Hellenic results outline threats

HELLENIC RESULTS OUTLINE THREATS

Annual results for the Hellenic War Risks Association released this week show the scale of the threat to the shipping industry from piracy in particular. 2008's surge in pirate activity off the Somali coast saw over 100 attacks according to IMB figures, half resulting in seizure, but by the middle of this May there have been a further 114 reported hijack attempts, 29 of them successful despite naval forces operating in the area. Five vessels covered by the Hellenic were attacked in 2008. Three were repelled but two were seized in the Indian Ocean more than 250 miles out to sea within days of each other. Armed men forced them to sail to the Somali coast, where both were held for over two months. The Hellenic assisted owners with negotiations which eventually resulted in the safe release of ships, crews and cargoes. This year so far, there have been eight attacks and five seizures of Hellenic-entered vessels. Three have been released.

Following international initiatives, more naval forces were deployed in the region during 2008. An Internationally Recommended Transit Corridor (IRTC) was established and an EU naval force, coalition task forces and other navies provided protection to merchant shipping. The Association has encouraged owners to use the IRTC and to put defensive measures in place on board in Somali waters; to register with the EU Naval Force"s Maritime Security Centre - Horn of Africa (MSC-HOA); and to participate in the Royal Navy"s Maritime Trade Organisation"s voluntary reporting scheme.

Responding to developments during 2008, London market underwriters added Gulf of Aden transits to the list of Additional Premium areas and extended the existing Somali AP areas in May. With no prospect of any short-term improvement, the Association started charging members Additional Premiums for ships transiting the Gulf of Aden and parts of the Indian Ocean from 1st January 2009. Hellenic said that economies of scale, have however, produced very competitive rates. In April 2009, this area was further extended to 600 miles from the Somalia coast into the Indian Ocean and as far south as the northern coast of Tanzania.

In August 2008, fighting between the Georgian military, separatists and Russian forces led to Georgia becoming an AP area. In September, oil installations in Nigeria again came under attack. In Sri Lanka, fighting between government forces and the Tamil Tigers escalated and two merchant ships were attacked in October. Tensions in and around the Gaza Strip rose, particularly in December when Israel began a ground offensive. AP rates in all four areas increased during the year, although those for Georgia reduced as the situation appeared to ease. These four areas remain subject to Additional premium.

Overall, the Hellenic made a small loss, amounting to 2 percent of its cash reserves, as a result of the collapse in global stock prices last year. Contributions and premiums were US$24.7m, compared with US$15.8m in 2007. By the end of the year, reserves stood at US$46.3m. The number of ships entered with the Hellenic increased very slightly over the year to 2,283 compared with 2,228 twelve months earlier.

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