of around US$200 million in 2009 • The Excess AVN52 market has yet to suffer an insurable loss • The market created in the wake of 9/11 has had the largest percentage fall in premium levels since the highs of 2002 • An influx of capacity and competition has driven premiums down from US$1.5 billion in 2002 • Some hull and liability underwriters are evidencing appetite to increase sub-limits to US$250m

  16. Excess AVN52: Third Party Liability • An influx of capacity and competition has driven premiums down from US$1.5 billion in 2002 to US$120 million in 2008 • The trend for premium reductions continued during 2009 • Premiums are now at their lowest level since the introduction of this cover and reductions are minimal

  17. Excess AVN52E Capacity: Based on US$850m excess US$150m Allianz (10%) Inter Hannover (10%) Axis (30%) Chartis (25%) Swiss Re (20%) Catlin, Starr (10%) Brit (3%) Antares (2.5%) Aegis, Amlin, Liberty (2%) ARK (1.75%) Atrium, Faraday, Hiscox, Pritchard, Markel, Talbot, XL (1.5%) St Paul (1.25%) ACE, Hardy, Watkin (1%) Kiln (0.6%) Plus Berkshire Hathaway (AAA) capable of writing US$1,000m It should be noted that underwriters are unlikely to participate up to their maximum capacity. The actual available capacity is dependant on a number of variables and underwriters desire to participate on any particular risk. Aspen (2.5%) Liberty Mutual (2%) Ironshore (10%) Glacier (5%) 2009

  18. Aviation underwriting-Reinsurance • Underwriting factors • Debit credit balance • Government policies • Dgca • Airworthiness • CVC • Flight data digital recorder • Public knowledge of all losses

  19. September 11 Crash

  20. Mangalore crash

  21. Hudson Crash

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