3. Marine risks

The Group writes a broad account of marine risks with maximum lines as follows:

Marine classes

	2006 gross premium £m	Current maximum line size £m	2006 average line size £m
Hull	15	10	1.0
Cargo	17	17	2.3
Energy	40	20	2.5
War and terrorism	21	17	6.3
Specie	8	34	8.2
Bloodstock	14	4	0.5
Yacht (hull and liability)	19	4	0.9
Liability	17	57	3.3

Notes:

1. Limits are set in US dollars converted at a rate of exchange of £1 = US$1.5 and therefore currency rate of exchange changes may increase or reduce the sterling limits.
2. Maximum line size is after business written and ceded by specific proportional treaties to Amlin Bermuda Ltd.
3. Premiums are stated net of acquisition costs.

The hull and cargo account is worldwide and property damage to ships and loss or damage to a large variety of cargo or goods in transit. The hull account can include machinery breakdown and the account written by Amlin is generally targeted towards smaller brownwater vessels and fishing boats. These accounts can be impacted by attritional claims of a small size as well as a single individual large claim. The cargo account in particular could also be involved in a major natural catastrophe loss.

The energy portfolio is mainly offshore rig and construction policies which may be impacted by large individual claims but is also exposed to severe catastrophe losses in areas such as the North Sea and Gulf of Mexico. The account includes control of well to limit loss of oil and avoid pollution and also some business interruption cover which indemnifies companies for loss of production.

War business includes aviation, marine and on land terrorism coverage and is therefore exposed to single incidents or a series of losses arising from concerted action. A small amount of political risk, confiscation and contract frustration is written.

Specie business consists of the insurance against damage or theft to fine art, the contents of vaults and other high value goods including jewellers block and cash in transit. The fine art may be shown at exhibitions which have very high aggregate values at risk. It is therefore subject to a frequency of small claims and also large individual losses. Some specie is written in catastrophe zones e.g. California.

The bloodstock account protects for death, illness or injury to horses mainly in the UK but business from the USA, Australia and South Africa is also written. This covers racing and eventing horses or breeding studs. The average value insured is below £1 million but there is the potential for an aggregate loss such as a stable fire which could cause multiple claims.

Yacht business covers property damage and third party injury for small leisure boats and craft. The bulk of the account is smaller value yachts in UK and Europe and there is an expectation of a large number of small claims. Third party liability yacht claims arise from injury or damage caused by one of our policyholders. There is also the potential for a large catastrophe loss such as a UK windstorm where there are large aggregate sums insured in coastal regions such as southern England.

The marine liability portfolio is written to protect ship-owners, harbours, charterers and energy companies against damage or injury to third parties. This includes the potential for pollution claims. The account could suffer a large catastrophe incident from a collision causing death of crew and passengers or an oil or chemical spill which could require large clean up costs.

© Copyright Amlin 2006