American Club Circular No. 12/13 1 APRIL 2, 2013 CIRCULAR NO. 12/13 TO MEMBERS OF THE ASSOCIATION Dear Member: THE INTERNATIONAL GROUP OF P&I CLUBS: 2012/13 ANNUAL REVIEW The International Group of P&I Clubs, of which the American Club is of course a member, has very recently published its 2012/13 annual review, a copy of which is attached for Members’ ready reference. The document is available on the International Group’s website at www.igpandi.org and is also being posted on the Club’s own website at www.american-club.com. It contains a review of several of the most important issues with which the International Group has been collectively engaged over the preceding twelve months. It is hoped that Members will find it to be of considerable interest speaking, as it does, to the very broad range of activity with which the Group concerns itself on behalf of the shipping community throughout the world. Yours faithfully, Joseph E.M. Hughes, Chairman & CEO Shipowners Claims Bureau, Inc., Managers for THE AMERICAN CLUB Annual Review Chairman’s statement 2 – 3 Executive Officer’s statement 4 – 5 Pooling and Reinsurance 6 – 7 Large Casualty Review 8 – 9 Piracy 10 – 11 Sanctions 12 – 13 Solid Bulk Cargo Liquefaction 14 – 15 Maritime Labour Convention 2006 16 – 17 European Union Passenger Liability Regulation - 329/2009 (PLR) 18 1 The world merchant fleet currently exceeds 85,000 vessels. Key facts 13 principal underwriting Clubs make up the International Group of P&I Clubs. Individually competitive, the International Group of P&I Clubs collectively is a force for security and stability in international trade. The International Group Clubs provide protection and indemnity cover for approximately 90% of the world’s ocean-going tonnage. Total entered owned tonnage in Group Clubs is now just under 1 billion GT. Through unique pooling and reinsurance arrangements Group Clubs provide an unparalleled cover for the victims of maritime incidents worldwide. Governments, maritime organisations and authorities around the world recognise the strength of the Club system and the Group. 2 Chairman’s statement For shipowners, 2012 proved to be another very challenging year with very few vessel sectors unaffected by the continuing global recession in the shipping industry. The Clarksea Index reflected a continuing downward cycle, averaging just below US $10,000/day in the year to December 2012. This is down 20% from 2011 and, in many cases, earning levels are insufficient to cover vessels’ operating expenses. Meanwhile strong fleet growth continues, with Clarkson reporting an increase of over 5% in the first 10 months of 2012, and an estimate of 6% for the full year – making an aggregate growth of 41% for the world fleet since 2007. More positively, the forecast is for a decline in the rate of growth and a reduction in new building deliveries from the high of 2012. 2012 also saw growth in world trade, and an increase in seaborne trade of over 4% across all vessel sectors. Despite all of this, it is realistic to expect that 2013 will be another tough and challenging year for the shipping industry. Claims trends Clubs have continued to face significant levels of attritional claims within their retentions up to $8m, but the major concern has also been a very substantial escalation in cost of large casualty incidents. The impact of those claims has been thrown into very clear focus by the grounding of the RENA and the subsequent wreck removal operation, and the COSTA