26 March 2009

Trading conditions in 2008 have been by far the most challenging the TT Club has experienced in recent years. Premium rates declined due to soft insurance market conditions. Claims rose and drove up reinsurance costs. Operating expenses also increased due to the weakness of the US dollar against sterling in the first part of the year and as a result of certain exceptional items also incurred during the year.

TT Club's investment return, excluding currency movements was positive if slightly lower than 2007, thanks to the Club having adopted a conservative investment policy. Ninety per cent of the Club's assets were invested in highly rated government bonds and cash deposits and as a result the Club was not exposed to the effects of the severe downturn in the equity markets in the second half of the year and achieved an underlying investment return of 3.5%.

Against this background, TT Club has announced satisfactory financial results for 2008.

An overall net deficit for the year of US$5.3 million is now reported, compared with a surplus for the 2007 year of US$8.3 million.

TT Club's overall surplus and reserves remain strong at USD121.6 million, just 4% down on the record level at the end of 2007. Solvency as measured by the Club's capital resources as a percentage of the FSA's Enhanced Capital Requirement (ECR) is 216%, which is an improvement on 2007.

Commenting on the overall performance TT Club's Chairman, Knud Pontoppidan said, "Our business remains well capitalised and our balance sheet is highly liquid, which is extremely important in the turbulent times which the Club and its Members are now encountering."

The 2008 year was, in the estimation of Swiss Re, the second costliest year in insurance history with catastrophe losses alone exceeding USD50 billion. In Asia tropical cyclone and earthquake activity combined to cause severe damage. In the US Gulf hurricanes Gustav and Ike had major impact and, though Europe escaped fairly lightly, winter storm Emma caused losses of around USD1.4 billion.

During the year the claims trend evident in 2007 continued, with again a noticeable increase in the frequency and cost of claims, especially those affecting port and terminal Members. The trend is most significant in the area of bodily injury claims, but is also evident in claims arising from high value handling equipment. In almost every case the underlying cause of these claims was human error. It continues to be a key part of the Club's mission to help its Members and the wider transport industry to reduce the incidence of such claims through targeted loss prevention measures such as improved training and better systems of work.

The Club has campaigned on a number of loss prevention initiatives in 2008, including recommending the installation of anti-collision devices on cranes and mobile handling equipment, and it will continue to do so in the future.

TT Club has over the years been justifiably proud of its retention rate on renewals, and this once more was high at approximately 90% despite the non-renewal of some loss-making business.

As part of the strategic business plan for 2009-11 TT Club will be seeking to retain a broader based and less volatile portfolio of risk. It will be focussing on growth and product development in the logistics and transport operator sectors, whilst seeking to reduce exposure to property catastrophe aggregations.

In detailing the Board's vision of the way forward for TT Club, Charles Fenton, CEO explained, "Having reviewed the Club's strategy last year as the world was entering an environment of rapid decline in the rate of economic growth, the Board re-affirmed the relevance of stability, continuity and quality of service. I am determined to take advantage of these factors, for which TT Club has traditionally a high reputation, to maintain an independent mutual organisation that provides financially secure products and valued claims and loss prevention services."

In addition to a re-alignment of the risk profile and new product development, the strategy, already implemented to a significant degree by Fenton includes, improvement in the Club's competitiveness through reductions in operating and reinsurance costs; maintenance of a high solvency level to support an AM Best A- (Excellent) credit rating; reduced dependence on reinsurance via higher risk retention and a sustained global service capability.

In conclusion Board Chairman Pontoppidan emphasised, "As predicted last year, 2008 has proven to be a very tough year, but the Club dealt well with the challenges it faced. I am confident that the action taken to prepare the Club for what promises to be another tough year, by reducing the expense base and focussing the Club's operations in its core sectors, will also enable us to both successfully meet the challenges in 2009 and to position the Club to take advantage of the improvements in insurance market conditions when they occur".

Financial highlights

• Gross earned premiums down 6.5% to US$192.2m (US$205.6m in 2007)
• Combined ratio* 110.5% (103.6% in 2007)
• Underlying investment return* US$14.6m (US$19.9m in 2007)
• Net result for the year a deficit of US$5.3m (surplus US$8.3m in 2007)
• Surplus and reserves down 4.2% to US$121.6m (US$126.9m in 2007)
• Capital resources (ECR= 100) 216% (209% in 2007)

*before exchange movements NB: Combined ratio is a measure of underwriting profitability and is the ratio of claims costs and expenses (including brokerage and commissions) to earned premiums, net of reinsurance. ENDS Note to Editors: TT Club The TT Club is the international transport and logistics industry's leading provider of insurance and related risk management services. Established in 1968, the Club's membership comprises ship operators, ports and terminals, road, rail and airfreight operators, logistics companies and container lessors. As a mutual insurer, the Club exists to provide its policyholders with benefits, which include specialist underwriting expertise, a world-wide office network providing claims management services, and first class risk management and loss prevention advice. www.ttclub.com The full Annual Report and Financial Highlights can be reviewed or downloaded and printed from the home page of the web-site www.ttclub.com by accessing the menu item Publications/Annual reports. Enquiries to: Ian Lush, Marketing Director, TT Club Tel: +44 (0) 20 7204 2642 E-mail: ian.lush@thomasmiller.com www.ttclub.com Media contact: Peter Owen, ISIS Communications Tel: +44 (0) 1737 248300 E-mail: info@isiscomms.com www.isiscomms.com Distributed by ISIS Communications Tel: +44 1737 248300 from outside UK 0845 130 1160 from within UK Email: info@isiscomms.com

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