CLAIMS HANDLING

1. New registered claims

			2008	2009	2010	Increase Rate
Newly Registered Claims	Claims	All Policy Years	1,834	1,531	1,873	22.34%
		Current Policy Year	1,590	1,230	1,508	22.60%
	Claim Amount (in $,000)	All Policy Years	53,370	38,150	75,950	99.08%
		Current Policy Year	42,880	28,100	70,850	152.14%
	LOU issued		32	42	61	45.24%
	LOU Amount (in $,000)		43,140	23,090	29,330	27.02%

A. All policy years

In the 2010 policy year, the reported claims for all policy years totaled 1,873 (including newly registered claims for the 2010 policy year) with an aggregate claim amount of $ 75.95 million. This represents an increase of 22.34% in the number of claims and 99.08% in the claim amount, compared to the 1,531 claims and $ 38.15 million in the previous policy year.

B. Policy year 2010

There were 1,508 reported claims in the 2010 policy year with an aggregate claim amount of $70.85 million. This represents an increase of 22.6% in the number of claims and 152.14% in claim amount, compared to the previous policy year¡¯s 1,230 claims and $ 28.10 million claim amount.

C. Category of newly registered claims

In the 2010 policy year, the Club¡¯s direction, cargo liability, and crew illness remained the most frequent claim types occurring. Compared with that of the previous policy year, the Club¡¯s direction surpassed the cargo liability, and ranked the first place. The change is the result of large number of preloading surveys performed in this policy year, which increased by nearly 50% compared to that of the previous policy year. Crew claims stayed in third place.

Collision liability, cargo liability and crew claims became the incident types giving rise to the largest claims by value. Comparing to the 2009 policy year, collision liability surpassed cargo liability, and ranked the first place, which is the result of huge claims in collision cases, and crew claims remained in the third place.

Risk Type		Number of Claim 2009	Number of Claim 2010
1	Club¡¯s direction	424	620
2	Cargo	475	432
3	Crew	204	292
4	Loss of or damage to property	39	43
5	Collision	19	36
6	Personal Injury	17	21
7	Stowaways	12	19
8	Pollution	18	18
9	Fines	11	12
10	Wreck removal	6	6
11	Others	5	9
	Total	1,230	1,508

(in $,000)

Risk Type		Claim Amount 2009	Claim Amount 2010
1	Collision	3,810	33,680
2	Cargo	21,090	15,640
3	Crew	1,270	9,850
4	Wreck removal	150	6,430
5	Loss of or damage to property	770	2,510
6	Pollution	440	1,730
7	Stowaways	70	540
8	Sue and Labor	60	150
9	Personal Injury or death(other than crew)	380	140
10	Club¡¯s direction	10	50
11	Others	50	130
	Total	28,100	70,850

D. Arrest of ship and guarantee

In the 2010 policy year the Association arranged for securities in various forms for 61 entered ships for a total amount of $ 29.33 million. Compared to those provided last year, the number of guarantees increased by 45.24%, and the amount of the guarantees increased by 27.02%. Except for 7 cases where CPI¡¯s Letter of Undertaking amounted to 89% of the guarantees provided. This indicated that the Association¡¯s credit on an international level remained stable.

2. CLAIMS Settlement

Arrest / Guarantee Cases in $ ,000

Policy year	2006	2007	2008	2009	2010	¡À%
Number	49	53	32	42	61	45.24%
Amount	20,570	29,470	43,140	23,900	29,330	27.02%
Club LOU	82%	83%	91%	90%	89%	-1.1%

In the 2010 policy year, 1,767 claims occurred in various policy years were settled and closed. The total claim amount was $ 72.45 million whereas total net payment by the Association was $ 16.23 million. Compared to the 1,758 claims settled in the previous policy year, this represented an increase of 0.51% in the number of closed cases.

in $ ,000

Policy Year	2009	2010	¡À%
Number of claim	1,758	1,767	0.51%
Amount of claim	110,210	72,450	-34.26%
Amount of payment	17,540	16,230	-7.47%

Report on settlement of major claims

2005 policy year

<1> The M.V. Chipobrok Sun of Chinese-Polish Joint Stock Shipping Co. encountered heavy weather in the Bay of Biscay on 30^th Dec. 2005, while en route to Taiwan from Hamburg, Germany. The windmill blades carried on deck clasped and sustained damage. The vessel headed to Brest, France for reinforcement of the cargo. However, the surveyor commented that the cargo was not fit for continuing the voyage. The cargo was discharged at Brest. The shipper originally agreed to ship the cargo back to Hamburg, but later refused to do so, which resulted in the cargo being left in Brest for a prolonged time. The Association requested the consignee in Taiwan to authorize the shipowner to deal with the cargo. Finally the cargo was scrapped in Brest, making an end to the increasing storage cost. The claim for cargo damage and storage cost amounted to $1.388 million. The Association was able to settle the case with $185,000 through tough negotiation.

2006 policy year

<2> The M.V. ¡°You Shun¡± of Guangzhou Zhenxing Shipping Co. Ltd. collided with the HK flagged MV ¡°Chang Xing¡± near Guishan Island, Zhujiangdou. The collision resulted in water ingress into the engine room, causing the vessel to lose power. Salvage for the vessel was successful. Later, the salvor Guangzhou Salvage Bureau lodged suit for a salvage fee of RMB 16.67 million. The first instance court determined the shipowner should pay a salvage cost of RMB 6.82 million. The judgment of the first instance court was upheld by the appeal court. The Association assisted the Member to file a suit in Hong Kong against MV ¡°Chang Xing¡±. The case was settled with a recovery of $1.197 million for loss of property and $ 71,000 for the death and personal injuries of crew members. The Association discussed the distribution of funds with the Member and its H&M insurer, and reached an agreement that the Association reimbursed the Member $407,000 to close the case, which was a relatively good result in domestic vessel casualties.

<3>The M.V. ¡°Chipolbrok Moon¡± of Chinese-Polish Joint Stock Shipping Co. was loading at Antwerp on 16 August 2006, when a heavy cargo fell off the ship¡¯s crane operated by stevedore. The heavy cargo smashed onto the barge beside the vessel. The barge sank with one of the barge owners dying immediately upon impact. The Association provided 3 Letters of Undertaking in the aggregate amount of € 4.15 million in this case. The barge and the cargo were later salvaged. The parties involved lodged 20 lawsuits in the local court. The Association is currently handling the case. Under the Association¡¯s suggestion, the lawyer appointed by the Association gathered all the parties involved to negotiate a settlement agreement which distributed the liabilities according to proportion of fault. The agreement was reached with the shipowner paying € 110,000. The shipowner¡¯s share of compensation was paid by the port operator. Therefore, the case was closed free of cost to the shipowner.

2008 policy year

<4>The M.V. ¡°Hebei Century¡± of Hebei Ocean Shipping Co. Ltd. arrived Pohang, South Korea to discharge iron ore on 21^st Nov. 2008. The cargo was found wet damaged by sea water. Due to the sudden drop in iron ore price, the consignee refused to take delivery of the cargo. Later, it turned out that the wet damage only affected cargo in hold No.2 and No.3. The consignee had to resume the discharge. The quantity of affected cargo was 7,000 mts in total. The Association provided Letter of Undertaking in the amount of $500,000 to release the vessel. Later, the consignee put forward a claim for $ 500,000. The Association consulted with the surveyor and the major cargo owner in China, and obtained information that the quality of iron ore cargo would not suffer much damage from wetting by seawater. The case was finally settled for $50,000 through tough negotiation.

2009 policy year

<5> The M.V. ¡°Xiang Kun¡± of Shanghai Pu Hai Shipping Co. Ltd. carried 160 containers from South Korea to Russia on 23^rd July, 2009. The shipper held the original bills of lading due to a freight dispute with the consignee. Thus, the consignee could not take delivery of cargo, resulting in over $ 1.3 million storage charges in port and demurrage for containers. Moreover, the containers were in danger of confiscation. The Association appointed lawyers to actively defend the shipowner¡¯s interests in the lawsuit bought by the consignee in Russia. To avoid liability for releasing the cargo without production of bills of lading, the shipowner lodged suit in South Korea against the shipper and applied for preservation of property, following suggestions by the Association. In the end, the shipper was forced to compensate all costs and expenses the shipowner had incurred.

3. sPECIAL NOTES FOR CLAIMS INCURRED IN POLICY YEAR 2010

<1>Issues on carriage of dry bulk mineral fines which may liquefy

In recent years, several entered ships carrying mineral concentrates suspected with high moisture content, free-surface effect developed in hatches due to constant shifting at sea, resulting in serious marine casualties, such as capsizing of the vessel. These accidents brought huge financial loss as well as adverse social effects to the Members. The Association would like to bring the Members attention to the issue by briefly reviewing some typical cases.

a. The M.V. ¡°Chang Le Men¡± carried iron ore fines from New Mangola India to Bangladesh on 7^th September 2007. The vessel developed a list after leaving the port. The master had to ground the vessel to avoid capsizing. In order to re-float the vessel, the shipowner signed LOF 2000 contract with SCOPIC Clause. The Association arranged guarantee for $1.2 million under the SCOPIC Clause.

b. The M.V. ¡°Wen Qiao¡± capsized off the Wonsan anchorage, North Korea on 17^th September 2007, while carrying iron ore fines bound for Tianjin. One crew member died in the accident. Following the accident, serious oil pollution occurred. The Port Authority raised a huge claim for clean-up costs and fines, which amounted to € 2.05million. They ordered compulsory wreck removal of the vessel as well. The investigation after the accident indicated that the vessel sank due to high moisture of cargo and crew¡¯s fault in navigation.

c. The M.V. ¡°Heng Tai¡± capsized on high seas on 2^nd October 2007 while carrying iron ore from India to Bangladesh. The accident was due to shifting of the cargo at sea. Among the 28 crews on board, 26 were rescued and 2 died. The claims for death of crew, loss of the effects of seaman, repatriation cost, and cargo damage amounted to $ 1.58 million in total.

d. The M.V. ¡°NASCO DIAMOND¡± carried nickel ore from Kolonodale, Indonesia to Lianyungang ,China on 9^th Nov. 2010. The vessel lost contact with the shipowner south of Okinawa, Japan. The shipowner immediately notified the search and rescue team of Taiwan, Japan, and relevant authorities in China to search for the vessel and crew. The vessel was found sank with 2 crew member dead, and 20 missing. Only 3 crew members survived.

The safe carriage of cargo that may liquefy has become the focus of the marine insurance industry in recent years. During the few weeks around November 2010, several vessels sank after loading nickel ore from Indonesia. These serious casualties led to a huge loss of life and property, and made the safe carriage of mineral fines become a major area of concern yet again. The Association has issued 8 Club Circulars in recent years, providing Member with guidelines and suggestions from various aspects, such as loss prevention, legal issues and contractual issues.

The Association would like to remind all Members to pay attention to the above mentioned issues, take into consideration the danger and complexity in the carriage of such cargo, and ensure strict compliance with all the suggestions in the relevant Club Circulars. Members who are loading or plan to carry such cargo must contact the Association at the earliest opportunity, so that a local surveyor and/or an expert can be appointed to take sample of the cargo prior to the ship¡¯s arrival and send the sample to competent laboratory for analysis. Cargo that may liquefy is subject to the provisions of the SOLAS Convention and the IMSBC Code regarding the loading, discharging, trimming and carriage of such cargo. The master must ensure all the relevant provisions are strictly complied with when carrying such cargo. When necessary, the master can use the overriding authority under SOLAS to refuse or suspend the loading of cargo or other suggestions made by the Association, until the cargo is proved safe for carriage, or is discharged from ship, so as to avoid the occurrence of serious marine casualties.

<2> Collision Cases

In the 2010 Policy Year, several entered ships were involved in collision with fishing vessels. The Association would like to bring the Members attention to such accidents through a brief review of the following cases:

a. The M.V. ¡°Hua Hai Hang 1¡± was suspected of colliding with a fishing vessel on 6^th May 2010 near Quanzhou area, China. The fishing vessel sank with 9 fishermen missing. The Marine Safety Agency considered M.V. Hua Hai Hang 1 was the offending ship for the collision. The fishing vessel raised a claim of $2.6 million to cover crew death, wreck removal, and loss of vessel, etc.

b. The M.V. ¡°East Sunrise Guangzhou¡± was found to have collided with fishing vessel ¡°Lu Rong Yu 2548¡± by the VTS of MSA near Weihai, China in the early hours of 27^th Aug, 2010. The collision resulted in the death of one crew member, 4 crew members were missing, and 3 crew members were injured. The Association issued LOU for RMB 5.5 million in total to the next of kin of the crew members.

c. The owner of M.V. ¡°Tai GU Hai¡± received a telephone call from the MSA, informing them that the owner of fishing vessel ¡°Lu Wei Yu 0246¡± alleged that M.V. Tai GU Hai had collided with their vessel outside the port of Lianyungang. The MSA of Lianyungang had delegated the MSA of Weihai to investigate into the accident. The fishing vessel was under repair in a ship yard in Weihai. The Association appointed a surveyor to follow-up the repair. The surveyor evaluated that the repair work would cost approximately RMB 900,000.

In all these collision cases, the crew of the entered ship was not aware of the occurrence of a collision. Hence, they did not report the accident voluntarily to the MSA. The MSA locked the entered ships as potential offending ship by record in VTS/AIS, and then the suspicion was officially confirmed after boarding the vessel for investigation. This put the shipownenr in a disadvantaged position in the negotiation with the owner of the fishing vessel and coordination with the MSA. The Association would like to remind all Members to draw lessons from these accidents, streamline the various management work, and strengthen the training of crew members. When the ship is accused of being involved in a collision accident, the master and crew should coordinate with the officials when they boarded the vessel for investigation, and provide them with all the facts concerned.

<3> Stowaway cases

In the recent policy years, the stowaway cases on entered ship kept occurring in high frequency, which cause huge problems to the normal operation of Members. The Association would like to bring Members attention to such accidents through a brief review of the following cases.

a. The crew on M.V. ¡°Pacific Banghu¡± found 9 stowaways on board the ship on 11^th Dec. 2008, while the vessel was on a voyage from Congo to China. In order to repatriate the stowaways as soon as possible, the vessel had to change its schedule, and call at Durban, South Africa. The Association appointed local correspondents to assist the ship¡¯s agent in repatriation of the stowaways. Due to the low efficiency of local authorities, it took more than 3 months to repatriate the 9 stowaways. The total cost was over $63,000.

b. The M.V. ¡°Bao Fu¡± just left Richards Bay, South Africa on 14^th Oct. 2009, when 2 stowaways from Tanzania were found on board. The vessel called India and Singapore successively. Because the stowaways did not carry any identification with them, the immigration office of both ports denied entry of them. The vessel¡¯s destination of this voyage was China. The Association finally managed to repatriate the stowaways successfully by issuing LOU in the amount of RMB 250,000 to the Exit and Entry Frontier Inspection of China.

c. The M.V. ¡°Rui Ning 3¡± was arrested by local authority in Ghana on 12^th June, 2010 during loading operation. The master of the vessel was detained by the Police. The reason for the arrest was that two stowaways from Cote D¡¯Ivoire allegedly arrived in Ghana on that ship. The shipowner had no choice but to arrange substitution of the crew, so that the vessel¡¯s schedule would not be further delayed. 8 crew members, including the master were detained in Ghana for more than 2 months pending an investigation. The vessel set sail after 10 days of detention.

d. The M.V. ¡°NASCO GEM¡± found one stowaway on board after leaving Dakar, Senegal on 20^th Aug. 2010. The vessel was heading for Spain and Morocco. The destination of the voyage was the USA. The Association appointed local correspondents in both Spain and Morocco to arrange repatriation of the stowaway. However, the requests were denied by the immigration office of both counties. In the end, the vessel had to return to Dakar, where the stowaway was finally repatriated.

e. The M.V. ¡°SHANGHAI VENTURE¡± found two stowaways on board after leaving Dakar, Senegal. The vessel arrived Venezuela, where two officers from the immigration office took custody of the stowaways. The repatriation failed due to the stowaways refusing to board the flight home. The local correspondent tried to arrange repatriation of the stowaways through Panama without success. In the end, the immigration office of Venezuela arranged the stowaways to be repatriated under custody of 4 officers.

The repatriation of stowaways was a very difficult and complicated work. In addition, it may bring criminal investigation to the vessel and crew. The repatriation may cost a considerable amount as well.

The majority of the stowaways come from African countries. This is a common factor in all the above mentioned cases. Therefore, Members operating an African liner services or planning to call at African ports should draw special attention to this issue.

The Association issued Club Circular No.2 2010, and Loss Prevention Circular No.9 2010 to provide detailed precautionary measures and suggestions on how to handle stowaway problems. The Association would like to remind all Members and their entered ships to raise awareness on the stowaway problem, and implement sufficient precautionary measure, so as to prevent the stowaway from sneaking onboard the vessel.

<4>Piracy issues

According to the data from International Maritime Bureau, there was a total of 445 pirate attacks in 2010. 53 ships were hijacked, indicating a 10% increase from 2009. The number of crew taken hostage kept arising over the years. In 2009, 1,050 crew members were taken hostage, and the number climbed to 1,181 in 2010, which was a new record high. At the end of 2010, 28 ships with 638 crew members were still under control by the Somalia pirates.

The latest statistics from the International Maritime Bureau show that the Somali pirates had launched 397 hijack attempts in the first quarter of 2010. A total of 16 ships were seized, and 299 crew member taken hostage. In addition, 3 crew members suffered injuries and 7 died during the attacks. The report also pointed out that the Somali pirates had widened their scope of activities long outside Arabian Sea. The rampant piracy actions and the growing arrogance of the pirates had made the prevention of pirate attacks even more important than ever.

In the event of piracy robbery against ships, deep sea robbery against ships showed a trend of growing operations. Especially in the waters near Somalia, pirates were more robust in recent years. They were equipped with strong firearms, and had begun to use the large cargo ship hijacked as the "mother ship", which could facilitate attacks farther away from shore. The range of attacks had been extended to the waters near the Mozambique Channel, and deep into the eastern Indian Ocean waters.

During the 2010 policy year, two entered vessel were attacked by pirates in the Gulf of Aden and off the Somali Coast respectively. Both vessels suffered damage of property and injuries to the crew. The Members involved were faced with a significant loss of time. The Association issued Club Circular No.1 2010 and Loss Prevention Circular No.6 2010 on this topic, to introduce the latest trend in piracy actions and recommend detailed prevention measures.

The Association would like to raise Members¡¯ awareness on the piracy issue, and remind all entered ships passing through the high risk area to be on alert for pirate threats. Members should strengthen their anti-pirate work, improve the operation skills of crew by training, and enhance early warning system of pirate attacks. The Association would like to remind all Members to pay serious attention to implement the measure recommended in the various Circulars so that the safety of vessel can be protected to the greatest extent, and personal injury and loss of property could be reduced or avoided completely.

Attachment:

Major claims incurred in policy year 2010

<1> The MV ¡°Gold Wing¡± of Five Ocean Maritime Services Co. Ltd. arrived in Shantou, China to discharge coal loaded in Indonesia, on 2^nd March, 2010. One month later, the cargo owner put forward a claim for $1.12 million, alleging that the master did not close the hatchcovers on time in the loading port, and the cargo sustained wet damage. As a result, the calorific value of the cargo dropped significantly. The buyer was entitled to claim compensation according to the sales contract. The Association appointed a lawyer and an expert to investigate the case, and found that the cargo subject to analysis in the loading port and discharging port was not the same consignment. The claim has been successfully rejected by the shipowner.

<2> The M.V. ¡°Zhong Xing¡± of International Marine United Holding Pte. Ltd encountered strong winds in Taiwan Strait on 26^th March, 2011 while carrying logs from Papua New Guinea to Yangzhou. The main engine stopped and water entered into the cargo holds. One crew member went missing. The vessel headed to port Keelung, Taiwan for reinforcement after abandoning part of the cargo. The Association provided LOU in the amount of $600,000 to the cargo interests. The shipowner declared general average. The GA adjustment is in progress.

<3> The M.V. ¡°Jin Yuan Ling¡± of Cosco Far-Reaching shipping Co. Ltd. was discharging fertilizer at Kosichang, Thailand on 2^nd April, 2010, when smoke was found coming out from Hold No.3. After the smoke was put out by water, the cargo in hold No.3 was found wet damaged and caked. The cargo owner has put forward a claim for $438,000. The Association is actively handling the claim now.

<4> The M.V. ¡°Hua Hai Hang 1¡± of Xiamen Hua Hai Hang Marine Co. Ltd., was suspected of colliding with a fishing vessel on 6^th May 2010 near Quanzhou area, China. The fishing vessel sank with 9 fishermen missing. The Marine Safety Agency considered M.V. Hua Hai Hang 1 to be the offending ship in the collision. The fishing vessel raised a claim of $2.6 million to cover crew death, wreck removal, and loss of vessel, etc. The Association managed to settle the case.

<5> The M.V. ¡°Da Peng Wan¡± of Cosco Southern Asphalt Shipping Co. Ltd. arrived in Tarragona, Spain on 6^th May, 2010. The port authority found a spillage of mineral oil of about 50km in length and the path of the spillage matched the track of the vessel acoording to the AIS. Hence, the vessel was suspected of illegal discharge of bilge. The port authority demanded a security for € 750,000, but the amount was later reduced to €460,000. Because the ship was under a tight schedule, the shiponwer agreed to put up cash deposit to release the vessel. The Association appointed lawyers to defend the shipowner. The lawyer has submitted relevant evidence to the port authority. Up to date, the port authority has not delivered their official decision yet.

<6> The M.V. ¡°Shun An Xing¡± of Jimei Hua Shipping Ltd. grounded near Haipong, Vietnam on 14^th May, 2010. The vessel developed a list of 70-80 degrees. The crew abandoned the ship. The vessel was a constructive total loss. Due to leaking of fuel oil, the shipowner arranged clean-up service, and at the same time, tried to plug the leakage. The local authority requested the shipowner to arrange salvage of the vessel ASAP, otherwise, they would arrange compulsory wreck removal. The claims for salvage, clean-up service, marking, and cargo damage amounted to approximately $1.4 million in total. The Association is actively handling the case now.

<7> The M.V. ¡°SC AURORA¡± of Sinochem Shipping Co. Ltd.(Hainan) arrived at Ningbo, China to discharge acetone on 2^nd June, 2010. The joint survey carried out by cargo interests and the shipowner revealed that the permanganate level of samples taken from several cargo holds were lowered beyond what was stipulated in the sales contract. The surveyor appointed by the Association analyzed the samples taken in the loading port and found out that the permanganate level was already lower than the level required by the sales contract. Hence, the Association pointed out to the cargo interests that prima facie evidence showed that the cargo was contaminated before loading, and therefore the carrier should not be held responsible.

<8> The M.V. ¡°Yuan Da¡± of Hongyuan Marine Co. Ltd. arrived in Turkey to discharge steel cargo on 2^nd June 2010. The vessel was arrested due to rust caused by fresh water. The Association provided LOU to release the vessel after receiving counter LOU in the amount of $ 750,000 from charterers. Since the survey carried out showed the hatchcovers were watertight, the rust may have been a pre-existing condition before loading. The cargo interests applied for a court survey to determine the extent of the damage. The surveyor drew the conclusion that the amount of cargo damage was approximately $330,000. The charterers¡¯ P&I Club requested to negotiate with the cargo receiver on behalf of the owner and charterers. There is no substantial progress to date.

<9> The M.V. ¡°Jing Feng¡± of Hongyuan Marine Co. Ltd. collided with South Korean flagged M.V. Hai Jung near Dalian, China, on 20^th June, 2010. The other vessel sank with 5 crew members dead, 2 crew members missing, and another 2 crew members saved. The owner of M.V. Hai Jung applied to the local court to arrest the M.V. Jing Feng. The Association provided LOU in the amount of RMB24 million to release the vessel. In addition, Club LOU in the amount of RMB 10 million was provided to the MSA of Liaoning Province to cover clean-up costs. Later, the Member managed to arrest the sister ship of M.V. Hai Jung in Shanghai, and obtained security of $1.5 million. The Association is actively handling the claim now.

<10> The M.V. ¡°Hong Prosperity¡± of Hongyuan Marine Co. Ltd. encountered with severe weather in the Indian Ocean on 26^th June, 2010. The lashing of some steel coils carried in the twin deck broke, and the cargo sustained physical damage. In addition, several frame structures were deformed, and the welding in some points of connection was cracked. The cargo receiver threatened to arrest the vessel and demanded security, after the vessel arrived in Vladivostok, Russia. The Association provided LOU for $350,000 plus interest and costs to release the vessel.

<11> The M.V. ¡°Tian Yun He¡± of Cosco Container Lines Co. Ltd. discharged 14 containers of hardware products in Long Beach, USA on 11^th Aug. 2010. The cargo was found wet damaged after delivery. The cargo receiver put forward claims for $244,000 and $ 239,000 respectively under two bills of lading. The surveyor appointed by the Association concluded that the wet damage was caused by fresh water, for which the carrier should not be held responsible. The survey report from the cargo interests pointed out that the wet damage was due to water leakage from the bottom of the containers when the container yard was flooded. The Association is now collecting evidence from the loading provide, and requesting the surveyor to comments on the report from the cargo interests.

<12>The M.V. ¡°Pacific Bangjiang¡± of Pacific King Shipping Holding Pte. Ltd. arrived in Chittagong, Bangladesh on 8^th Sept. 2010 to discharge bagged fertilizer. The cargo was caked before loading. And it was raining upon discharge. The cargo receiver arrested the vessel and lodged suit in local court for $ 1.89 million. The shipowner and shipper both dispatched representatives to negotiate with the cargo receiver on the spot. A settlement agreement was finally reached among the parties involved.

<13> The M.V. ¡°Yong Fa Men ¡±of Nanjing Ocean Shipping Co. Ltd. was sailing towards Brazil on 14^th Aug. 2010, when a crew member suffered spinal injury onboard. The crew member was hospitalized in Santos, Brazil, and later repatriated back to China for continuing treatment. The medical expenses incurred in Brazil had already accumulated to $330,000.

<14> The M.V. ¡°UASC MADINAH¡± of Seaspan Corporation collided with a cruise ship in Koper, Slovenia on 15^th Aug. 2010. After the accident occurred, the Association immediately lodged suit in Slovenia, in order to take advantage of the low limitation of liability in Slovenia. Later, the vessel was arrested in Italy by the other side. The Association issued LOU in the amount of € 14.50 million to release the vessel. Now the cruise ship has finished repair and put forward its claim for repair cost, port charges and passenger claims.

<15> The M.V. ¡°East Sunrise Guangzhou ¡±of East Sunrise (Group) Co. Ltd. was found to have collided with fishing vessel ¡°Lu Rong Yu 2548¡± by the VTS of MSA near Weihai, China in the early hours of 27^th Aug. 2010. The collision resulted in death of one crew member, 4 crew members missing, and 3 crew members injured. The Association issued LOU for RMB 5.5 million in total to the next of kin of the crew members. The Association has appointed surveyors and lawyers to investigate into the collision and provide assistance to the shipowner.

<16> The M.V. ¡°NASCO DIAMOND¡±of Nanjing Ocean Shipping Co. Ltd. carried nickel ore from Kolonodale, Indonesia to Lianyungang ,China on 9^th Nov. 2010. The vessel lost contact with the shipowner off the southern coast of Okinawa, Japan. The shipowner immediately notified the search and rescue team of Taiwan, Japan, and relevant authorities in China to search for the vessel and crew. The vessel was found sank with 2 crew members dead, and 20 missing. Only 3 crew members survived. The Association has appointed surveyors, lawyers and experts in navigation to assist the shipowner and gather evidence, in order to prepare defense for the potential cargo claim and seek recovery against the charterers.

<17> The M.V. ¡°Hai Xin ¡±of Dalian Yucai Shipping Co. carried 6,055 mt of Magnetite ore from Chunjin, North Korea bounded for Rizhao, China, on 22^nd Nov. 2010. The vessel sank off the coast of Lianyungang, China. All 18 crew members were saved. To avoid leaking of the remaining fuel oil, the MSA of Lianyungang arranged clean-up work. The Association issued Letter of Undertaking in the amount of RMB8 million for the clean-up service. Later, with the assistance from the Association, the shipowner signed a contract with an underwater engineering company for underwater inspection, pumping, and wreck removal.

<18> The M.V. ¡°Xin Xiang Hai ¡±of Yang Pu Zhe Hai Shipping Co. Ltd. collided with the dock crane while berthing at Jiangyin, China, on 24^th Nov. 2010. The crane suffered physical damage. The port authority original raised a claim for RMB 10 million for repair cost and loss of use. Taking into consideration the ship¡¯s schedule and safety issues, the shipowner signed settlement agreement with the port authority.

<19> The M.V. ¡°Tai Kang Hai ¡± of Cosco Bulk Carrier Co. Ltd. arrived in Bizerte, Tunisia to discharge American Soya Beans on 5^th Feb. 2011. The cargo in Hold No.2 was found wet damaged by sea water. The vessel encountered heavy weather en route. The surveyor appointed by the Association considered that the sea water had entered into the cargo hold from a ventilation opening. The cargo receiver suspended discharge, and requested the depreciation rate to be determined at 20%, which led to the claim amount of $336,000. Later, the cargo receiver arrested the vessel and demanded a bank guarantee in the amount of $ 615,000. The Association applied for a court survey. The court surveyor determined that only 70 mt of cargo was affected. The claim was finally settled with $90,000.

Financial Statement

1. Claims in all policy years and assessment of liability

For all policy years, from the establishment of the Association on 1^st January 1984 to 20^th February 2011, there are currently 2,065 open cases with a total claim amount of $ 724,317,703. The Association¡¯s estimated liability in these claims is $ 293,259,106£¨including co-insurance apportionment, net liability $31.66 million£©, with an estimated loss ratio of 40.48%. In comparison with the preceding policy year, this is an increase of 123 cases (representing an increase of 6.33%). The claim amount increased by $ 29.56 million (an increase of 8.76%). The estimated liability increased by $ 2.55 million (an increase of 8.76%). The estimated loss ratio increased by 8.37 percentage points. This represents a significant deterioration in the claims.

2. Assets

According to the Audit Report of the 2010 policy year, the total assets of the Association were $723.88 million. This represents an increase of 20.9% compared to the previous policy year, a net increase of $ 125.21 million. This increase is mainly attributed to the increase in investment income.

3.Free Reserves per GT

The free reserves of the Association amounted to $686.19 million, increased by a further $122.14 million when compared to the $ 564.05 million of the previous policy year, representing a net increase of 21.65%. This increase is primarily attributed to the gains from investments and exchange rate.

At a total tonnage of 27.80 million GT in the 2010 policy year, the free reserve per GT is $24.66. This represents an increase of 5%, or a net increase of $ 1.17 per GT, compared to $23.49 per GT in the previous policy year. Had the calculation been based on the total tonnage of 24.01 million GT in the previous policy year, the free reserves per GT would have been $28.55 per GT, indicating a net increase of 21.56%.

Policy Year	Free Reserve Per GT ($)
	Calculating at entered tonnage of present policy year	Calculating at entered tonnage of previous policy year
2006	11.37	12.77
2007	21.54	24.6
2008	22.83	24.73
2009	23.49	31.55
2010	24.66	28.55
¡À%	5%	21.56%

Note: The increase rate was 2010:2009 figure

According to data in the above table, the Association would be ranked first for the past ten consecutive years, compared with all Clubs in the International Group of P&I Clubs.

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