The Insurer

Not only must they heed what is happening to interest rates and forecasts of the stripe that one quarter of the world’s containership fleet will be in layup by 2011, but they must monitor the health of their insurers, and even what politicians are going to do about offshore jurisdictions.

Issues that at first glance seem rather distant from waterfront enterprises could substantially affect their finances and balance sheet security. We are used to talking in trillions these days, but the loss in a single quarter of $61.7bn by the world’s largest insurer, AIG, was staggering, and it was not all from its hapless financial products division either.

While nowhere on the same scale, the financial woes that are plaguing the mighty reinsurer Swiss Re and have led to an executive shake-up are worrying too.

All this means that brokers and their ports clients have to make some pretty tough judgments about the longevity of insurers and reinsurers. No-one wants to be told one bright morning that their insurer has gone out of business. It is little wonder that buyers are striving to syndicate their risk more widely.

Fortunately, there is some reassurance in the fact that the US Congress has, albeit reluctantly, bailed out AIG again, that Warren Buffett has invested in Swiss Re and reinsured its loss reserves, that operations at Lloyd’s are providing the security for various ventures in the ports sector, and that there is a viable mutual, TT Club, prominent in the speciality.

Nor is it all gloom on the company front: one insurer that has recently been a challenger in port cover provision, RSA, continues in good shape, now at a safe distance from some disastrous strategic decisions a decade ago that forced it to undergo painful divestments; AXA Corporate Solutions is very happy with its marine performance; and Allianz Global Corporate & Specialty, with clients including ports, and harbour authorities, has just had a comfortably profitable year, despite a bottom-line loss at the parent Allianz group.

We cannot breathe easily yet, however. The Obama-Brown verbal assault on offshore financial centres could rattle the tax-friendly bases of many insurance and reinsurance operations, although the rhetoric remains to be tested.