Insurers like to say they are only as good as their claims record. Few claims files carry more weight than this one.
A ledger recording Atlantic Mutual Insurance Company’s share of the hull cover on RMS Titanic will be sold on 21 November by English auctioneers Henry Aldridge & Son. The pre-sale estimate is US$40,000 to US$67,000 (£30,000–£50,000). The Devizes firm, which holds the record for every major Titanic item sold at auction, believes it is the only copy still in existence.
The binder was signed on 27 March 1912. Nineteen days later, Titanic hit an iceberg in the North Atlantic and sank on her maiden voyage to New York, killing more than 1,500 people.
Atlantic Mutual took a US$100,000 line, which is roughly US$3.5 million in today’s money. That was one part of a total-loss placement worth about US$5 million, shared among a consortium of around 77 insurers, and Atlantic Mutual is believed to have been one of the largest participants. The insured was the Oceanic Steam Navigation Company, the corporate owner behind the White Star Line.
Read next: Allianz, Coastal Marine establish marine hull partnership in Asia-Pacific
The policy ran for 12 months from 30 March 1912. A handwritten endorsement extended cover to the delivery passage from Belfast to Southampton, including any sea trials along the way. The document therefore records the ship’s insured status before any paying passenger came aboard. Andrew Aldridge, the auction house’s managing director, has reportedly described the clause as “slightly prophetic”.
According to Lloyd’s own history of the Titanic, broker Willis Faber & Co, a forerunner of today’s WTW, went to the Lloyd’s underwriting room on 9 January 1912 to place Titanic and her sister ship Olympic for White Star. Lloyd’s records the Titanic’s insured value as £1 million. At the exchange rate of the time, that was about US$4.9 million, which matches the US$5 million figure in American records.
Underwriters were keen to get on the slip, with one exception. British Dominions Marine Insurance refused to sign because it judged the vessel sat too low in the water.
Read next: Marsh Risk Asia adds three to marine and cargo team in Singapore
The numbers explain why Lloyd’s still ranks the sinking among its most significant historical losses, next to 9/11 and the 1906 San Francisco earthquake. Lloyd’s says total insured marine losses for all of 1912 came to £6.75 million, roughly US$33 million at the time, and that figure includes Titanic. A single ship made up about a seventh of the year’s marine losses.
On the morning the news broke, reinsurance rates on the vessel reached 60% as reports went from damaged to sinking. Underwriters who had written the hull were rushing to lay off risk on a ship that was already lost. The episode is also an early case study in facultative reinsurance. Delays in the ship’s delivery complicated the back-to-back reinsurance arrangements underneath the original placement.
White Star was still paid in full within 30 days. Today’s large marine losses can take months of salvage, adjusting and coverage argument to settle, so that turnaround still stands out. The aftermath was not entirely clean, though. Insurance Business has previously reported research suggesting a senior Titanic officer played down the iceberg collision, possibly to head off negligence claims.
Atlantic Mutual’s later history makes the document more poignant. The New York carrier was founded in 1838 and by the mid-1800s had become North America’s largest marine and general insurer. More than a century later, it was a major insurer of property damaged or destroyed on September 11, and that exposure is widely thought to have contributed to its decline. Its licences were revoked and it entered liquidation in 2011, after 173 years of trading. Papers from its historical archive, including Titanic material, were later exhibited in New York, where a dealer bought them.
Read next: Weak dollar flatters marine premium growth as attritional claims build, IUMI finds
The estimate looks modest next to what Titanic collectors have paid recently. Over the past two years, the Devizes saleroom has sold three gold pocket watches for more than US$1.5 million each at current exchange rates. The record, about US$2.4 million, was paid for the watch Isidor Straus was wearing. Captain Arthur Rostron’s watch, presented to him for rescuing survivors aboard the Carpathia, made about US$2.1 million. In April this year a survivor’s lifejacket sold for close to US$900,000.
Insurance documents attract a narrower group of buyers. The auction house says the market is driven by passengers’ and crew members’ stories, and a hull binder, however significant to underwriters, does not have a person at its centre.
Values are also climbing fast. In 2013, the violin that bandmaster Wallace Hartley is said to have played as the ship sank sold for £1.1 million including fees, about US$1.5 million at today’s exchange rates. Aldridge now suggests it could be worth three or four times that. For brokers with high-net-worth clients who own collectables, that is a reminder that valuations a few years old can leave clients significantly underinsured.
Andrew Aldridge has said provenance is everything with these objects, and that matters here. The auctioneer says it can find no record of an original Titanic policy being sold before. However, a Titanic historian’s account of an earlier Henry Aldridge auction, apparently held in 2013, describes the original Atlantic Mutual hull ledger selling there for £14,000, around US$22,000 at the time. Separately, US trade press reported that year that a ledger page from Atlantic Mutual’s Titanic policy, number 391550, sold at Doyle New York for US$25,000 to an anonymous buyer.
It is not yet clear whether any of these is the item now on offer, a separate page or another record of the same risk. Serious bidders will want that answered before the hammer falls on 21 November.
Either way, the lot records a policy that responded to a total loss exactly as intended, and the claim was paid within a month.
For more on hull, cargo and war risks, see Insurance Business’s latest marine news.
