ITEM NO: 7c_Supp
DATE OF
MEETING:__6/22/2010_______
Property Insurance
Renewal Update
Presented 6/22/2010
Jeff Hollingsworth, Risk Manager

Outline
Property Insurance Program Recap
Structure of Property Insurance
Property Insurance Cost Factors
Property Insurance Challenges
Insurance for Capital Projects
Renewal Projection for July 1, 2010

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Current Structure of Property Program
(Major Deductibles Per Occurrence)
$1Million Fire and Extended Coverage
$1Million Flood
$50,000 Course of Construction
$25,000 Fine Arts
$100,000 Equipment Breakdown

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Current Structure of Property Program
(Main Limits Insured Per Occurrence Unless Noted)
$1 Billion Fire/Extended Coverage Limit;
$25 Million Flood Limit (Annual)
$50Million Course of Construction Limit
$350 Million Terrorism
$100 Million Equipment Breakdown
$100 Million Business Interruption

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Current Structure of Property Program

First $25 Million with Lexington (Chartis)
Excess coverage with various Lloyds
Syndicates
A+++ Rating
Procured by Alliant Insurance

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Property Insurance Cost Re-Cap
2010 Estimate Assumes No Purchase of Earthquake Insurance
$4,500,000

$4,000,000
Property Insurance Premium
Property Value x $1000
$3,500,000

$3,000,000

$2,500,000

$2,000,000

$1,500,000

$1,000,000

$500,000

$-
2000    2001    2002    2003    2004    2005    2006    2007    2008    2009   2010 Est

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Property Insurance Coverage
Annual Policy  July 1st through June 30th
Fire and Extended Coverage
Wind, Spills, Collapse, Impact, and Explosion
Covers Equipment Breakdown
Mechanical/Electrical Equipment
Covers Owned, Leased, Rented Property
Example  Applied to leased generators
Covers Business Interruption
If Due to a Loss Covered by the Policy

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Property Insurance Coverage
Annual Policy  July 1st through June 30th
Covers Flood
Excludes Land Movement/Earthquake
Covers Terrorism
Covers Projects Under Construction
* All subject to exclusions either by peril,
location, or type of property

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Property Insurance Cost Factors
Rates depend on:
Total Insurable Values Reported:
Values of Projects Under Construction
Loss Record
Primary and Reinsurance Markets
Underwriting of Locations (Port Portfolio)
Cost of Major Materials
Catastrophic Exposure (Wind, Earthquake, Flood )

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$3,000,000,000
Insured Values - Port Property Insurance
$2,500,000,000


$2,000,000,000

AIRPORT TOTALS
$1,500,000,000
SEAPORT TOTAL
REAL ESTATE TOTAL

$1,000,000,000


$500,000,000


$-
2009                    2010
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Aviation Property Losses
Total Property Damage-Net of Collections
2005 Losses = $140,000               Recovery = $104,000
2006 Losses = $280,000               Recovery = $115,000
2007 Losses = $94,000                Recovery = $87,000
2008 Losses = $113,000               Recovery = $96,000
2009 Losses = $34,000                Recovery = $18,000
2010 Losses = $19,000                Recovery = $9,000
Collection Recovery ~ 63%


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Non-Aviation Property Losses
Total Property Damage-Net of Collections
2005 Losses = $9,000           Recovery = $3,500
2006 Losses = $61,000          Recovery = $45,000
2007 Losses = $42,000          Recovery = $26,000
2008 Losses = $67,000          Recovery = $33,000
2009 Losses > $1,000
2010 Losses > $1,000
Collection Recovery ~ 60%
Excludes T-86 Spout Losses in 2006 and 2007

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Earthquake Insurance Challenges
Low limits compared to values at risk
Past loss history with Nisqually in 2001
New modeling used by insurers
Port has high insurable values
Port has aggregation of values
Insurers with aggregation of values

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$1,800,000
Initial Earthquake Premium Quotes
$1,600,000
$1,400,000
$1,200,000
$1,000,000                                              $50 Million Limit
$75 Million Limit
$800,000
$100 Million Limit
$600,000                                             Port Insurance 2009
$400,000
$200,000
$0
Seaport           Airport          Real Estate

Notes: Airport coverage is for AOB and Parking Garage Only
Seaport is for Container Terminals, Cranes, and Cruise Only
Real Estate is for Pier 69 Facility Only (Building Only and Building/Pilings)
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Capital Projects
Insurance Provided :
Coverage For Projects less than $50 Million in Value
Aviation Capital Costs ~ $ 70 Million*
Non-Aviation Capital Costs ~ $40 Million * *
Deductible of $50,000
Includes interests of contractors
Rental Car Facility
Port has a separate policy for this project
Insured to $280 Million including earthquake
East Marginal Grade Separation Project
Port has a separate policy for this project
Insured to $20 Million including earthquake
* Excludes Rental Car Facility
** Excludes East Marginal Way Grade Separation
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Property Renewal Forecast
July 1, 2010
Port has budgeted $1.4 Million for renewal  will
depend on:
Final rate offered to Port;
Final property values used for renewal;
Final list of capital projects under construction during policy year;
Renewal range estimated to be between $1.3
Million to $1.4 Million;
With no major changes to overall structure, including deductibles.
No purchase of earthquake coverage/FEMA still a source of funds
Reviewing this issue the Divisions


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