Ship Valuation and Insurance


I am researching ship valuation for some forthcoming articles. Before getting into how ship valuation is done, I want to look at why. I came across this ship valuation paper by Paul Willcox, managing director of CW Kellock and sworn valuer for the Admiralty Courts in London has written an interesting paper on ship valuation [http://goo.gl/XVpzG]. He lists nine reasons for valuations, to which I have added one, summarised below as;

  1. Banking – Independent appraisal for loan application.

  2. Banking – Loan drawdown (my addition)
  3. Banking – Independent appraisal of the ship subject of the loan, and any other ships used as security in the facility.
  4. Creditors – Reserve price for court sale – need to advise creditors of the what the ship may achieve at auction.
  5. Insurance or general average.
  6. Raising Finance – Investment prospectus: valuation of assets for ipo or for bond issues.
  7. Accounting – Annual accounts and audits.
  8. Accounting for vessels under shared or family ownership.
  9. Legal – A dispute over a valuation or a valuation as part of a court case.
  10. Statutory – Government regulations. 

I have good examples or direct experience of most of the above except No 5 – Insurance or general average. Can anyone tell me why valuations are used in insurance. Is it for a newbuilding replacement value or for the mark-to-market value?

I am collating the feedback on my LinkedIn “Ship Valuation” group, but you can add a comment here, too.

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About Craig Jallal
A shipping analyst whose feels the need to comment on the industry.

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