An Insurance Perspective p on Newbuilding g

by Tang Sau Weng 26 June 2009

CSL Global Ltd Leading Providers of Marine & Transportation Risk Services

CSL Global Ltd is a leading provider of professional claims, risk control and recovery services to the marine insurance industry and to clients operating in and around the global cargo, shipping, transportation and supply chain sectors.

A Brief Introduction to CSL Global

CSL Global Ltd is a leading provider of professional claims, risk control and recovery services to the marine insurance industry and to clients operating in and around the global cargo, shipping, transportation and supply chain sectors. CSL offers clients consistently high service standards founded upon a strong commitment to technical excellence and communication. Our international resource network comprises a team of over 65 dedicated industry specialists drawn from a broad but complementary range of marine and transportation risk disciplines, operating from owned or controlled offices in North America, Latin America, Europe and Asia. Our offices are managed and operated by dedicated marine personnel with proven careers in the marine and transportation risk sectors. The marine business is our upbringing, our lifeblood and our future. In the fast moving and volatile world of international commerce, CSL companies have the operational agility and innovation to respond to clients modern day needs on a local, regional or global basis.

CSL Global Services

MARINE CLAIMS Surveys & investigations Freight liability Specie, including Cash in Transit Claims management Loss adjusting General Marine Liability Third Party Administration (TPA) Recoveries PROJECTS Warranty surveys for the international insurance markets on large infrastructure development projects. Power generation Petrochemical Oil & Gas Heavy Industry Load, discharge & route / transportation consultancy Management of whole project on a global basis

RISK CONTROL Loss prevention Risk control reviews C-TPAT / SOX security planning and audits Location reviews Load, stow & securing surveys Vessel outturn inspection & control Supply chain risk analysis, risk monitoring Car accounts transit & storage Marine risk consultancy

TECHNICAL SERVICES Hull & Machinery Shipyard inspections Marine casualty Port risk assessments Tug & tow Super yachts

Contact CSL Global

For further details of how CSL Global can assist you, or to instruct us to act on your behalf please contact the following regional client managers: GLOBAL SERVICES
Cargo & Logistics:
Chris Ball +44 20 7816 5870 c.ball@cslglobal.com

Hull & Machinery:

Steve Gilbert +44 20 7816 5870 s.gilbert@cslglobal.com

EMEA (Europe, Middle East & Africa)

Europe:
Chris Ball

USA & Canada

Michael Logue Michael Iversen +1 609-240-9690 m.logue@cslglobal.com +1 417-461-7090 m.iversen@cslglobal.com

Middle East:: Steve Gilbert Africa::

Jason Gibbons

+44 20 7816 5870 c.ball@cslglobal.com +44 20 7816 5870 s.gilbert@cslglobal.com +44 1622 816 015 j.gibbons@cslglobal.com

Latin & Central America

Jorge Viuela Mark Hanna +56 9 9251-1137 j.vinuela@cslglobal.com +56 9 92252516 m.hanna@cslglobal.com

Asia
Sau Weng Tang +65 9728 3168 sw.tang@cslglobal.com

CSL Global Contact Directory

GLOBAL SERVICES CONTACT UK & EUROPE:
T: +44 20 7816 5870 M: +44 7811 469539

REGIONAL LIAISON CONTACT - UK:

London Office

Chris Ball

Jason Gibbons

REGIONAL LIAISON CONTACT - USA: Springfield Office T: +1 417 461 7090 / M: +1 417 316 0739 m.iversen@cslglobal.com

T: +44 1622 816 015 M: +44 7866 562610

Maidstone Office

Michael Iversen

REGIONAL LIAISON CONTACT LATIN AMERICA: Chile office T: +56 2 790 3100 M: +56 9 9251 1137 j.vinuela@cslglobal.com

REGIONAL LIAISON CONTACT - ASIA: Singapore Office T: +65 6866 3388 M: +65 9728 3168 sw.tang@cslglobal.com

Jorge Viuela

Sau Weng Tang

j.gibbons@cslglobal.com

c.ball@cslglobal.com

CSL London
T: +44 20 7816 5870 F: +44 1622 816 019 Chris Ball
c.ball@cslglobal.com

CSL Maidstone
T: +44 1622 816010 F: +44 1622 816019
j.gibbons@cslglobal.com t.wynn@cslglobal.com

CSL New York

T: +1 212-344-9600 F: +1 212-344-9695
j.ruggiero@cslglobal.com r.lawson@cslglobal.com

CSL New Orleans

T: +1 504-454-2678 F: +1 504-454-2796
d.rawls@cslglobal.com w.chatelain@cslglobal.com

CSL Baltimore
T: +1 410-327-5001 F: +1 410-327-5003
i.knobloch@cslglobal.com

CSL Chile
T: +56 2 790 3100 F: +56 2 790 3117
j.vinuela@cslglobal.com m.hanna@cslglobal.com

CSL Singapore
T: +65 6866 3388 M: +65 9728 3168
sw.tang@cslglobal.com

Jason Gibbons Tarja Wynn

Jim Ruggiero

David Rawls

Ivo Knobloch

Jorge Viuela Mark Hanna

Sau Weng Tang

Steve Gilbert
s.gilbert@cslglobal.com

Richard Lawson

Wendy Chatelain

CSL Bristol
T: +44 117 958 2530 F: +44 117 958 2539
g.covello@cslglobal.com p.rock@cslglobal.com

CSL New Jersey

T: +1 212-344-9690 F: +1 212-344-9695
m.logue@cslglobal.com

CSL Springfield
T: +1 417-461-7090 F: +1 417-461-7095
m.iversen@cslglobal.com r.iversen@cslglobal.com

CSL Long Beach

T: +1 562-572-5064 F: +1 714-646-9140
c.nahal@cslglobal.com

CSL Brazil
T: +55 11 4416 4483 F: +55 11 4416 4483
f.robertson@cslglobal.com

CSL Thailand
T: +66 (0)2 6811793 to 5 F: +66 (0)2 6811796
c.rajesh@cslglobal.com

Gino Covello Philip Rock

Michael Logue

Michael Iversen Roger Iversen

Chuck Nahal

Fraser Robertson

C. Rajesh

CSL Billericay
T: +44 1277 630400 F: +44 1277 630 550
j.worrall@cslglobal.com j.arber@cslglobal.com

CSL Houston
T: +1 713941-7800 F: +1 713-941-2725
s.west@cslglobal.com d.rawls@cslglobal.com

CSL Cincinnati
T: +1 417-461-7090 F: +1 417-461-7095
f.clausen@cslglobal.com

CSL Seattle
T: +1 253-853-7912 F: +1 253-853-7913
s.smith@cslglobal.com

CSL Panama
T: +507 226 7286 F: +507 322 0546
d.frogge@cslglobal.com

REGIONAL LIAISON CONTACT - CHINA: Shanghai Office T: +86 21 6584 2700 M: +86 138 1787 2347 ck.pang@cslglobal.com

Pang Chong Kit

John Worrall John Arber

Sharron West David Rawls

Fred Clausen

Stan Smith

Dora Frogge

CSL Manchester
T: +44 1663 732 113 F: +44 1663 732 322
m.denny@cslglobal.com

CSL Minneapolis
T:+1 507-263-0975 F: +1 507-263-0979
s.erhardt@cslglobal.com

CSL China
T: +86 21 6584 2700/02/ 03
ck.pang@cslglobal.com

Michael Denny

Steve Erhardt

Pang Chong Kit

Agenda
Risk Profile of Shipbuilding p g yards y Present market conditions Risk Assessment of Shipbuilding yards Key learning points from JH 143 surveys

Risk Profile of Shipbuilding p g Yard

Broadly divided into 2 categories : Yard Risks C Construction Risks ( (The vessel under construction) )

Risk Profile of Shipbuilding p g Yard - Yard Risks

Environmental earthquake, flooding, typhoon Physical damage Welding, hot work, FIRE Theft tools and equipment Personnel P l injuries i j i

Risk Profile of Shipbuilding p g Yard

- Construction Risk (vessel under construction)

Physical damages fire, mishandling of equipment Delay equipment, parts Non performance failure to meet design expectations Contractual C t t l issues i noise i & vibrations ib ti Trials operations of actual vessel

Present Market Conditions insurers perspective

Orderbook 9,454 vessels of 180m CGT / 557m dwt A Asian i yards d attracted d some 55% of f global l b l orderbook d b k 60% contracted in Chinese shipyard (in 2009) Vessel value difficult to assess value accurately Underwriting capacity Reduction in number of underwriters Risk Management approach Introduction of JH 143 shipyard risk assessment

Risk Assessment of Shipbuilding Yards - Why is it necessary ?

In a 14 month I th period i d US$700million US$700 illi of f claims l i passed to Underwriters All from fires and other accidents newbuildings and conversion projects during

Imagine this .

Construction Risk some examples

Construction Risk some examples

Construction Risk some examples

Construction Risk some examples

Construction Risk some examples

Construction Risk some examples

Everyone thought that they were

SAFE
BUT The Th h has Not been effectively dealt with

RISK

What is JH 143 Warranty Risk Assessment ?

Introduced in 2003 by the Joint Hull Committee at Lloyds A survey of the shipyard before construction or repairs - to evaluate the shipyard Insurers have demanded that surveys to be completed before providing any form of coverage Surveys to be carried out by independent parties All the surveyors recommendations to be implemented by shipyards Underwriters can request for additional surveys during construction Shipyards are graded according to the findings

What does JH143 survey covers ?

JH 143 Grading

From experience, the key learning points from JH 143 surveys are :
The management of sub contractors Housekeeping H k i and d cleanliness l li Hot work management Fire prevention and fighting Top management involvement

Agenda
Risk Profile of Shipbuilding p g yards y Present market conditions Risk Assessment of Shipbuilding yards Key learning points from JH 143 surveys

Conclusions
Claims on the rise vs Increasing premiums Vessel current value difficult to assess Underwriting capacity reduced Risk assessment of shipyards py is becoming g popular p p

Questions and Discussions

A master would not considered to have sailed the ocean until he has his deck washed every season

THANK YOU FOR YOUR ATTENTION

Tang Sau Weng Managing Director CSL Global - Asia