Transcript Title in Arial bold Subhead in Arial

Tuesday 26th January, 2010
Karachi Insurance Institute:
Risk Management Workshop,
Karachi
Bruce Garrett, Managing Director,
Marsh Ltd Energy Practice, London
www.marsh.com
Agenda
1
Introduction of Marsh speakers
2
Where are we in 2010:
 Power project risks
 Power operating risks
 Major infrastructure risks
 Energy project risks
 Energy operating risks
Marsh
1
Construction, Power & Utilities Practice Power Project Experience
North America
Comanche
Highbridge
Riverside
Bruce Power, Nuclear
Pt Lepreau, Nuclear
Roxboro FGD
Nelson Energy
Kendall Combined Cycle
Lawrenceburgh Energy
Jackson Combined Cycle
Covert
Waterford Energy
Mystic Station Redevelopment
Fore River
Meriden Project
Hay Road
Martin Expansion Project
Ghila River
El Dorado
Pike County Project
Southhaven
Green County Energy
Ouachita
Brazas Valley Energy
Redhawk
Harquahala
Blythe
Elk Hills
Duke Energy, Cliffside
PepCo Holdings
Duke Energy – Edwardsport
Suez Astoria
National Grid Upgrade
Flour – Brazos Electric
United Kingdom
Rugeley FGD
Lockerbie Biomass
Seabank Power $618m
Thames Power $165m
Humber Phase I and II $544m
South Coast Power $216m
Grangemouth CHP $85m
Didcot B $220m
Brigg Power
Shotton CHP
West Burton FDG
Winnington CHP
Michelin CHP
Port of Liverpool CHP
Kelmsley II FBC
Hickson & Welch CHP
Sizewell B Nuclear Power Station
Torness Nuclear Power Station
Dungeness Nuclear Power Station
Central & South America
Interandes CCGT, Argentina/ Chile
Cana Brava, Brazil
Uruguaiana, Argentina/ Brazil
Macae Power, Brazil
Seneca, Venezuela
Pedregal Power, Panama
Tamuin I, Mexico
Tamuin II, Mexico
Mexicali, Mexico
Andres Power, Dominican Republic
San Pedro de Macoris, Dominican Republic
PQU II, Brazil
Angamos AES Chile
Kallpa III
Marsh
(N.B. Nuclear projects in blue print)
Ireland
Edenderry Power $70m
Dublin Bay Power $270m
Coolkeeragh $160m
Bord Gais $640m
Europe
Rosen SpA - Italy,
API Energia, Italy
Turbogas - Portugal,
Entek Bursa, Turkey
Marmara Ereglisi - Turkey,
Csepel II, Hungary
Ankara CCGT - Turkey,
Vertes Power, Hungary
BC Euromu CHP, Hungary
TVO – OL3 Nuclear Station Finland
Cernavoda Unit 2 Nuclear, Romania
Tejo Energia, Portugal $720m
Gas Natural, Spain, Malaga
Gaz de France $400m
Mochove 3&4, Slovakia
Pakistan
UCH Power
Saba Power
Kot Addu
China
Luannan
Zhenjiang
Shuzhou
Daya Bay 1&2, GuangDong
Ling Ao Nuclear, China
South East Asia
Thai Oil, Thailand
Rayong Electric, Thailand
Industrial Power, Thailand
Khanom Electric, Thailand
Gulf Co-Gen, Thailand
Thai National Power, Thailand
KEGCO, Thailand
Genting Sanyen Power, Malaysia
Automan Power, Malaysia
Paiton 5 and 6, Indonesia
Coco Phase 3, Thailand
Ilijan, Philippines
Kobe Steel, Japan
Paiton 7 and 8, Indonesia
Bugok Project, Korea
Wolsong, Nuclear
Africa
Jorf Lasfar, Morocco
Belle Vue, Mauritius
Rades, Tunisia
Takoradi, Ghana
Tageta Project, Tanzania
Hadjeret Ennous, Algeria $900m
Middle East
Al Taweelah 2, UAE $1.5 billion
Al Taweelah 1, UAE
United Power, Oman
Al Kamil, Oman
Shuweihat, UAE $2 billion
Taweelah B, UAE
Ras Laffan B, Qatar $2 billion
Rabigh, Saudi Arabia
Fujairah F2, UAE
Mesaieed A, Qatar $1.7 billion
Fujairah F1, UAE $2.2bn
Australia
Callide “C” Power
Pelican Point
Swanbank “E”
Truenergy
Indian Region
Upper Bhoti Koshi Power Project, Nepal
Venkatesh Coke and Power, India
Kelanitissa, Sri Lanka
2
The International Reinsurance Markets
Power Project Risks
 A buyer’s market!
 Capacity @ USD 1.5billion; new markets entering the fray
 Rating levels- lowest level for a decade
 Deductible and wordings: relatively stable
 Most power projects so far on LEG/2 basis but……….
 Technology: still a key area of interest for specialist underwriters
 Some new technology may be about to emerge
 So how do clients achieve the best results?
Marsh
3
Power Specific UK Experience 2008 – 2009
Cliffside
800MW
Astoria
575MW
Delta
328MW
Duke
630MW
Whitegate
328MW
Mochove
Slovakia
Navoi
400MW
3 Sites
380MW
Brazos
620MW
AECL
Retube
Buck
620MW
Stratford
100MW
Palo Viejo
120MW
Estreito
1050MW
Marsh
Chilca III
186MW
San Pedro
120MW
Angamos
464MW
Takoradi
180MW
Pego
416MW
Fujairah
200MW
Mesaieed
2000MW
4
Steps to Success
Power Projects
 Warranties: Be sure about the extent of cover afforded, and that which is not protected
 Provide detailed project value breakdown data
 Project Bar Chart: minimum level 2 please!
 Testing and Commissioning: Explain in detail
 Partial operations/handover: Be clear from the start
 Do not skimp on information;
 Use colour and always seek to differentiate
Marsh
5
Major Infrastructure Projects
 Tunnels: major area of focus
 Contractor compliance with International Tunnelling Code of Practice
 Marsh: we have our very own “Mr Mole”
 Caveat Emptor: Price should not blind any client – significant wording
differences abound
Marsh
6
Marsh’s Tunnelling Credentials
Marsh
7
Construction Markets
 London / Europe: best for “mega” projects
 Middle East: growing; hungry and close in culture and time
 Singapore: cultural synergy; competitive and capacity abounds
As buyers / insurers we encourage you to seek alternative market views.
Marsh
8
Power Operating Risks
2010
 Market closer to losses than some sectors = lower deductibles
 Loss statistics = more attritional losses
 But few Nat Cat losses
 Capacity abounds; competition is fierce
 Softer market seems likely
 Capacity: circa $ 3 billion
Marsh
9
To buyers of Power Risk Transfer Protection
 Quality information is “King”
 Sell your risks; differentiate your risks; communicate powerfully and
clearly
 Leave adequate time for marketing negotiations
 New entrants are coming to the market
 Intra market and regional competition exists – not to be ignored
Marsh
10
Energy Market Update 2010
 Exceptional results in 2009, after very poor result in 08
 Pricing stable in first half but reductions available from Q4
 Capacity at its highest since 2001
 Willingness of leaders to compete
 Softening trend to accelerate during 2010
Marsh
11
Energy Market Update 2010
 Onshore Property
– Most competitive segment
–10 potential leaders
– Capacity increasing
– Few significant losses in 2009
– Market still disciplined on coverage & deductibles
 Offshore Property
– Some significant losses in 2009 but no
hurricane losses
– Hurricane premium represents 30-40% of
market premium
– More competition outside of Lloyd’s
Most underwriters looking for GROWTH
Marsh
IN 2010
12
Contact Details
Oil, Gas & Petrochemical risks
London
Bruce Garrett
[email protected] / Tel: +44 20 7357 5542
Dubai Risk Engineering
Ian Roy
[email protected] / Tel: +971 42129337
Power Projects
Scot Peachey
[email protected] / Tel: +44 20 7357 2595
Paul Holliday
[email protected] / Tel: +44 20 7357 3832
Power Operational Risks
Simon Howell
[email protected] / Tel: +44 20 7357 1864
Rigby Watson
[email protected] / Tel: +44 207 357 5887
Marsh
13
Thank you
Marsh
14
www.marsh.com