Steamship Mutual to Boost Capital

January 30, 2009

Steamship Mutual, a leading P&I Club that provides marine liability insurance worldwide, announced that it is boosting its capital reserves to compensate for investment losses.

"Despite Steamship Mutual's market leading underwriting results, the lack of a sustained recovery in the global financial markets has had a significant impact on the Club's investment results and the Steamship Board has decided that additional capital must be raised," said the announcement.

Steamship said it would raise the additional amounts "by levying additional premium (Class 1 Protection and Indemnity) for the policy years 2006, 2007 and 2008, payable over the next 18 months, as follows:
2006 - 12.5 percent additional
2007 - 14 percent additional premium
2008 - 20 percent additional premium

Otto Fritzner, Club Chairman, added: "We are acutely aware of the unwelcome nature of this announcement, particularly in view of the current difficulties in the freight market. But one of the Board's primary obligations to its members is to ensure that Steamship maintains its position as top class security for members' claims, acceptable throughout the world, and meets the capital requirements of all the Club's regulators.

"With this in mind, despite the Club's recent strong underwriting performance, we have decided that it is necessary to put the Club in a position to raise US$80 million of additional capital to restore its reserves to the level applying at the beginning of this financial year."

James Stockdale, Steamship's CEO, commented: "Unfortunately the Club has been unable to escape the unprecedented severity of the global economic downturn and the volatility in the financial markets. The Club has incurred significant investment losses, amounting to about US$95 million as at 23rd January 2009, and this action was essential to restore the Club's reserves to their proper level to safeguard the Club's long term security."

He also pointed out that the Club "has devoted very considerable effort to achieving a high quality membership and delivering strong underwriting results. The additional capital is designed to restore the Club's reserves to the levels necessary to sustain the business for the foreseeable future and to ensure it is in a position to meet all known regulatory requirements. With the benefit of the restored reserves, current and prospective Members can be confident in both Steamship Mutual's first class service and its financial security."

The bulletin also noted that with "shipping markets under great stress," it is "too early to predict what effect these pressures will have on the level of P&I claims in the immediate future. In this very uncertain climate, the Club does not feel that it would be prudent to place any reliance on claims levels falling significantly, or at all, during 2009 and account has to be taken of the possibility that market stresses could cause claims to rise rather than fall in the short-term."

Source: Steamship Mutual - www.simsl.com