Background and Global Implications on Shipping and Marine Insurance Companies in perspective of recent Yemen's Ansar Allah group (Houthi) Attacks in the Red Sea.
Updated: September 06, 2024
1. Impact on Maritime Shipping: Attacks in the Red Sea by Iran-aligned Houthi militants have disrupted a crucial trade route, leading to significant rerouting of shipments away from the Suez Canal.
2. Increased Freight Rates and Congestion: The rerouting has pushed freight rates higher and caused congestion in ports across Asia and Europe.
3. Decrease in Canal Traffic: The number of ships crossing the Suez Canal has dropped by 66% as carriers divert their vessels around Africa.
4. Strained Infrastructure: These disruptions have led to service reconfigurations and volume shifts, straining infrastructure and resulting in port congestion, delays, and shortages in capacity and equipment.
5. Global Network Impact: Maersk highlighted that the disruption extends beyond the Far East-Europe trade routes, affecting its entire global network.
6. Uncertain Timeline: The timeline for resolving these disruptions and returning to normal operations remains uncertain.
7. Robust Demand: Despite the disruptions, demand for container shipping remains strong.
This situation underscores the vulnerability of global supply chains to geopolitical conflicts and the cascading effects such disruptions can have on international trade.
Source: https://www.reuters.com/world/middle-east/maersk-says-impact-red-sea-situation-continues-intensify-2024-09-05/
Largest container shipping companies.
Note:
(TEU. Twenty Feet Equivalent Unit. 20 Feet Long 08 Feet Tall, 08 Feet wide. One ship can contain usually 18000 to 21000 TEU. )
1. Mediterranean Shipping Company (MSC)
Total TEU: 5,705,424
Ships: 801
Market Share: 19.9% .
2. APM. Maersk
Denmark.
TEU: 4,193,392
Ships: 685
Market Share:14.6%
3. CMA CGM.
France.
TEU: 3,635,418
Ships: 634
Market Share:12.7%
4. COSCO Shipping Lines (COSCO) China.
TEU: 3,092,220
Ships: 491
Market Share: 10.8%
5. Hapag-Lloyd
Germany.
TEU. 2,004,030
Ships: 274
Market Share: 7.0%
6. Ocean Network Express (ONE) Japan.
TEU: 1,809,846
Ships: 232
Market Share: 6.3%
7. Evergreen Marine Corporation Taiwan.
TEU: 1,648,821
Ships: 212
Market Share: 5.7%
8. HMM Co. Ltd.
South Korea.
TEU: 797,327
Ships: 71
Market Share: 2.8%
9. Yang Ming Marine Transport Corporation
Taiwan.
TEU: 708,591
Ships: 94
Market Share: 2.5%
10. Zim Integrated Shipping Services (ZIM)
Israel.
TEU: 655,751
Ships: 139
Market Share: 2.3%
11. Wan Hai Lines
Taiwan.
TEU: 481,225
Ships: 118
Market Share: 1.7%
12. Pacific International Lines (PIL) Singapore.
TEU: 295,567
Ships: 89
Market Share: 1.0%
13. Shandong International Transportation Corporation (SITC) China.
TEU: 160,156
Ships: 101
Market Share: 0.6%
14. X-Press Feeders
Singapore.
TEU: 157,681
Ships: 81
Market Share: 0.5%
15. Korea Marine Transport Corporation (KMTC)
South Korea.
TEU: 150,704
Ships: 64
Market Share: 0.5%
16. Sea Lead Shipping
Singapore.
TEU: 141,202
Ships: 32
Market Share: 0.5%
17. Unifeeder
Denmark.
TEU: 138,995
Ships: 86
Market Share: 0.5%
18. IRISL Group
Iran.
TEU: 137,720
Ships: 31
Market Share: 0.5%
19. Sinokor Merchant Marine
South Korea.
TEU: 122,252
Ships: 80
Market Share: 0.4%
20. Zhonggu Logistics Corporation China.
TEU:120,042
Ships: 86
Market Share: 0.4%
21. TS Lines
Taiwan.
TEU: 92,655
Ships: 44
Market Share: 0.3%
22. Antong Holdings (QASC)
China.
TEU: 83,868
Ships: 84
Market Share: 0.3%
23. Regional Container Lines (RCL) Thailand.
TEU: 77,153
Ships: 34
Market Share: 0.3%
24. Global Feeder Shipping LLC United Arab Emirates.
TEU: 76,616
Ships: 33
Market Share: 0.3%
25. Ningbo Ocean Shipping Co. China.
TEU: 75,077
Ships: 80
Market Share: 0.3%
26. Emirates Shipping Line
United Arab Emirates.
TEU: 72,188
Ships: 14
Market Share: 0.3%
27. Swire Shipping
Singapore.
TEU: 71,023
Ships: 36
Market Share: 0.2%
28. Matson
United States.
TEU: 69,235
Ships: 29
Market Share: 0.2%
29. SM Line
South Korea.
TEU: 64,109
Ships: 14
Market Share: 0.2%
30. Arkas Line.
Turkey.
TEU: 59,465.
Ships: 36.
Market Share: 0.2%
According to statista top four, MSC, APM-Maersk, CMA CGM, and COSCO Group, As of May 2023, these four leading companies controlled almost 58 percent of the global container ship fleet. 19-Mar-2024
1. Top Global Ocean Marine Insurance Companies:
1-Allianz Global Corporate & Specialty. AGCS.
Overview:
Allianz Global Corporate & Specialty (AGCS) is a division of the Allianz Group, specializing in corporate and specialty insurance. It was established in 2006 by merging Allianz Global Risks and Allianz Marine & Aviation into a single global unit. AGCS focuses on providing insurance and risk management solutions for large corporate and industrial clients, as well as specialty business lines such as marine, aviation, and energy.
Market Presence:
AGCS operates globally, with a presence in over 200 countries through a network of branches and partner companies. This extensive reach allows AGCS to service clients wherever they do business.
Financial Performance:
In fiscal year 2023, the Allianz Group, which includes AGCS, achieved a total business volume of €161.7 billion and an operating profit of €14.7 billion2. AGCS contributes significantly to these figures through its specialized insurance services.
Key Services:
AGCS offers a wide range of insurance products, including:
Property insurance
Marine insurance
Aviation insurance
Energy insurance
Engineering insurance
Directors & Officers (D&O) liability insurance
2- Chubb:
Overview:
Chubb Limited is a leading global provider of property and casualty (P&C) insurance. It is the largest publicly traded P&C insurance company in the world and is listed on the New York Stock Exchange (NYSE: CB).
Market Presence:
Global Reach: Chubb has substantial local operations in 54 countries and territories, making it a truly global insurer.
Diverse Portfolio:
The company serves a diverse range of clients, from large multinational corporations to individual consumers.
Financial Performance:
2023 Highlights: Chubb reported record financial results in 2023, with operating income reaching $9.3 billion, up 45% from the previous year. This growth was driven by strong performance in P&C underwriting, investment income, and life insurance income.
Premium Revenue:
Consolidated premium revenue grew to $57.5 billion, reflecting nearly 40% growth over three years.
Combined Ratio: Chubb achieved an industry-leading combined ratio of 86.5%, indicating strong underwriting profitability.
Chubb continues to capitalize on favorable market conditions and expand its presence, particularly in Asia, through strategic acquisitions and partnerships.
3- Zurich Insurance Group:
Overview:
Zurich Insurance Group Ltd, commonly known as Zurich, is a leading multi-line insurer that serves customers in global and local markets. Founded in 1872, Zurich is headquartered in Zurich, Switzerland. The company offers a wide range of insurance products and services, including property and casualty insurance, life insurance, and investment management.
Market Presence:
Global Reach: Zurich operates in over 215 countries and territories, making it one of the most globally diversified insurers.
Key Markets:
The company has a significant presence in Europe, North America, Latin America, and the Asia-Pacific region.
Strategic Partnerships: Zurich has long-standing distribution partnerships, such as with Deutsche Bank in Germany, which enhance its market reach.
Financial Performance:
2023 Highlights: Zurich reported a record operating profit of USD 4.0 billion for the first half of 2024, a 7% increase from the previous year. The company achieved its highest-ever return on equity (BOPAT ROE) of 25.0%.
Net Income: Net income attributable to shareholders rose by 21% to USD 3.0 billion.
4- AIG (American International Group):
Overview: American International Group, Inc. (AIG) is a leading global insurance organization. Founded in 1919, AIG provides a wide range of insurance products, including general insurance, life insurance, and retirement services. The company is headquartered in New York City and operates through a network of subsidiaries and affiliates worldwide.
Market Presence:
Global Reach: AIG operates in more than 80 countries and jurisdictions, offering insurance solutions to both individual and commercial clients.
Diverse Portfolio: The company serves a broad range of industries, including aviation, marine, energy, and financial services.
Financial Performance:
2023 Highlights: AIG reported a net income attributable to AIG common shareholders of $264 million for the fourth quarter of 2022, compared to $3.7 billion in the same period the previous year.
General Insurance: The General Insurance segment saw an adjusted pre-tax income increase of 69% from the prior year, driven by better underwriting results and higher net investment income.
Life and Retirement: The Life and Retirement segment also performed well, with a 57% increase in adjusted pre-tax income from the prior year.
AIG’s Share in the Aviation and Marine Industries
Aviation Industry:
Market Share in aviation: AIG insures approximately 80% of the world’s major airlines, airports, and manufacturers.
Coverage: AIG provides a wide range of aviation insurance products, including physical damage, liability, and war risk coverage.
Marine Industry:
Market Presence: AIG is a significant player in the marine insurance market, offering comprehensive policies for cargo, hull, and marine liability.
Competitive Landscape: AIG is one of the leading companies in the marine insurance sector, alongside other major insurers like Allianz and Chubb.
AIG’s strong presence in both the aviation and marine industries highlights its capability to manage complex and high-risk insurance needs globally.
5-Travellers insurance:
Overview:
Travelers Companies, Inc., commonly known as Travelers, is one of the largest insurance companies in the United States. Founded in 1853, Travelers provides a wide range of insurance products, including property and casualty insurance for auto, home, and business. The company is headquartered in New York City and Hartford, Connecticut.
Market Presence:
Global Reach:
Travelers operates primarily in the United States, Canada, the United Kingdom, and Ireland. It also has a presence in other international markets through its Lloyd’s syndicate.
Business Segments: The company operates through three main segments: Business Insurance, Bond & Specialty Insurance, and Personal Insurance.
Financial Performance:
2023 Highlights: Travelers reported strong financial results for 2023. The company achieved a net income of $3.662 billion, up 36% from the previous year.
Net Written Premiums: Travelers reported record net written premiums of $31.959 billion for the full year, a 7% increase compared to the prior year.
Combined Ratio: The company maintained a consolidated combined ratio of 88.0%, indicating strong underwriting performance.
Return on Equity: Travelers achieved a return on equity of 12.7% for the full year.
Travelers continues to focus on disciplined underwriting, innovative product offerings, and strong customer relationships to maintain its position as a leading insurer.
Travelers has been protecting the maritime industry for over 150 years, demonstrating their extensive experience and expertise in this sector.
6-Liberty mutual:
Overview:
Liberty Mutual Insurance Company, founded in 1912, is one of the largest global property and casualty insurers. Headquartered in Boston, Massachusetts, Liberty Mutual offers a wide range of insurance products and services, including personal and commercial insurance, life insurance, and specialty insurance.
Market Presence:
Global Reach: Liberty Mutual operates in over 30 countries and economies around the world1.
Diverse Portfolio: The company serves a broad range of clients, from individuals to large multinational corporations.
Financial Performance:
2023 Highlights: Liberty Mutual reported annual consolidated revenue of $49.4 billion for the year ending December 31, 2023.
Net Income: The company achieved a net income of $2.2 billion for the same period.
Combined Ratio: Liberty Mutual maintained a combined ratio of 97.8%, reflecting its strong underwriting performance.
Maritime Insurance
Liberty Mutual offers comprehensive maritime insurance solutions, including:
Marine Cargo Insurance: Covers physical loss or damage to goods during international transit, including inland transit shipments and goods in storage.
Marine Hull Insurance: Provides coverage for physical loss or damage to vessels at the dock, during trips, or while operating4.
Marine Liability Insurance: Protects against third-party claims of property damage or personal injury stemming from maritime business activities.
Builder’s Risk Insurance: Covers ships under construction, providing protection against various risks during the building process.
Liberty Mutual’s strong presence in the marine insurance market is supported by its global network of marine professionals and tailored coverage solutions.
7-CNA insurance:
Overview:
CNA Financial Corporation (CNA) is a leading insurance holding company, providing a broad range of standard and specialized property and casualty insurance products and services for businesses and professionals in the U.S., Canada, Europe, and Asia. Founded in 1897, CNA is headquartered in Chicago, Illinois.
Market Presence:
Global Reach:
CNA operates in the United States, Canada, Europe, and Asia, serving a diverse range of industries and clients.
Specialty Focus:
The company is known for its strong presence in specialty insurance segments, including professional liability, healthcare, and financial institutions.
Financial Performance:
2023 Highlights: CNA reported a net income of $1.2 billion for the full year 2023, reflecting a 12% increase from the previous year.
Net Written Premiums: The company achieved net written premiums of $10.3 billion in 2023, up 6% from the prior year.
Combined Ratio: CNA maintained a combined ratio of 94.8% for its property and casualty (P&C) business, indicating strong underwriting performance.
Investment Income: Net investment income increased by 7% to $2.4 billion, driven by higher yields in the fixed income portfolio and strong returns from alternative investments.
CNA continues to focus on disciplined underwriting, strategic growth in specialty lines, and leveraging its global presence to drive profitability and shareholder value.
8-Great American insurance group:
Overview: Great American Insurance Group, founded in 1872, is a prominent provider of specialty property and casualty insurance products. The company is headquartered in Cincinnati, Ohio, and operates as a subsidiary of American Financial Group, Inc. Great American focuses on niche markets, offering tailored insurance solutions to meet the specific needs of its clients.
Global Presence:
Operations: Great American operates primarily in the United States, but it also has a presence in Canada and Europe. The company serves a wide range of industries, including agriculture, aviation, marine, and more.
Specialty Focus: The company is known for its expertise in specialty insurance lines, providing customized coverage for unique risks.
Financial Performance:
2023 Highlights: Great American reported strong financial results for 2023. The company achieved a net income of $1.2 billion, reflecting a solid performance across its various business segments.
Net Written Premiums: The company recorded net written premiums of $7.5 billion, demonstrating growth in its specialty insurance lines.
Combined Ratio: Great American maintained a combined ratio of 92.5%, indicating effective underwriting and risk management practices.
Maritime Insurance Presence
Great American has a significant presence in the maritime insurance sector, offering a comprehensive range of marine insurance products:
Ocean Marine Insurance:
Ocean Cargo: Coverage for goods shipped by water or air, including incidental warehouse storage and intermediate transit by rail or truck.
Commercial Hull: Insurance for physical loss or damage to vessels.
Marine Liabilities: Protection against third-party claims of property damage or personal injury stemming from maritime business activities.
Pollution Insurance: Coverage for environmental liabilities related to marine operations.
Inland Marine Insurance:
Builders Risk: Insurance for buildings under construction.
Contractors Equipment: Coverage for equipment used by contractors.
Transportation: Insurance for goods in transit.
Great American’s extensive experience and specialized approach make it a key player in the marine insurance market, offering tailored solutions to meet the evolving needs of its clients.
9-AXA XL:
Overview: AXA XL is a division of AXA Group, specializing in property and casualty insurance and reinsurance. Formed through the merger of AXA Corporate Solutions, AXA ART, and XL Group, AXA XL provides a wide range of insurance products and services to large corporations and mid-sized companies globally.
Global Presence:
Operations: AXA XL operates in over 30 countries, with a strong presence in Europe, North America, Asia-Pacific, and Latin America1.
Network: The company leverages AXA Group’s extensive global network to offer comprehensive insurance solutions tailored to local markets.
Maritime Insurance: AXA XL has a significant presence in the maritime insurance sector, offering a variety of products to cover the diverse needs of the marine and logistics industry:
Marine Cargo Insurance: Covers goods in transit by sea, air, and land, including risks such as loss, damage, theft, and war.
Marine Hull Insurance: Provides coverage for physical loss or damage to vessels.
Marine Liability Insurance: Protects against third-party claims related to marine operations.
Ports and Terminals Insurance: Covers risks associated with port and terminal operations.
Ship Repairers’ Liability: Insurance for ship repair yards and related activities.
Financial Performance:
2023 Highlights: AXA XL reported strong financial results for 2023, with a significant increase in premiums and profitability. The division’s reinsurance premiums grew by 9% to €1.3 billion in Q1 2024, driven by favorable pricing and higher volumes in specialty lines.
Revenue Growth: AXA XL’s overall revenue increased by 6% in Q1 2024, reflecting robust performance in property and casualty insurance.
Investment Performance: The company continues to benefit from strong investment returns, contributing to its overall financial stability and growth.
AXA XL’s comprehensive range of insurance products, global reach, and strong financial performance make it a key player in the global insurance market, particularly in the maritime sector.
10-Berkshire Hathaway Speciality Insurance: BHSI.
Overview: Berkshire Hathaway Specialty Insurance (BHSI) is a division of Berkshire Hathaway, providing commercial property, casualty, healthcare professional liability, executive and professional lines, surety, travel, programs, and homeowners insurance. BHSI was established in 2013 and has quickly grown to become a significant player in the specialty insurance market.
Market Presence:
Global Reach:
BHSI operates in key markets across North America, Europe, Asia, and Australasia. The company has offices in major cities including New York, London, Hong Kong, Sydney, and many others.
Diverse Portfolio:
BHSI offers a wide range of insurance products tailored to meet the needs of mid-market and large, risk-managed customers.
Financial Performance:
2023 Highlights: BHSI reported strong financial performance in 2023, with significant growth in premiums and profitability. The company continues to benefit from its strong underwriting discipline and diversified portfolio.
Revenue Growth: BHSI’s revenue has been steadily increasing, driven by its expansion into new markets and the introduction of innovative insurance products.
Maritime Insurance Presence
BHSI has a robust presence in the maritime insurance sector, offering comprehensive coverage for various marine risks:
Ocean Marine Insurance:
Coverage: Includes protection for cargo, hull, and marine liabilities. BHSI’s ocean marine insurance is designed to cover physical loss or damage to vessels and goods during transit.
Global Capabilities: BHSI provides marine insurance solutions worldwide, tailored for mid-market and large, risk-managed customers.
Inland Marine Insurance:
Coverage: Offers protection for goods in transit over land, including construction equipment and other high-value items.
BHSI’s extensive experience and financial strength make it a key player in the marine insurance market, providing tailored solutions to meet the evolving needs of its clients.
Discuss their market shares and the overall size of the global marine insurance market, which was valued at approximately $26.5 billion in 2021 and is projected to reach around $31.5 billion by 2028.
2. Global Trade Transport from Suez Canal:
According to.the chairman of SCA Suez Canal Authority, Mr. Osama Rubie, in 2020, the total ships crossed the canal were 18,830 while in 2021 it was 20,694.
In 2022 it was increased by 15% with 25,583 with record return of
$8 Billion, a rise of 25% over to 2021, according to official statement.
While in 2023 the Suez Canal annual Revenue drops by 23.4% due to ongoing Red Sea crisis.
“Revenues fell to US$7.2 billion (S$9.6 billion) in the fiscal year 2023/2024 that ended in June from US$9.4 billion a year earlier,” Mr Rabie said.
Chairman of Suez Canal Authority, Mr. Osama Rabie added that the number of crossing ships fell to 20,048 in the fiscal year 2023/2024, compared with 25,911 in the fiscal year 2022/2023.
Significance of the Suez Canal in global trade:
- Importance:
The Suez Canal handles about 12% of global trade and 30% of global container traffic.
- Economic Impact:
On average, 50 ships traverse the canal daily, carrying between $3-9 billion worth of cargo.
The Suez Canal is strategically located, providing a direct and time-saving maritime route between Europe and the Indian Ocean.
Ships using the canal avoid the lengthy and perilous journey around the southern tip of Africa (Cape of Good Hope), significantly reducing transit times and fuel consumption.
It carries approximately 12% of global trade and is the shortest sea route between Southeast Asia and Europe.
There are three routes to Europe other than to Suez canal route namely:
1. Cape of Good Hope route.
2. Northern Sea Route. NSR.
3. Panama Canal Route
1. Cape of Good Hope route
Total Distance:
From Rotterdam to Singapore via the Cape of Good Hope is about 11,720 nautical miles, compared to 8,440 nautical miles via the Suez Canal.
Ships have used this route for centuries, circumnavigating Africa.
For example, a voyage between a southern Chinese port and Rotterdam would be around 10,000 nautical miles using the Suez Canal but approximately 13,500 nautical miles around the Cape of Good Hope.
Carriers rarely choose this longer route for transit-time-sensitive headhaul, but current low bunker prices and European market conditions have made it viable.
2. Northern Sea Route (NSR)
The Northern Sea Route significantly shortens the distance between Europe and Asia. For example, the distance from Murmansk (Russia) to Yokohama (Japan) is about 5,770 nautical miles via the NSR, compared to 12,840 nautical miles through the Suez Canal.
The NSR runs across the Russian maritime Arctic from the Bering Strait west to Norway.
It shortens the distance for ships by over 70% compared to the Cape of Good Hope route.
However, few believe it can become a global container route due to ice conditions, limited infrastructure, and geopolitical complexities.
3.Panama Canal Route.
The Panama Canal connects the Atlantic and Pacific Oceans, providing a shorter route for ships traveling between the east and west coasts of the Americas.
The Panama Canal connects the Atlantic and Pacific Oceans, saving up to 2,000 nautical miles for ships sailing between Europe and East Asia or Australia.
During 2019, 13,785 ships transited through the Panama Canal, emphasizing its global ocean connections.
The total length of the Panama Canal is approximately 50 miles (80 kilometers) from shoreline to shoreline. It connects the Atlantic and Pacific oceans through the narrow Isthmus of Panama. Ships sailing between Europe and East Asia or Australia can save as much as 2,000 nautical miles (3,700 kilometers) by using the canal, while inter-coastal voyages between South and North America are shortened by up to 3,500 nautical miles (6,500 kilometers) when utilizing this strategic waterway.
- Recent Disruptions:
Yemen:
Land, Rainfall, Oil Production, and Fisheries Sector.
Land Use and Rainfall:
- Agricultural Land: 34% of Yemen's land is classified as agricultural, but most of it is pasture and range land.
- Arable Land: Only 3% of the total land is arable, with roughly 1.5 million hectare actually cultivated.
- Rainfall: Average annual rainfall is 127 millimeters (5 inches). The highest mountainous areas in southern Yemen receive 520 to 760 mm (20.5 to 29.9 inches) of rain per year, while some western highlands areas get 1,000–1,500 mm (39.4–59.1 inches) annually.
Oil Production:
- Yemen's oil production was significant in the early 2000s, reaching over 400,000 barrels per day (b/d).
- However, since 2015, output has drastically declined to below 100,000 b/d, averaging about 57,000 b/d this year. ( August 2021)
Hydrocarbon Reserves:
- Yemen ranks 29th globally in proven oil reserves, accounting for about 0.2% of the world's total oil reserves (1,650,585,140,000 barrels).
- Proven hydrocarbon reserves include 3 billion barrels of crude oil and 17 trillion cubic feet (Tcf) of gas.
Fisheries Sector:
- Yemen's coastal strip stretches across the Red Sea, Gulf of Aden, Arabian Sea, and the Indian Ocean.
- With more than 350 types of fish and aquatic life, the fisheries sector is crucial for:
- Providing food.
- Boosting the national economy.
- Creating jobs and supporting development.
Who are Houthi or Ansar Allah group?
The Houthis, also known as Ansar Allah (supporters of God), are an armed group that control most parts of Yemen, including the capital, Sanaa, and some of the western and northern areas close to Saudi Arabia.
1. Historical Context:
- In 1962, a revolution in North Yemen's 1,000 years of rule by Zaidi Imams, who claimed descent from the Hashemites.
- The region of Sa'dah in the north was their main stronghold but has remained underdeveloped since their fall from power.
- The Yemeni government has limited authority in Sa'dah.
2. 1994 Civil War and Wahhabis:
- During Yemen's 1994 civil war, the Wahhabis, adherents of strict Sunni Islam from neighboring Saudi Arabia, supported the government against the secessionist south.
- Zaidis complain that the government has given the Wahhabis too strong a voice in Yemen.
- Saudi Arabia worries about potential strife near its border with Yemen.
3. Houthi Movement and Conflict:
- The conflict began in 2004 when the government attempted to arrest Hussein Badreddin al-Houthi, a Zaidi religious leader of the Houthis.
- The Houthis accused former President Ali Abdullah Saleh of massive financial corruption and criticized his alignment with Saudi Arabia and the United States.
- The Yemeni government alleged that the Houthis sought to overthrow it and implement Zaidi religious law.
4. Houthi Goals and Iran's Role:
- The Houthis fight for government accountability, an end to corruption, regular utilities, fair fuel prices, and job opportunities for ordinary Yemenis.
- They reject accusations of seeking to overthrow the republican system and emphasize self-defense against government attacks.
- The Yemeni government of directing and financing the insurgency.
5. Preferred Political System:
- According to a Newsweek report in February 2015, the Houthis prefer a republic with elections, where women can hold political positions.
- They do not seek a cleric-led government like the Islamic Republic of Iran due to the larger number of followers of the Shafi doctrine in Yemen.
Maritime Security by Global Powers:
1. Naval Patrols and Escorts.
Major naval powers like the United States, the United Kingdom, and the European Union deploy naval forces to patrol critical maritime routes such as the Strait of Hormuz, the Red Sea, and the Gulf of Aden. These patrols help deter piracy and ensure the safe passage of commercial vessels.
2. Freedom of Navigation Operations (FONOPs):
The U.S. Navy and allied navies conduct FONOPs to assert international rights and freedoms of navigation in contested waters, such as the South China Sea.
3. International Cooperation:
There are multinational task forces, such as Combined Task Force 151, which focus on counter-piracy operations in the Gulf of Aden and the Indian Ocean.
Agreements Between Shipping Companies and Naval Militarie.
a. Convoy Systems:
During periods of heightened threat, naval forces may organize convoys where commercial vessels travel together under the protection of military ships.
b. Information Sharing:
Shipping companies often collaborate with naval forces and international organizations to share information about potential threats and incidents. This helps in timely responses to security challenges.
C. Private Security:
Some shipping companies hire private maritime security companies to provide armed guards on board vessels, especially when transiting high-risk areas.
Specific Agreements and Initiatives.
a. International Maritime Organization (IMO):
The IMO facilitates international cooperation on maritime security through conventions and guidelines, such as the International Ship and Port Facility Security (ISPS) Code.
b. Regional Agreements:
There are regional agreements like the Djibouti Code of Conduct, which focuses on combating piracy and armed robbery against ships in the Western Indian Ocean and the Gulf of Aden.
These measures and agreements help ensure the security of vital maritime routes, protecting global trade and energy supplies.
According to Ynetnews, Israel "In the first five months of 2024, the Houthis carried out more than 100 attacks on ships, many of which targeted oil tankers or commercial cargo vessels. This has led to disruptions in global shipping, affecting countries that depend on the Suez Canal and Red Sea routes, including Gulf nations and India." August 27, 2024.
During the off Camera press briefing by Pentagon's Press Secretary, Sabrina Singh at June 17, 2024. Ms. Singh told at a question " ...that the Houthis have attacked or threatened U.S. Navy or other commercial vessels over 190 times
since November 19th, and while they, you know, thankfully haven't been successful every time,.."
https://www.defense.gov/News/Transcripts/Transcript/Article/3809715/deputy-pentagon-press-secretary-sabrina-singh-holds-an-off-camera-on-the-record/
Between November and December 2023, a 1.3 percent decrease in global trade resulted from Houthi attacks on commercial shipping in the Red Sea. By March 2024, over 2,000 ships had diverted routes away from the Red Sea, making costlier voyages, since the first Houthi attack the previous November.
What sort of Ammunition used by Houthi Group ?
1. Conventional Weapons:
- Small Arms: Houthi fighters use a variety of small arms, including rifles, machine guns, and pistols.
- RPG-7: The RPG-7 rocket-propelled grenade launcher is commonly employed by Houthi forces against armored vehicles and military installations.
- Artillery: The Houthis have access to artillery pieces, mortars, and howitzers for indirect fire support.
2. Missiles and Rockets:
- Ballistic Missiles: The Houthis have launched medium-range ballistic missiles into Saudi Arabia. These missiles are often of Iranian origin and pose a significant threat to regional stability.
- Drones: The Houthis also use unmanned aerial vehicles (UAVs), commonly known as drones, for reconnaissance and attacks.
- Anti-Ship Missiles: Their anti-ship missile systems have improved over time, targeting naval vessels.
3. Advanced Weapons:
- Iranian Support: The Houthis receive training and arms from Iran's Islamic Revolutionary Guards Corps (IRGC) and Lebanese Hezbollah.
- Smuggling Networks: Despite a UN arms embargo, the Houthis have created covert networks for weapon procurement, funded by ill-gotten gains and extortion schemes.
- Medium-Range Ballistic Missiles: The Houthis' ability to field these missiles demonstrates their growing capabilities.
Foreign Interference in Yemen: US and UK Influence.
1. United States:
- Post-World War II: In 1946, President Harry Truman sent the first American diplomatic mission to Yemen. Led by Bill Eddy, a former Marine, this mission aimed to establish relations with Yemen.
- Cold War Era: During the Cold War, the US maintained a strategic interest in Yemen due to its geopolitical location near the Red Sea and the Arabian Peninsula.
- Support for Unification: The US played a role in the unification of North Yemen (Yemen Arab Republic) and South Yemen (People's Democratic Republic of Yemen) in 1990.
- Counterterrorism Cooperation: After the 2000 USS Cole bombing in Aden, the US intensified counterterrorism cooperation with Yemen.
- Drone Strikes: In the 2000s, the US conducted drone strikes against al-Qaeda targets in Yemen, often with controversial outcomes.
2. United Kingdom:
- Colonial Influence: The UK has a long history of bilateral relations with Yemen, dating back to the 20th century when it was a colonial power in the region.
- Creation of South Yemen: The UK played a significant role in the creation of the independent South Yemen, which it had previously colonized.
- Post-Unification Relations: After Yemen's unification in 1990, the UK continued to engage with the unified state.
Identify the countries most affected by the Houthi attacks from a marine insurance perspective:-
Which countries effects most?
Saudi Araba:
As a major player in the region, Saudi Arabia's shipping routes are heavily impacted.
- United Arab Emirates:
Significant maritime trade routes pass through the Red Sea, affecting UAE-based shipping companies.
- Egypt:
The Suez Canal's strategic importance means that disruptions here have a global ripple effect.
4. Significant Loss:
Detail of the significant losses incurred due to the Houthi attacks:
Global Trade Disruption:
The attacks have disrupted global supply chains, with traffic through the Red Sea down by more than 40%. This has led to delays and increased costs for shipping companies, as many have rerouted their vessels around the Cape of Good Hope, adding thousands of nautical miles to their journeys.
Increased Shipping Costs:
Insurance rates for voyages through the Red Sea have surged. Cargo insurance rates, which were typically around 0.6% of the cargo’s value, have increased to 2%, with additional war risk premiums further inflating costs.
Economic Impact on Egypt:
Egypt has faced economic penalties due to reduced Suez Canal transit fees, as many ships avoid the Red Sea route.
Humanitarian and Security Concerns:
The attacks have endangered crews, impeded international humanitarian relief efforts, and threatened freedom of navigation. This has raised regional security concerns and necessitated military responses from the U.S. and UK.
- Increased Premiums:
Marine war insurance premiums have risen sharply, from around 0.05% to as high as 0.7% of the hull value.
- Operational Costs:
Higher premiums and increased demand for war risk coverage have driven up operational costs for insurers.
- Supply Chain Disruptions:
Delays and increased costs for shipping companies due to rerouted or delayed vessels.
5. Recommendations
- Enhanced Security Measures: Encourage the formation of maritime coalitions like Operation Prosperity Guardian to protect shipping routes.
- Risk Assessment and Pricing: Implement advanced analytics and IoT for better risk assessment and dynamic pricing.
- Diversification of Routes:
Advise shipping companies to consider alternative routes to mitigate risk exposure.
6. Conclusion.
1. We noted in depth detailed that the Profit of insurance companies significantly rises in fiscal year 2023 and Q1 2024.
a. Operating profit of AGCS is €14.7Billion in fiscal year 2023, far more than previous fiscal year 2022 which was €655Million.
b. Operating income of Chubb during fiscal year 2023 was $9.3Billion which is 45% increase than previous year.
c. Zurich reported a record operating profit of USD 4.0 billion for the first half of 2024, a 7% increase from the previous year.
d. Travelers Insurance, The company achieved a net income of $3.662 billion, up 36% from the previous year.
e. CNA Insurance reported a net income of $1.2 billion for the full year 2023, reflecting a 12% increase from the previous year.
f. AXA XL, The division’s reinsurance premiums grew by 9% to €1.3 billion in Q1 2024, driven by favorable pricing and higher volumes in specialty lines. AXA XL’s overall revenue increased by 6% in Q1 2024.
g. In the fiscal year 2022, Berkshire Hathaway Specialty Insurance (BHSI) reported an operating profit of $30.85 billion1. For the fiscal year 2023, BHSI’s operating profit increased to $37.35 billion.
So It is crystal clear that the operating profit of Global insurance companies has substantially increased in fiscal year 2023 and Q1 2024.
2. Between November and December 2023, a 1.3 percent decrease in global trade resulted from Houthi attacks on commercial shipping in the Red Sea.
By March 2024, over 2,000 ships had diverted routes away from the Red Sea, making costlier voyages, since the first Houthi attack the previous November.
3. Inspite of Maritime Security by Global Powers, Naval Patrols and Escorts, Freedom of Navigation Operation (FONOPs), International Cooperation, agreements between shipping companies and Naval military and Convoy system; How Houthi Rebels carried out more than 100 attacks in first four months of 2024, and according to Pentagon Press Secretary, Ms. Sabrina Singh that the Houthis have attacked or threatened U.S. Navy or other commercial vessels over 190 times since 19th November 2023?
It will be hot emerging open ended question.
4. According to the Stockholm International Peace Research Institute, the Saudis were expected to spend nearly $70 billion on arms in 2023. From 2018-2022, Saudi Arabia was the world’s second-largest arms importer, buying 78% of its purchases from the U.S., which accounted for 19% of U.S. arms exports.
According to Yemendataproject.org during 2015 to 2022, 3445 days of comapign, Coalition forces Air raids were 25,054, resulting in 10,243 Civilian Yemenis injured and 8,9,93 Dead, rising world's worst humanitarian crisis in Yemen.
How the world ancient richest country, the Yemen, turn into poorest country of the world inspite of vast reserve of oil and gas, having agriculture land and good rainfall?
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