Seeking a Rising Tide.

After more than a decade of treacherous results, marine insurers are facing a sink-or-swim reality.

When the Liberian-owned tanker the Westchester ran aground in late November spilling a half-million gallons of crude oil into the lower Mississippi River, it was reported as the largest oil spill in the last five years. This incident and its more famous disaster forebears--the sinking of the Titanic and "The Perfect Storm's" Andrea Gail--illustrate that the practical need for marine insurance is often encased in the romance and adventure of the sea.

In reality, however, the marine insurance market is having problems staying afloat because of competitive market conditions and underpricing, said the outgoing chairman of an industry trade group. During remarks at the annual meeting of the American Institute of Marine Underwriters in November, James A. Zrebiec described the marine insurance market as desperate, and he warned that only "the smartest, the economically healthiest, the quickest and the most highly skilled" would survive in this lean and mean market.

Marine insurance is a tiny section of the property/casualty market--reporting about $1.7 billion in 1999 premiums written in the United States, compared with the overall property/casualty premium total of $286 billion, according to the institute and A.M. Best Co. data. The marine insurance market includes coverage for ocean cargo, charter boats, physical damage to the boat's hull, tugs, supertankers and pleasure craft. The largest segment in the line is cargo at 39%, followed by yacht at 21%.

Yacht insurance is the fastest-growing line in terms of premium over the past five years and is the only segment to register growth during that period, Zrebiec said.

Atlantic Mutual Cos. illustrates that point, with a 40% growth rate in yacht coverage in 2000 over its 1999 numbers. Ray Martino, vice president of Atlantic Mutual's marine division, points to the strong U.S. economy as fodder for the steady growth in the division's coverage of yachts worth up to $40 million. "Consumers have more disposable income today and are playing harder, too," he said.

Even the top writers of marine coverage gain only a small portion of their overall company premiums from this line. Marine coverage makes up only 2.4% of No. 1 marine writer CNA Insurance Cos.' premiums and 1.6% of No. 2 American International Group Inc.'s premiums, according to A.M. Best Co. data.

Marine insurance premium dropped 4.1% between 1998 and 1999--the third straight year of decline. This performance must improve, or the lines will be dropped by parent companies, warned Zrebiec, who is chairman of International Marine Underwriters, a member of CGU Insurance Group.

"As a specialty line with little synergy with other commercial business, property/casualty company executives naturally expect ocean marine to outperform conventional lines--or we will become expendable," Zrebiec said. "Unfortunately, our results have dragged slightly behind the business as a whole." Institute members' combined ratio was 108.6 in 1999, compared with the property/casualty industry's 107.9.

Martino doesn't see a quick turnaround for the marine insurance business. "It's been struggling for the last 15 years; 2000 will be a disaster with significant changes occurring in the marketplace--as dead wood being cut out, as a number of carriers cease to do business."

Deirdre H. Littlefield, divisional head of special lines in the Americas for Swiss Re, is a bit more optimistic. "Senior management and stockholders expect an adequate return on their capital. It's a very real issue; any of the senior members of the marine community that I speak to are very much aware of it. I think this is the right opportunity for this market to show its management what we can do and the kind of profits that can be generated. It's an excellent point in the marketplace," Littlefield said.

Raising Rates

Marine insurance's story parallels the U.S. commercial insurance market as a soft market that's learning to raise rates. "We've known all along that market share isn't important, and that making a profit is paramount. We're going through the same thing as standard commercial accounts, but we're six to eight months behind. We're no longer afraid of upsetting people about rate increases," said Richard DeSimone, president of global marine for The St. Paul. To back up that statement, DeSimone said St. Paul is averaging a 5% rate increase on renewal business. "People forgot how to underwrite in a soft cycle. The way to do it now is to understand the business we are covering, and if higher deductibles and limiting terms are appropriate, we need to take those actions along with charging the right price. We have to get back to Underwriting 101," he said.

Fred Robertie, executive vice president and chief operating officer of MOAC, part of CNA Maritime, the largest writer of ocean marine in the United States, said he agrees. "We're an eyelash compared to the property/casualty industry," Robertie said. "If lines can't make a reasonable profit, it's a distraction to the parent company. They don't need another loss leader."

Several parent companies already have cut loose underperforming marine insurance components. For example, St. Paul sold the renewal rights to its Midwest river transportation business in 1999, and XL Capital exited its marine cargo business at Lloyd's, choosing to concentrate on "those things that we do well," the company announced in October.

DeSimone said St. Paul exited the brownwater, or inland water, protection and indemnity business because it's highly competitive and has consistently produced poor results. Protection and indemnity insurance covers shipowners' liability to third parties for damage to their ship or cargo, offers an extension of the limitations of hull insurance and covers personal injury, illness, loss of life, collision liabilities excluded from hull policies and legal costs.

Instead, the company is focusing on marine liability, cargo and hull insurance other than river business. It writes brownwater hull for tugs and barges and liability coverage for shipbuilders, stevedores and shipyards. On the protection and indemnity (P&I) insurance side in brownwater marine, there are more crew injury claims, as exemplified by P&I combined ratios running in the 180s, DeSimone said. The running aground of the Westchester is an example of the high costs and risks identified with this coverage. Two Norwegian insurers, GARD P&I and Unitas, are facing millions of dollars in cleanup costs and hull repair on the Westchester, said Andy Garger, vice president-legal for the Water Quality Insurance Syndicate. The syndicate insures certain pollution liabilities for about 40,000 vessels, of which 300 to 400 are involved in pollution incidents in any given year.

St. Paul's global marine division had net written premiums of $17 million in the third quarter and continues to push for price increases. This line showed improvement, although it's recovering more slowly than other St. Paul lines, according to a Credit Suisse First Boston report on the company's third-quarter results. The company has decided to hold the line on growth, though St. Paul believes it's a good long-term niche business, said Credit Suisse First Boston.

Rich History

In the broad scope of world economics, Martino of Atlantic Mutual considers marine insurance to be extremely important. "It's the lubricant to allow international trade to flow: the great enabler," he said. Although some people point to Lloyd's as the originator of marine insurance, Martino said he's heard stories of it dating back earlier than the 1600s to China. As farmers moved goods across the rapids of the Yangtse River, one in 10 would lose their goods, until they learned to spread their goods among 10 boats, thus spreading their risk. Martino couldn't point to the source of the tale, or even if it's based on fact. "But if it isn't true, it ought to be," he said.

And when talking to Atlantic Mutual about marine insurance, it's hard not to stumble into a conversation about its most famous insured--the Titanic. The insurer paid $100,000 in hull coverage a week after the tragedy in April 1912 and has a copy of the original insurance policy on display in its Madison, NJ., headquarters. Today, Atlantic Mutual handles ocean marine and inland marine in one department, with ocean marine the larger business of the two. It's the 15th-largest ocean marine insurer with 2.1% market share and $36 million in direct premiums in 1999, according to A.M. Best Co. data.

Present Troubles

Although the entire property/casualty industry's combined ratio is expected to improve slightly this year, Zrebiec predicts that marine will deteriorate by a few points. In light of this prediction, he said the industry is lucky to have escaped major disasters. In addition, a robust domestic economy and increasing world trade helped to avoid "truly catastrophic results. Clearly, it's been the intense price competition fueled by overcapacity that has generated prices below reason," he said.

Todd Bault, an equity analyst with Sanford C. Bernstein & Co., said ocean marine, like standard commercial lines, is cyclical in nature and is no longer considered an exceptionally specialized line. Because it's one of the oldest insurance lines, many companies have developed expertise in writing the business, which has added to a highly competitive market, he said.

On the bright side, Zrebiec said the hardening of commercial rates signals a turnaround for the marine industry Declining capacity and investment income in the marine line also mean a new focus on underwriting discipline. "In coming years, the P/C industry will see positive results, and I'm confident so, too, will the marine insurance industry," he said. "In the meantime, the legacy of the pricing strategies of the past will continue to plague our results."

Don't Go There

But the industry experts unanimously warn their troubled brethren not to expand their coverage into property to pump up profits. Marine insurance is basically an unregulated line of the industry and "could technically be stretched to include other things. In the past, when markets hardened, the brokers' response was to look to marine to hide business that historically would go to the property market at a higher price," Robertie said. Another way to see it is "covering the sheep until the consumer wears the sweater," DeSimone said. But he points out that the largest industry losses in marine insurance in the last 15 years were from covering property. During the Northridge earthquake in 1994, a marine insurer had to pay $50 million on one policy that was written to cover goods during transit, but stretched the coverage to include storage in a warehouse that was damaged during the earthquake. "We get full of ourselves and get away from our expertise. We're not property underwriters; we're motivated to write in that area, but not educated," said Atlantic Mutual's Martino.

Quality Control

The marine insurance industry's underpricing has led to criticism that even bottom-drawer vessels and cargo owners are benefiting from the soft-pricing market. This led to a U.K. shipping minister's comment at a meeting in Athens this fall: "There would not be a problem of substandard shipping if nobody was prepared to insure it."

While acknowledging that some high-risk vessels and cargo owners have taken advantage of low pricing, "American underwriters have not typically been the world's bargain-basement market," Zrebiec said. When gathered around the water cooler, global marine insurers worry about the quality of the staff of their policyholders, Martino said. The fishing and tanker industries are full of workers who are undereducated and deal with long hours of hard work. "This is a critical issue for ocean cargo and hull," he said.

A solution to the problem of insuring high-risk foreign vessels was offered by Rear Adm. Robert C. North, assistant commandant, U.S. Coast Guard, when he addressed the American Institute of Marine Underwriters. North announced a Coast Guard initiative that would eliminate substandard shipping and reward high-quality vessels. Foreign ships earning the Qualship 21 certificate could be singled out by insurers as good risks. North said vessels from Scandinavia and the United Kingdom would qualify now. The Coast Guard also would like to form a partnership with the marine insurance industry to swap statistics and work on risk-assessment programs, North said.

As for the future, industry leaders see the need to balance raising their rates with rising reinsurance costs. But it's not all bad news, as DeSimone sees it. "World trade is expanding, and we have a strong economy. These are opportunities for committed marine underwriters. It's a good time," he said.

                       1999 Top Ocean Marine Writers
                  Ocean marine insurance covers damage or
                   destruction of a ship's hull and the
                 ship's cargo in the event of the insured
                ship colliding with another ship or object,
             sinking, capsizing, experiencing fire or piracy.
                                         1999       %
                                       Direct Premium % Market Share
Rank Company/Group                   Premiums  Change           1999 1998
 1   CNA Ins Cos                     $239,438    -1.3           13.8 13.4
 2   Amer Intern Group                174,942     1.5           10.1  9.5
 3   Royal & SunAlliance              110,422   -16.6            6.3  7.3
 4   St Paul Cos                      102,033   -14.0            5.9  6.5
 5   CGU Group                         88,235     0.6            5.1  4.8
 6   Ace INA Group                     87,523     1.5            5.0  4.8
 7   Allianz of America                76,780     5.5            4.4  4.0
 8   Zurich US Group                   72,702    44.6            4.2  2.8
 9   Chubb Group of Ins Cos            71,894    -9.8            4.1  4.4
10   Reliance Ins Group                55,171   -26.4            3.2  4.1
11   Travelers PC Group                53,504    -7.5            3.1  3.2
12   Liberty Mutual Ins Cos            46,762     3.0            2.7  2.5
13   Great Amer P&C Group              45,279    11.8            2.6  2.2
14   XL America Group                  37,716    46.6            2.2  1.4
15   Atlantic Mutual Cos               36,218     5.1            2.1  1.9
16   New York Marine Group             34,727   -18.8            2.0  2.4
17   Underwriters Reins Group          31,290   -12.1            1.8  2.0
18   Amer Steamship Owner              30,004     2.8            1.7  1.6
19   Hartford Ins Group                25,267    -1.7            1.5  1.4
20   Navigators Group                  24,449    20.9            1.4  1.1
21   State Farm Group                  19,587     4.4            1.1  1.0
22   USAA Group                        19,535     1.9            1.1  1.1
23   Kemper Ins Cos                    17,781     2.5            1.0  1.0
24   Tokio Marine & Fire USB Group     17,574    -5.8            1.0  1.0
25   Market Corp Group                 17,546   123.6            1.0  0.4
26   FM Global Group                   15,620   -17.6            0.9  1.0
27   Fairfax Fin (US) Group            13,184   -15.2            0.8  0.9
28   Allmerica P & C Cos               13,017     5.0            0.7  0.7
29   HCC Ins Holdings Group            10,922   -55.1            0.6  1.3
30   Seaworthy Ins Co                  10,207    25.8            0.6  0.4
31   Sentry Ins Group                   8,159    17.5            0.5  0.4
32   Axa Global Risk US Group           7,602    -7.5            0.4  0.5
33   Koa Fire & Marine USB              6,841    -6.4            0.4  0.4
34   Yasuda Fire & Marine               6,500     1.4            0.4  0.4
35   RLI Group                          6,002   434.9            0.3  0.1
36   Amer Modern Ins Group              5,921    77.5            0.3  0.2
37   Highlands Ins Group Inc            5,856   -64.0            0.3  0.9
38   Nissan Fire & Marine USB           5,485     6.6            0.3  0.3
39   W R Berkley Corp Group             5,313    20.6            0.3  0.2
40   Allstate Ins Group                 5,141    14.3            0.3  0.2
41   Amica Mutual Ins Co                4,736     2.7            0.3  0.3
42   Ingram Industries Group            4,689   163.3            0.3  0.1
43   Frontier Ins Group Inc             4,585   -26.6            0.3  0.3
44   Mitsui Marine & Fire of America    4,343   -15.9            0.2  0.3
45   Samsung Fire & Marine USB          4,091    -9.0            0.2  0.2
                                                  % of
          Adjusted Loss Ratio [1]              Company
Rank 1997                    1999  1998  1997 Premiums
 1   12.9                    51.5  74.1  44.5      2.4
 2   10.1                    79.4  65.2  61.9      1.6
 3    8.0                    66.8  65.7  74.0      2.7
 4    6.7                   102.3  84.7  65.1      2.0
 5    5.2                    56.4  62.6  49.1      2.0
 6    4.5                    75.6  51.5  51.1      3.6
 7    4.1                   112.7  97.0  80.6      1.6
 8    3.1                    83.0  71.9  55.7      1.4
 9    4.3                    39.6  68.9  45.0      1.4
10    4.0                    76.1  69.9  70.0      1.4
11    2.7                    68.3  74.7  63.2      0.6
12    2.6                   123.4  51.2  74.3      0.5
13    2.4                    38.3  63.6  55.3      1.5
14    1.5                    86.6  63.6  70.9     12.5
15    1.9                    44.2  74.3  52.7      4.7
16    2.9                    60.6  56.3  30.0     70.1
17    1.1                   107.5  87.0  79.9     22.7
18    1.4                    91.7  79.1  18.8    100.0
19    1.5                    31.5  49.6  27.5      0.4
20    1.0                    73.0  87.6  69.7     56.0
21    1.0                    42.5  52.0  46.4      0.1
22    1.0                    50.9  59.0  39.7      0.4
23    0.8                    42.0  69.2  48.8      0.6
24    1.1                    67.9  53.8  63.6      8.2
25    0.4                    81.7  40.0  53.2      3.1
26    0.9                   -99.9  59.8 502.5      1.8
27    0.9                   119.2  21.9 131.5      0.6
28    0.6                    81.9  79.5  75.5      0.6
29    0.5                    82.6  61.9  79.2      3.6
30    0.4                    73.3  65.7  63.6    100.0
31    0.5                    80.9  96.7  63.2      0.7
32    0.4                   118.7 262.7  71.8     13.2
33    0.4                    52.0  64.8  34.6    100.0
34    0.3                    48.3  81.1  44.2      5.7
35    0.0                    67.9 185.6   0.0      1.8
36    0.0                    36.1  68.5   0.0      1.4
37    1.1                   114.0  94.7  59.1      1.6
38    0.3                    46.4  97.3  21.5    100.0
39    0.2                    60.3  43.7  56.5      0.4
40    0.2                    38.6  47.2  34.0      0.0
41    0.3                    55.0  40.5  46.3      0.5
42    0.1                   671.1 999.9 353.3      3.3
43    0.4                   228.7 100.0  58.3      0.5
44    0.3                    12.4  41.9  42.6     57.1
45    0.2                    52.8 139.6  51.8    100.0
(1.)Adjusted loss ratio is direct losses incurred
divided by the difference between direct premiums
earned and dividends paid to policyholders.
46 Swiss Re America Group                $3,984   3.3   0.2   0.2   0.3  92.5
47 Prudential of America Group            3,518  -6.6   0.2   0.2   0.3  16.4
48 Aon Corp Group                         3,341  93.8   0.2   0.1   0.0 107.2
49 Associates First Capital               3,285 -60.4   0.2   0.5   0.6  14.6
50 LG Ins Co Ltd USB                      3,078   0.2   0.2   0.2   0.2  30.6
51 Sumitomo Marine & Fire USB             3,027  14.3   0.2   0.1   0.1  64.4
52 Vanliner Ins Co                        2,928  19.7   0.2   0.1   0.1  65.3
53 State Auto Ins Cos                     2,842  -3.9   0.2   0.2   0.2  26.5
54 Windsor-Mt Joy Mutual                  2,668  -0.8   0.2   0.1   0.1  55.7
55 Berkshire Hathaway                     2,531 -26.8   0.1   0.2   0.2  83.7
56 Old United Casualty                    1,948  23.7   0.1   0.1   0.1  68.8
57 Winterthur Swiss Group                 1,922 -40.2   0.1   0.2   0.2  82.7
58 Unitrin Inc                            1,547  -5.7   0.1   0.1   0.1  21.7
59 Nationwide Group                       1,532  33.9   0.1   0.1   0.0 140.3
60 Alaska National Ins Co                 1,416  -0.7   0.1   0.1   0.1  12.8
61 Nippon Fire & Marine USB               1,329  12.2   0.1   0.1   0.1  46.1
62 Generali USB                           1,312  23.0   0.1   0.1   0.2 123.6
63 Country Cos                            1,310  -5.5   0.1   0.1   0.1  38.7
64 MetLife Auto & Home Group              1,190   0.1   0.1   0.1   0.1  54.5
65 Nat Security Group Inc                 1,168  -0.2   0.1   0.1   0.1  35.5
66 Red Shield Ins Co                      1,017   4.0   0.1   0.1   0.0  31.5
67 Lancer Ins Co                            948   9.3   0.1   0.0   0.0  21.9
68 Bankers Ins Group Inc                    826   3.2   0.0   0.0   0.0  30.1
69 Trenwick Group                           789 -57.3   0.0   0.1   0.2 358.3
70 United National Group                    783  14.8   0.0   0.0   0.0  45.9
71 Hyundai Marine & Fire USB                721  13.1   0.0   0.0   0.1 -11.8
72 Penn Lumbermens Mutual                   678 -62.4   0.0   0.1   0.1 -99.9
73 American National Financial Group        648   4.8   0.0   0.0   0.0  35.0
74 Chiyoda F&M Ins Co of America            451 -22.0   0.0   0.0   0.0  12.0
75 Motorists-American Hardware Group        395   6.9   0.0   0.0   0.0  47.1
76 Sorema NA Group                          333 -66.6   0.0   0.1   0.1  81.3
77 Electric Ins Co                          323   2.7   0.0   0.0   0.0  24.3
78 Assurant Group                           297 -50.8   0.0   0.0   0.0  48.3
79 Umialik Ins Co                           291 -26.4   0.0   0.0   0.0  45.2
80 Providence Washington Cos                286  -5.8   0.0   0.0   0.0  12.5
81 Acceptance Ins Cos                       273 -98.0   0.0   0.7   0.1 -21.7
82 Harleysville Ins Cos                     270 -80.0   0.0   0.1   0.2 456.7
83 HDI U S Group                            269 -45.8   0.0   0.0   0.3 379.3
84 White Mountains Ins Group                259 -72.1   0.0   0.1   0.1 -99.9
85 Hastings Mutual Ins Co                   254  -8.0   0.0   0.0   0.0  69.3
86 Germania Mutual Group                    237  22.3   0.0   0.0   0.0  26.4
87 Farmers Ins Group                        227 175.8   0.0   0.0   0.0  -9.0
88 Safeco Ins Cos                           117  21.0   0.0   0.0   0.0 -99.9
89 Providence Mutual Group                  114   9.6   0.0   0.0   0.0  16.8
90 Beacon Ins Group                          45   4.3   0.0   0.0   0.0  31.0
   Total U.S. Cos.                   $1,740,440  -4.0 100.0 100.0 100.0  67.8
46 -17.0  38.8   2.3
47  42.1  44.3   0.2
48   6.3   6.1   0.5
49 137.2 102.5   0.5
50  27.8  29.5  56.0
51  61.3  36.3   5.0
52  63.8  62.8   4.2
53  48.9  29.8   0.4
54  43.0  33.1  17.6
55  52.2  52.4   0.0
56  73.9  52.5   4.9
57  53.5  90.5   0.1
58  39.9  41.2   0.2
59  60.0  60.0   0.0
60  44.1  35.2   2.7
61  16.7  31.0  13.4
62 153.1  70.0   1.2
63  26.8  37.3   0.2
64  23.2  77.5   0.1
65 126.9  36.4   5.5
66  13.0  28.8  10.6
67  23.8  12.3   0.6
68  21.2   9.6   0.3
69  82.9 121.0   0.5
70  61.6 147.0   0.3
71 173.3   5.3 100.0
72 -99.9 -31.9   1.3
73  45.0  75.9   0.1
74 194.8  29.7 100.0
75  52.2  35.9   0.1
76 137.2  47.6   0.7
77  35.8  30.6   0.1
78  64.3   5.8   0.0
79  42.5  46.0   2.6
80  10.1   7.9   0.2
81  59.9  31.8   0.0
82  -9.3  95.6   0.0
83  93.3  85.3   0.0
84 191.8   0.7   0.7
85  74.7  31.1   0.1
86  41.4  25.3   0.2
87  27.7  16.5   0.0
88  59.4  72.1   0.0
89  28.0  39.6   0.4
90  24.1  58.8   0.1
    70.9  63.1   0.6
(1.)Adjusted loss ratio
is direct losses incurred
divided by the difference
between direct premiums
earned and dividents paid
to policyholders.
                     1999 Premium Distribution and Top
                       Ocean Marine Writers by State
                                  ($000)
                             1999  % of      %
                No. of     Direct  U.S.  Prem.
State      Rank   Cos.   Premiums Total Change ALR [1] DDCCE [2]
Ala.         20    138    $17,706   1.0    5.5    37.0       6.0
Alaska       29     83     10,530   0.6    6.5    45.1       5.5
Ariz.        33    105      7,379   0.4   25.5    47.7       2.1
Ark.         37    119      4,725   0.3   16.2    88.3       3.4
Calif.        2    170    162,363   9.3   -7.8    71.0       4.4
Colo.        36    110      4,869   0.3   15.2    34.6       2.5
Conn.        15    110     31,426   1.8   -8.4    47.6       4.1
Del.         41    102      2,729   0.2   -2.9    20.9       1.6
D.C.         45     81      1,317   0.1  -19.2    15.0       1.6
Fla.          3    165    157,613   9.1    4.7    66.0       5.5
Ga.          18    137     23,593   1.4    0.4    44.0       7.4
Hawaii       32     79      7,636   0.4   15.5    39.1       4.7
Idaho        47     89        961   0.1   -8.1    10.7       3.5
Ill.          9    159     52,160   3.0   -6.4    57.3       5.1
Ind.         26    122     14,259   0.8   -2.9    35.1       4.6
Iowa         35    103      4,985   0.3   26.0    61.6       5.5
Kan.         40     95      2,930   0.2   55.1    82.0       1.9
Ky.          30    126      9,814   0.6   -2.2   102.9       6.8
La.           5    158    103,976   6.0  -16.6   100.8       9.9
Maine        22     99     17,575   1.0    8.9    66.4       4.1
Md.          11    137     35,123   2.0    7.5    63.8       3.1
Mass.         8    140     60,440   3.5    8.0    81.7       3.7
Mich.        13    132     34,684   2.0   10.0    51.6       4.1
Minn.        24    114     15,402   0.9    1.4    18.6       2.1
Miss.        27    125     13,536   0.8    9.3    81.1       8.5
Mo.          14    133     32,738   1.9   -7.5   103.6       9.7
Mont.        48     75        584   0.0   14.4    38.8       1.4
Neb.         38     91      3,553   0.2  -37.6   181.9       2.7
Nev.         39     85      3,138   0.2   24.6    40.3      13.4
N.H.         31     88      8,202   0.5   -5.0    53.7       6.2
N.J.          6    130     91,488   5.3   47.0    94.7       4.0
N.M.         46     80      1,035   0.1   50.9    81.7       2.4
N.Y.          1    185    355,680  20.4  -15.6    45.5       3.5
N.C.         19    135     22,291   1.3    8.4    53.5       4.2
N.D.         51     70        203   0.0    4.1   999.9       3.3
Ohio         16    149     29,163   1.7    9.6    71.1       6.9
Okla.        34    119      6,881   0.4   61.2    21.3       0.9
Ore.         21    129     17,666   1.0   -8.4    55.7       4.5
Pa.          10    159     40,604   2.3    1.7    59.7       2.9
R.I.         25    101     14,303   0.8    5.7    62.4       4.8
S.C.         23    117     16,299   0.9   14.1    72.0       4.9
S.D.         49     72        368   0.0    3.3   171.0       1.1
Tenn.        12    131     34,710   2.0    2.7   100.2       2.2
Texas         4    192    136,453   7.8  -18.5    88.8       5.4
Utah         42     96      2,610   0.1    7.6   109.3       1.6
Vt.          44     83      1,757   0.1    1.2    82.6       1.7
Va.          17    139     28,801   1.7   20.4   113.6       7.9
Wash.         7    153     80,521   4.6   -2.7    62.7       5.3
W.Va.        43     88      1,822   0.1  -15.2    44.2       9.1
Wis.         28    124     11,614   0.7   10.7    48.6       5.9
Wyo.         50     64        228   0.0   48.8     4.5       1.2
U.S. Total         362 $1,740,440 100.0   -4.0    67.8       4.9
           % Market Share                                         %
                    Agent     Direct                         Market
State          Writer [3] Writer [4] Leading Writer           Share
Ala.                 91.3        8.7 CNA Ins Cos               14.0
Alaska               89.5       10.5 Royal & SunAlliance       21.6
Ariz.                87.7       12.3 CNA Ins Cos               14.6
Ark.                 96.0        4.0 Axa Global Rsk US Group   15.4
Calif.               96.2        3.8 Amer Intern Group         13.9
Colo.                88.4       11.6 Zurich US Group           22.5
Conn.                90.0       10.0 CNA Ins Cos               16.8
Del.                 96.4        3.6 CNA Ins Cos               24.7
D.C.                 89.2       10.8 CNA Ins Cos               40.3
Fla.                 94.8        5.2 CNA Ins Cos               16.3
Ga.                  94.8        5.2 CNA Ins Cos               17.9
Hawaii               82.1       17.9 CNA Ins Cos               16.3
Idaho                76.2       23.8 USAA Group                19.2
Ill.                 93.7        6.3 CNA Ins Cos               12.3
Ind.                 97.1        2.9 Zurich US Group           25.5
Iowa                 93.7        6.3 Zurich US Group           19.7
Kan.                 95.7        4.3 Zurich US Group           16.8
Ky.                  97.0        3.0 CGU Group                 21.3
La.                  95.8        4.2 CNA Ins Cos               20.3
Maine                89.2       10.8 W R Berkley Corp Group    20.5
Md.                  96.2        3.8 Seaworthy Ins Co          29.1
Mass.                96.3        3.7 CGU Group                 17.3
Mich.                94.2        5.8 St Paul Cos               17.3
Minn.                93.7        6.3 Amer Intern Group         14.5
Miss.                95.9        4.1 Zurich US Group           17.5
Mo.                  95.4        4.6 St Paul Cos               34.7
Mont.                84.0       16.0 Hartford Ins Group        12.6
Neb.                 97.4        2.6 Undrs Reins Group         55.0
Nev.                 89.7       10.3 Zurich US Group           16.0
N.H.                 92.0        8.0 W R Berkley Corp Group    17.4
N.J.                 94.9        5.1 CNA Ins Cos               35.1
N.M.                 88.8       11.2 Zurich US Group           26.9
N.Y.                 95.7        4.3 Amer Intern Group         17.9
N.C.                 88.1       11.9 CNA Ins Cos               10.6
N.D.                 87.1       12.9 CNA Ins Cos               15.2
Ohio                 87.5       12.5 CNA Ins Cos               16.7
Okla.                94.0        6.0 Axa Global Rsk US Group   29.8
Ore.                 77.4       22.6 Liberty Mut Ins Cos       17.5
Pa.                  92.1        7.9 CNA Ins Cos               22.1
R.I.                 67.7       32.3 Liberty Mut Ins Cos       23.3
S.C.                 92.0        8.0 CNA Ins Cos               15.4
S.D.                 87.0       13.0 St Paul Cos               15.6
Tenn.                98.3        1.7 Amer Intern Group         42.5
Texas                77.7       22.3 State Farm Group          14.4
Utah                 85.9       14.1 Zurich US Group           14.6
Vt.                  93.8        6.2 CGU Group                 23.5
Va.                  93.8        6.2 CNA Ins Cos               19.3
Wash.                79.3       20.7 Liberty Mut Ins Cos       14.1
W.Va.                95.6        4.4 CNA Ins Cos               37.9
Wis.                 94.0        6.0 CNA Ins Cos               17.8
Wyo.                 87.2       12.8 Zurich US Group           21.3
U.S. Total           92.2        7.8 CNA Ins Cos               13.8
                                        %
                                   Market
State      Second Leader            Share
Ala.       St Paul Cos               13.7
Alaska     Ace INA Group             15.6
Ariz.      Amer Intern Group         10.6
Ark.       St Paul Cos               12.8
Calif.     Allianz of America        12.2
Colo.      Royal & SunAlliance       15.0
Conn.      Travelers PC Group        11.0
Del.       CGU Group                 12.9
D.C.       FM Global Group            8.7
Fla.       Ace INA Group             14.6
Ga.        Zurich US Group           11.3
Hawaii     Sentry Ins Group          13.9
Idaho      Zurich US Group           16.8
Ill.       Royal & SunAlliance       11.3
Ind.       CNA Ins Cos               19.7
Iowa       CNA Ins Cos               12.9
Kan.       Chubb Grp of Ins Cos      15.5
Ky.        CNA Ins Cos               16.2
La.        Reliance Ins Group        12.9
Maine      CGU Group                 16.1
Md.        CNA Ins Cos               16.9
Mass.      Amer Intern Group         15.0
Mich.      CNA Ins Cos               17.2
Minn.      St Paul Cos               13.6
Miss.      Amer Intern Group         12.9
Mo.        CNA Ins Cos               16.9
Mont.      USAA Group                12.3
Neb.       CNA Ins Cos               13.3
Nev.       CNA Ins Cos               13.8
N.H.       Royal & SunAlliance       16.6
N.J.       Royal & SunAlliance        9.0
N.M.       CNA Ins Cos               12.5
N.Y.       CNA Ins Cos               10.9
N.C.       Royal & SunAlliance        9.2
N.D.       Travelers PC Group         9.5
Ohio       Ace INA Group             15.5
Okla.      Zuirch US Group            8.3
Ore.       St Paul Cos                8.7
Pa.        Royal & SunAlliance        9.0
R.I.       Travelers PC Group         8.5
S.C.       Ace INA Group             10.5
S.D.       Winterthur Swiss Group    10.6
Tenn.      Ingram Industries Group   13.5
Texas      Amer Intern Group         13.8
Utah       Ace INA Group             14.4
Vt.        Royal & SunAlliance       14.6
Va.        Vanliner Ins Co           10.2
Wash.      St Paul Cos                9.7
W.Va.      Royal & SunAlliance       11.9
Wis.       Chubb Group of Ins Cos    14.4
Wyo.       Hartford Ins Group        16.8
U.S. Total Amer Intern Group         10.1
(1.)ALR: Adjusted loss ratio is direct losses
incurred divided by the difference between
direct premiums earned and dividends paid to
policyholders.
(2.)DDCCE: Direct defense and cost-containment
expense ratio, formerly allocated loss adjustment
expense (ALAE).
(3.)Insurers that distribute primarily through
independent agents.
(4.)Insurers that distribute primarily through
a direct-selling system or an exclusive agency
system.

A New Captain On Board

Deirdre H. Littlefield was elected chairwoman of the American Institute of Marine Underwriters last November. She is the first woman to hold that post in the organization's 102-year history. The New York-based AIMU is one of the major trade associations in the marine insurance field and has about 51 member insurance companies. Littlefield, who is divisional head of special lines in the Americas for Swiss Re, has spent her entire career in marine insurance, beginning with the Chubb Group of Insurance Cos. In a recent interview, she talked about the marine insurance industry and the role of women in it.

Q. You are the first woman to chair the American Institute of Marine Underwriters. Have any other women reached this status in marine insurance industry associations?

When I first started in the business and became involved with the AIMU, it was about 25 years ago. At that time, there were probably fewer than a half-dozen women involved in marine insurance, or in the AIMU at all. I'm now the chairwoman of the AIMU, and a woman [Grace Thomas of Atlantic Mutual Cos.] is the chairwoman of the Inland Marine Underwriters Association. You have the head of the Canadian Board of Marine Underwriters [Patricia Bodkin of Allianz Insurance Company of Canada], and Tina Tang [of Swiss Re] is the president of the Board of Marine Underwriters of San Francisco. I think there have been enormous advances made in the last 25 years, so we have a pretty good representation in the marine world.

Q. What are the challenges in the industry right now? I think there are both challenges and opportunities, and right now the opportunities probably outweigh the challenges. We are seeing the marine market changing radically with prices increasing, and the U.S. market, in particular, is in a very strong position to take advantage of that. The companies that most of the major marine writers work for are very strong organizations--well rated--and have significant depth that can support a marine organization. We have some of the most talented marine underwriters in the world at this point in our marketplace, so I see a tremendous amount of opportunity for the U.S. market to take advantage of what's going on. On the other side, we're seeing a London market that appears to be in significant disarray at this point in time. That affords U.S. underwriters and U.S. marine insurance companies, as well as brokers, opportunities. What we're seeing is a loss of a lot of the leaders in the London market. There is a signifi cant consolidation that's continuing, and of that smaller group there are even fewer who are viewed on the international scene as leaders. From what I'm hearing through intermediaries, the London market is being very slow to respond to this year's renewal season.

Q. Where do you think the marine insurance market will be five years from now?

It will be stronger than it's ever been. There will be further consolidation, and the remaining players will have invested money in their staff. Technology will enable them to reduce their costs and thereby increase their profitability.

Technology is a very important issue to AIMU members. The marine insurance business has always been a rather expensive business to run. There's a lot of paper, a lot of transactions and high transaction costs, and technology would certainly reduce costs. I think it's something the marine market, including reinsurance and brokers, is very interested in. What you'll see is a variety of coverages being sold online, certainly yacht insurance. Cargo insurance in particular is very labor intensive and very expensive because a lot of documentation needs to be issued. It has to be printed, distributed--all of that adds to costs. Using technology can certainly improve overhead expenses associated with areas like cargo and yacht insurance and reporting of claims. It hasn't happened yet, because companies themselves are at different points internally in embracing technology. There are international laws and requirements to get some of this lingo down and common, so all of that has created hurdles.