JAPAN P&I CLUB
CONTENTS

Number of claims received (Policy Year) Naiko Class vessels Paid claims and reserve funds within our retention (Policy Year) S&P Rating Outlook : Stable Reserve Entered Tonnage Entered Vessels
Combined Ratio

S&P rating is published in July 2023. The Reserve, the Entered Tonnage/Vessels, the Number of claims received, and the Paid claims and reserve funds within our retention are as of 31 March 2023. 1
I am Hitoshi Nagasawa, newly elected as Chairman of the Association, at the Ordinary General Meeting of Members and the Board of Directors Meeting on 19 July 2023. I am delighted to present the Association's Annual Report 2023. In the business year 2022, as economic activity began to normalise after the prolonged COVID-19 pandemic, the tug-of-war between the growing global inflation and the tight monetary policy by central banks around the world continued. The subsequent credit crunch caused by bank failures in the US also raised awareness of the risk of recession brought on by strains in inflation control. The expansion of sanctions against Russia by Western countries and the G7, following Russia's invasion of Ukraine, led to disruptions not only in security but in global food and energy policies and supply chains as well. In Japan, soaring global resource prices and the weak yen made the trade deficit of 2022 the largest ever recorded. The recovery of the Japanese economy lagged behind the rest of the world, partly because of issues with the vaccination rollout and spread of variants. Although uncertainty still remains about the global economy, COVID-19 has been moved to category 5 under the Infectious Diseases Act and infection control measures have been relaxed. We thus expect a recovery in the economy to pre-pandemic levels thanks to inbound tourism consumption and other factors. In the shipping industry, demand for containerships has been sluggish, which is a reversal from the high demand deriving from stay-at-home measures during the pandemic. Uncertainty over the economic outlook and concerns about stagnant cargo movements remain. However, the global energy crisis caused by Russia's invasion of Ukraine has accelerated the transition to alternative energy. The industry must keep working towards not only zero emissions, but to creating social value by responding to the need for the transport and storage of renewable energy. As for P&I insurance, the operation of the pooling and reinsurance schemes of the International Group of P&I Clubs (IG) became difficult, as sanctions imposed by the EU and other countries against Russia restricted the provision of insurance to some ships carrying Russian cargoes. The international situation surrounding Russia and Ukraine is still unstable, and we must keep an eye on regulatory developments in all relevant authorities. The IG itself continues to work to represent and protect the interests of shipping companies. As a result of large accidents and COVID-19 related claims payments, as well as the impact of the weak yen, our Association recorded a net loss in the business year 2021. This resulted in a significant reduction in its reserves. Since securing an adequate level of reserves is essential for the stable provision of insurance services to Members, and there was an urgent need to expand the financial base, the Association developed a plan in 2022 to secure a stable reserve of more than JPY25 billion. Under this plan, we applied a general increase/premiums increase along with unbudgeted supplementary calls in the 2023 renewal. Consequently, the reserve which had decreased in the previous year recovered in 2022. We would like to thank our Members for their understanding and support in this process. The Association's mission is to contribute to our Members' stable managment and further development. The Association also seeks to play a role in society by responding promptly to marine accidents, providing compensation, and striving to minimise their impact on environment, society, and the economy. A greater awareness of environmental and human rights issues has led to increased responsibilities being imposed on shipowners across the globe. We remain fully aware of our mission in such circumstances and will do our utmost in the management of the Association to achieve mutual insurance that is of value to society. We would sincerely appreciate your continued support and encouragement in this. We extend our thanks and best wishes to you all. 19 July 2023 Hitoshi Nagasawa, Chairman
We are pleased to present the Annual Report 2023. We would like to take this opportunity to express our sincere appreciation to all the Members for their support and cooperation. In the business year 2022, Japan continued to be affected by the COVID-19 pandemic. We finally saw signs of the end of this in the fourth quarter of the year. In 2023, the Japanese government announced its policy to re-classify COVID-19 as category 5 under the Infectious Diseases Act, and face mask wearing rules relaxed. We saw other post-pandemic initiatives including a move towards the normalisation of economic activity. The maritime and insurance industries were significantly affected by the strengthening of broad economic sanctions against Russia amid the protracted Russian invasion of Ukraine. Under these circumstances, the Association's top priority was to improve the balance of income and expenditure in order to achieve a stable surplus. In terms of premium income, we applied a general increase of 10% for ocean-going owners' entries, charterers' entries, and FD&D in the 2023 renewal. As for Naiko Class entries (Japanese coastal vessels), total premium increased by 15% after Members' rates were adjusted to reflect their individual claims record. These increases were for improving the balance of income and expenditure and ensuring the soundness of the financial base. For ocean-going owners' entries, we also collected unbudgeted supplementary calls, which were 25% of advance calls for each of the 2020 and 2021 policy years, when loss records deteriorated significantly. On the other hand, the number of large claims in excess of the Club retention of USD10 million, and thus eligible for sharing within the International Group of P&I Clubs (IG) reinsurance pool, remained low compared to previous years across the IG. Claim payments related to COVID-19 also decreased. As a result of the above, a net surplus of JPY4.65 billion was recorded in the business year 2022 and the reserve amount, an indicator of financial soundness, increased by JPY5.33 billion from the previous year to JPY27.44 billion, thus restoring the reserve, which had fallen significantly in 2021. Accordingly, while the credit rating by S&P Global Ratings remains  "BBB  (Outlook : Stable)"  as  earned  last  year,  the Association's capital adequacy has been revised upward from "Strong (A)" to "Very strong (AA)", as a result of which the financial risk profile is also upgraded. The Association's mission is to provide quality and stable insurance services to its Members, and we recognise that this requires, above all, the expansion of its revenue and financial base. In 2023, our priorities will be 1) improving the balance of income and expenditure and increasing core capital, 2) strengthening risk management and 3) further improving service quality to the satisfaction of our Members. We will continue to make every effort to be the first choice Club of our Members, and we would appreciate your continued support and cooperation as well as your continued efforts to prevent accidents by ensuring safe ship operations. Finally, I would like to express my heartfelt wishes for the safety of all your vessels and the prosperity of your business. 19 July 2023 Shizuo Takahashi, Director General BUSINESS REPORT ENTERED TONNAGE REINSURANCE TREND OF CLAIMS TREND OF POOL CLAIMS INTERNATIONAL GROUP TOPICS LOSS PREVENTION INVESTMENTS SUSTAINABILITY INITIATIVES
During the course of the 2022 policy year, the Association gained new entries of 6 million gt for ocean-going owners' entries and 170,000 gt for Naiko Class entries. The International Group of P&I Clubs saw a decrease in the 2022 policy year from past policy years in the number of pool claims. However, as the claims amount of ocean-going owners' entries incurred in past policy years, especially 2020 and 2021, increased, the loss record became worse. For Naiko Class entries, no large claim occurred in policy year 2022. The reinsurance premiums significantly increased due to multiple natural catastrophes such as Hurricane lan, the situation in Ukraine and global inflation. Given the situation described above and having considered the various factors essential for the management of the Association, including ensuring our financial strength, the Association asked ocean-going vessels Members for a 10% general increase in premiums for the 2023 policy year. As for Naiko class entries, total premium increased by 15% after Members' rates were adjusted to reflect their individual claims record. At the conclusion of the 2023 renewal, the Association's entered tonnage amounted to 87.8 million gt for ocean-going owners' entries and 2.6 million gt for Naiko Class entries. The Association is grateful for the support of Members for this result. As to the entered tonnage by type, bulk carriers have constituted the majority of our entries for many years, and there has been virtually no change in the proportions of the entered tonnage by type. At the end of the 2022 business year (31 March 2023), there were 3,712 vessels entered, comprised of 1,988 for owners' entries and 1,724 for Naiko Class entries. The total amount of entered tonnage was 90.2 million gt, consisting of 87.7 million gt for owners' entries and 2.6 million gt for Naiko Class entries.
achieve a 15% increase in total Naiko class premiums. 30.2 Under the Mutual Psemium system, it is renamed "Additional Call" from the 2023 policy years ■ Bulk Carriers - ■ Container Ships -------16.5% ■■ Tankers- ■ Car Carriers ----------------8.0% ■■ LPG/LNG Tankers --------7.1% ■■ General Cargo Ships--2.2% ■ Others -----------------------1.5% ЮТ ОЗЯЗТИЗ / ТЯОРЭЯ VENIES / TROGEN S SEN
Effective reinsurance arrangements play a key role in stabilising the insurance risk exposure which the Association may face as a result of huge losses, and in providing the insurance cover necessary for Members at a fair and reasonable cost. The Association's reinsurance arrangements consist of the International Group of P&I Clubs (IG) Pool and Reinsurance Programme and the Association's own reinsurance programmes.
IG Pool and Reinsurance Programme
Commercial reinsurance cover of just over USD3,000 million is provided to the Members of all Clubs in the IG. The reinsurance market continues to be in a challenging condition due to the situation in Ukraine and ongoing effects of natural disasters such as Hurricane lan. With the deterioration of claim records for pool claims in  previous policy years, the IG Reinsurance rates increased by an average of approx. 5.8% year-on-year at the latest renewal. The IG's reinsurance captive Hydra continues to support the IG clubs by providing an important layer of the reinsurance structure. A report on the trend of pool claims is on page 9.
The Association's own reinsurance arrangements
In order to stabilise our business results, we arrange our own reinsurance for claims from Naiko Class, Charters' liability risks, and our club retention for Gaiko Class (ocean-going owners' entries). The hardening of the reinsurance market due to the situation in Ukraine, global inflation and natural disasters, as well as the impact of large claim losses, has led to an increase in reinsurance premiums across all lines for the 2023 policy year.
*Losses arising from Malicious Cyber, COVID-19 and other new Pandemics are subject to an annual aggregate limit totaling USD135 billion. Reinsurance for oil pollution claims is purchased as a separate cover with a limit of USD1,000 million. Reinsurance for passenger and seafarer claims is subject to a limit of USD2,000 million for liability to passengers, or USD3,000 million for
passenger and seafarer claims combined.
The number of claims received in PY 2022 remained at 2,500, the same level as the 2021 policy year, for combined ocean-going vessels and Naiko Class vessels. Although the paid and reserve funds within our retention (Paid and Reserve) have shown an increasing trend in recent years towards higher per case Paid and Reserve figures, the per case figure is expected to decrease in the 2022 policy year compared to the previous four policy years. The Paid and Reserve amounted to USD67 million for ocean-going vessels and JPY1,200 million for Naiko Class vessels. In the 2021 policy year, the Association had two incidents involving ocean-going vessels, including a grounding case with pollution, which led to claims exceeding USD10 million and thus being shared with the Pool. For Naiko Class vessels, there was one incident exceeding JPY300 million. On the other hand, although for the 2022 policy year there were two incidents exceeding USD10 million for ocean-going vessels, there were no large claims, meaning exceeding JPY300 million, for Naiko Class vessels.
Ocean-going vessels
The number of claims received has been decreasing over the past five years. Of the claims which were made in that period, those for cargo damage provided the highest proportion of the total number of claims, accounting for 45%. The next most frequent category was crew claims, which accounted for 34%, and the number of claims is increasing. These claims have been significantly affected by the COVID-19 pandemic, surpassing the proportion of cargo damage claims in the 2021 and 2022 policy years. On the other hand, casualties such as collision, stranding, sinking, fire, and oil pollution accounted for 2%. Although the proportion of the number of casualty claims was small, the insurance money for each case was high and accounted for 21% of the total Paid and Reserve for the five years. Most of the claims exceeding USD10 million are related to casualty claims, which is one factor that significantly affects the loss record. Additionally, crew claims related to COVID-19 began to rise from the 2020 policy year. The number of these claims received, together with the Paid and Reserve, increased in the 2021 policy year. However, in the 2022 policy year, crew claims decreased to pre-pandemic levels, before the spread of the COVID-19 infection. ■■ Number of claims received   * 1,*2 (as of 31 March 2023) ■ CARGO　■■ CREW　■ CASUALTY　■■ OTHERS (Number)
Naiko Class vessels
Although for several years there was no significant difference from year to year in the number of claims received for Naiko Class vessels, from the 2019 policy year onwards it started decreasing. However, since the 2021 policy year, there has been an increase. With respect to claims by category, pier damage claims have been the most frequent, accounting for 41% of the total claims during the past five years. The annual average number of casualty claims was 18, or as low as 7% of the total claims of that period. However, these accounted for 30% of the total Paid and Reserve. In the 2021 policy year, a claim exceeding JPY300 million occurred, resulting in an increase in the total Paid and Reserve. Similar to the trend of ocean-going vessels, once such an incident occurs, it will substantially affect the whole loss record. IO BO ON3RIT / TROGER SS *2: "Number of claims received" for ocean-going vessels means the total number of claims for owners' entries, charterers' entries and FD&D. *3: "Paid and Reserve" for ocean-going vessels means the total Paid and Reserve for owners' entries, charterers' entries and FD&D.
Claims pooled by the International Group of P&I Clubs in the 2021 policy year indicate a notable trend towards higher amounts, with approximately 30% of the claims exceeding 50 million dollars, although the number of claims did not significantly increase compared to the average over the period spanning the 2018 policy year to the 2020 policy year. The Association's contribution to the pool was nearly USD25 million in the 2021 policy year, reflecting a substantial sum. As for the 2022 policy year, both the number and amount of claims were very low, something rarely seen in recent years. As a result, the contribution to the pool by the Association in 2022 policy year was approximately USD6 million, measurably below the average over the period spanning the 2018 policy year to the 2021 policy year (USD17 million). The leading causes of significant casualties in the 2021 and 2022 policy years were fires on container ships and PCCs, strandings of container ships and bulk carriers, and oil pollution from tankers. TO TOOL HOON3ЯL / TROGER SSEN
The International Group of P&I Clubs (IG) is made up of 12 not-for-profit mutual insurance associations from around the world, including us. IG Clubs provide liability cover for approx. 90% of world ocean-going tonnage. The claims sharing agreement between the 12 clubs and the IG’s collective purchase of reinsurance from the world's reinsurance market allow for each club to provide the highest level of insurance cover to shipowners. The IG also provides a forum for sharing information on matters of concern or respective experience and expertise. On behalf of clubs and their members, it engages with governments, legislators and maritime regulators on matters relating to shipowners' liabilities.
The situation in Ukraine
The IG has been devoting a great deal of time and effort to addressing issues arising from the situation in Ukraine since February 2022.
<Sanctions Committee>
The Sanctions Committee has carried out multiple meetings with the sanctions authorities of the United Kingdom, the United States, and the European Union in order to gather information on the sanctions regime imposed by each country/area and to seek clarification on their legislative intents. In discussing the "Price Cap" system, which prohibits the transportation and the provision of insurance for the transportation of Russian crude oil and petroleum products which are sold above a certain price, the IG explained to the authorities the roles and positions that shipping companies and P&I clubs play in the trade chain, so that Members would not have impractical obligations imposed on them. Information that the IG obtains is shared with Members through Club circulars.
<Reinsurance Committee>
The situation in Ukraine was one of the main issues in reinsurance renewal discussions for the 2023 policy year. Excess War P&I reinsurers introduced territorial exclusionary language in the cover for vessels operating in Russian and certain Belarusian and Ukrainian waters; however, as a consequence of negotiations with reinsurers for the Reinsurance Committee, reinsurance brokers were ultimately able to secure Excess War P&I insurance cover of USD80 million any one event, each vessel for vessels in those areas.
The Association makes considerable efforts to help our Members prevent accidents. A ship owner's liability for wet damage to cargoes on vessels with hatch covers, such as bulk carriers, is a regular loss insured by the Association. Hatch covers must be kept in weather-tight condition in order to protect cargo from wet damage due to seawater or rain. The Association makes several efforts to assist Members in preventing this type of accident.
Condition Surveys
We arrange condition surveys for entered/newly entered vessels in order to maintain the seaworthiness and cargo worthiness of vessels above levels considered safe. Weather tightness of hatch covers is highly important to protect cargoes from wet damage; therefore, inspections for bulk carriers etc., include ultrasonic testing for hatch covers. The ultrasonic test is the standard inspection method for the International Group of P&I Clubs and it allows us to see the location and degree of gaps in sealing. Members repair the sealing around hatch covers, including packing rubbers and compression bars, which is found to be defective during condition surveys.
Seminars / Bulletins
In May 2022, we held webinars on "Hatch Covers: Cargo Claims and Maintenance". With regard to hatch covers, it is necessary to pay attention not only to wet damage to cargo, but to injury and death of personnel due to poor maintenance and incorrect operation as well. We also regularly provide Members with information on the importance of maintenance. In the 2022 policy year, we published the P&I Loss Prevention Bulletin Vol.53, entitled "Hatch Covers: Claims v/s Maintenance". This discussed the importance of maintenance, with particular reference to the structure and key parts of hatch covers, and some common defects found when testing and inspecting hatch covers. It also set out in more detail the contents of the seminars held in May 2022. In addition, the Association regularly publishes safety information through our Japan P&I News etc. which can be found on our website. NEWBNA SSOL / 190439 SS31
■ Investments and Investment return
Investments
Investment income and profit received during the year decreased by JPY386 million to JPY732 million. Returns ratio on our overall investment portfolio also decreased by 0.74 percent point to 1.19%. In particular, overall returns decreased because of a drop in investment returns from equity funds and bond funds. Returns on investments from equity funds were JPY183 million, decreasing by JPY259 million from the previous year. Losses on investments from bond funds were JPY11 million, a fall of JPY116 million from the 2022 returns amount of JPY105 million. In March 2023, the Federal Reserve (Fed) decided repeatedly to raise its policy interest rate. Subsequently, market interest rates rose rapidly and bond prices fell, which resulted in a decrease
in bond funds’ income.
On the other hand, the total value of investments held by the Association increased by JPY16,463 million to JPY80,477 million. This increase was due to the collection of unbudgeted supplementary calls and a temporary income increase following the introduction of the Mutual Premium method. By category of assets, deposits increased in particular. By currency, dollar assets increased by USD81.6 million, and the Japanese yen converted amount increased more by JPY13,911 million. Yen assets benefitted from foreign exchange fluctuations of JPY4,000 million, due to the change in the year-end exchange rate from JPY122.39/USD in the previous year to JPY133.53/USD. Our current mid-to long-term challenge, as set in our financial year 2018, is to adjust the asset allocation so BMTS3ANI / TROPER SS3N BNISBANI / TROGER SSENI
"(The same period last year)
"(The same period last year) that the expected rate of return will increase to 2.4%. The adjustment is brought about by restraining the risk and improving the Sharpe Ratio. While the return on our overall investment portfolio was 1.19% due to a series of decreasing factors, the expected rate of return has reached the target level due to the effects of the rise in interest rate. We maintain a safety-friendly operation in our Investment Policy in accordance with the Plan of Business Operations approved by the Japanese Financial Services Agency. Our policy includes the following: Credit risk: The target of fixed-rate bonds is restricted to Japanese government and corporate and foreign bonds rated "A" or higher. Interest rate risk: A proportion of bonds is held as held-to-maturity bonds to mitigate a loss in case of a decline in market value when interest rates rise. Exchange risk: We hold funds in USD to assist the abatement of liabilities arising from any future adverse currency variations. The Association conducts regular monitoring in order to check whether the amount of risk carried by our total assets is within the appropriate range.
Average Expense Ratio
Our average expense ratio for the five years ended 31 March 2023 was 7.78%. The average expense ratio is the average of the percentage of operating expenses (total operating expenses after deducting claims management expenses) of revenue. This figure was calculated in accordance with the Schedule and the guidelines issued by the International Group of P&I Clubs and is consistent with the relevant Financial Statements.
We contribute to the sustainable development of society by providing shipowners' liability insurance. The shipping industry supports peoples' livelihoods, and our service plays a vital role in maintaining the security and stability of the industry.
Mission
The mission of the Association is threefold: to protect the interests of our Members, to promote the sound development of the Association, and to contribute to a more secure and stable shipping and related maritime industry by providing shipowners' liability insurance to our Members.
Approach to Sustainability
• We recognise the gravity and the significance of global environmental issues in our journey towards sustainability. • Where possible, we support the decarbonisation efforts of the shipping industry during the transition to greener fuels. • We aim for fair organisational management and to build strong relationships with both local and international communities, while strengthening our operational governance, in the hope for world peace, justice, and security.
Sustainable Actions
LINE ATLUSANIALSUS / TROGESI ШИЕ YTLISANIATSUS / TROGESI SSE
Activities
-Loss Prevention Activities-
Marine accidents affect the marine environment. We put considerable effort into our Loss Prevention activities as we seek to prevent accidents involving our insured vessels. Not only do we regularly hold Loss Prevention seminars, we also provide information through P&I Loss Prevention Bulletins and Japan P&I News to support our Members' efforts to prevent accidents. We also conduct entry surveys and condition surveys to maintain and improve the quality of Member vessels.
-Claims Handling-
In the event of a marine accident, appropriate claims handling is required to minimise the damage. We appoint correspondents and experts with specialised knowledge and abundant experience to deal with oil spills and strandings, and the removal of shipwrecks, in order to minimise the potential impact on the environment, society, and economy. In the event of a severe accident, we dispatch staff members to the site, and set up a disaster countermeasure office to support people in the affected areas.
-Quality Working Environment-
We aim to create a comfortable working environment for all our employees. We operate mainly in Japan, but within a culturally diverse environment, with executives and employees from seven different nationalities. We respect basic human rights and do not tolerate discrimination or infringement of human rights on the grounds of gender, age, occupation, nationality, race, belief, religion, or social status, etc. In order to promote mental health care, all our employees are given a stress check, and we arrange occupational health physicians for those who seek consultations for physical and mental health reasons. Furthermore, to provide a secure working environment for working parents, we encourage our employees to take childcare leave, provide the option of shorter working hours, and offer pre- and postpartum leave. In recognition of these efforts, in 2021 we received a certification called Kurumin which is awarded to companies in Japan which support working parents.
-Legal Compliance-
We regard thorough legal compliance as the most vital matter in the operation of the Association. We have set up a Compliance Committee to prevent violations such as workplace bullying and sexual harassment, and for early detection and response. We have established a compliance consultation desk to support a whistleblowing system.
-Awareness-raising Activities-
Our Managerial Committee has discussed the Association's sustainability strategy, and we have held study sessions for employees so that they can deepen their understanding of sustainability matters. We are also investigating the effectiveness of energy conservation efforts at our office, creating for this purpose visual representations of our energy consumption.
FINANCIAL STATEMENTS
REPORT OF THE INDEPENDENT AUDITORS INCOME AND EXPENDITURE ACCOUNTS BALANCE SHEETS  STATEMENTS OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS RESERVES POLICY YEAR STATEMENTS UR TNEONBABONI 3HT 30 180 939 / STNEWSLYIS TO

INDEPENDENT AUDITOR’S REPORT
To Mr. Shizuo Takahashi Director General, Representing Director The Japan Ship Owners' Mutual Protection & Indemnity Association
Opinion
We have audited the financial statements of The Japan Ship Owners' Mutual Protection & Indemnity Association ("the Association"), which comprise Balance Sheet as at 31 March 2023, and Income and Expenditure Account, and Statement of Cash Flows for the fiscal year then ended, and Notes to the Financial Statements. In our opinion, the financial statements referred to above are prepared, in all material respects, in accordance with the basis of presentation and accounting policies described in the Notes A and B to the financial statements.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Association in accordance with the ethical requirements that are relevant to our audit of the financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter – Basis of accounting
We draw attention to the Notes A and B to the financial statements , which describes the basis of accounting. The financial statements are prepared to be used for parties related to the Association. As a result, the financial statements may not be suitable for another purpose. Our opinion is not modified in respect to this matter.
Other Information
The other information comprises the Annual report excluding the rating information (but does not include the financial statements and our auditor's report thereon), which we obtained prior to the date of this auditor's report, and the rating information, which is expected to be made available to us after that date. Management is responsible for the other information. In addition, those charged with governance are responsible for overseeing the Association's reporting process of the other information. Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially PricewaterhouseCoopers Aarata LLC Otemachi Park Building, 1-1-1 Otemachi, Chiyoda-ku, Tokyo 100-0004, Japan T: +81 (3) 6212 6800, F: +81 (3) 6212 6801, www.pwc.com/jp/assurance
inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Financial
Statements
Management is responsible for the preparation of the financial statements in accordance with the basis of presentation and accounting policies described in the Notes A and B to the financial statements, for determining that the basis of preparation is acceptable in the circumstances, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Association's ability to continue as a going concern and disclosing, as applicable, matters related to going concern. Those charged with governance are responsible for overseeing the Association's financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with auditing standards generally accepted in Japan will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: . Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. . Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, while the purpose of the financial statement audit is not to express an opinion on the effectiveness of the Association's internal control. . Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. . Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Association's ability to continue as a going VBON3430N13H1 -60 180 939 / SLIN3W UN TNACNGGBONISHT BO 1809B9 / STNEWSTATS 1 concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Association to cease to continue as a going concern. Evaluate whether the presentation and disclosures of the financial statements are in accordance with the basis of presentation and accounting policies described in the Notes A and B to the financial statements. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Convenience translation
The U.S. dollar amounts in the accompanying financial statements with respect to the year ended 31 March 2023 are presented solely for convenience. Our audit also included the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis described in the Note A-2 to the financial statements.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Association which is required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan. Mosetrike Next IFCO21957FE410. Masahiko Nara Designated Engagement Partner Certified Public Accountant 19 July 2023 Notice to Readers: The presentation of "Note C Other Notes to Financial Statements" is not required by accounting principles generally accepted in Japan, and has not been audited by the independent auditor. .
The accompanying notes are an integral part of these financial statements. COOY BRULIONSAXE ON BROONI / STNEMSTATS JADN
The accompanying notes are an integral part of these financial statements. IS BONATYS / STNENSTATIS JAIDNA
for the years ended 31 March 2023 and 2022
The accompanying notes are an integral part of these financial statements. HSVO BO SLNEWBLYLS / SLNEWBLYLS JAI EIYIS TYIONYNIG 3HL OT SETON / S INEMETATS JA

A. Basis of Presentation
1： In accordance with the Insurance Business Act, the financial year for an insurance company in Japan is from 1 April to 31 March. The financial year of the Japan Ship Owners' Mutual Protection & Indemnity Association (the "Association") conforms with this requirement. The accompanying financial statements have been prepared from the financial statements disclosed for domestic reporting purposes by the Association in accordance with the provisions of Japanese Companies Act, the Ship Owners' Mutual Insurance Association Law of Japan, and related regulations which are different in certain respects with regards to application and disclosure requirements of International Financial Reporting Standards. The supplementary schedules required by the above-mentioned laws in Japan are omitted. However, the statement of cash flows, though not required, is voluntarily disclosed to provide information to readers. The statement of cash flows has been prepared based on "Standard of preparing the Consolidated Statement of Cash Flows, etc. (Japanese Business Accounting Council statement, 13 March 1998)" and "Practical Guideline in Preparing the Statement of Cash Flows for the Consolidated Financial Statements, etc. (Accounting Practice Committee No.8, 28 November 2014)". For the convenience of readers outside of Japan, certain been made reclassifications have the in accompanying financial statements. Amounts of less than one million yen and one thousand dollars are rounded.
2： Translation to U.S. Dollars
The accompanying financial statements are expressed in Japanese Yen and, solely for the convenience of readers, the statements for the year ended 31 March 2023 have been translated into U.S. Dollars at the rate of ¥133.53 = U.S.$1, the middle rate prevailing on the Tokyo foreign exchange market on 31 March  2023. The functional currency of the Association is Japanese Yen, and the translation to the US Dollars is only for the convenience of readers.
B. Notes prescribed by the laws and regulations
1： For foreign currency bonds, the Association records unrealized foreign exchange gains and losses with respect to the amortized cost denominated in foreign currency to the income and expenditure account in each respective period. 2： For the years ended 31 March 2023 and 2022, the aggregate revenue of business transacted with the subsidiary companies amounted to ¥50 million ($374 thousand) and ¥49 million, respectively, and the aggregate expenses amounted to ¥62 million ($464 thousand) and ¥61 million, respectively.
Policy Year 2021 in the amount of ¥5,580 million ($41,787 thousand), 25% unbudgeted Supplementary Call for Policy Year 2020 in the amount of ¥3,330 million ($24,938 thousand) and 25% unbudgeted Supplementary Call for Policy Year 2021 in the amount of ¥3,538 million ($26,495 thousand). The year ended 31 March 2022 includes 40% Supplementary Call for Policy Year 2020 in the amount of ¥4,740 million.
③ Change in reserve for outstanding claims consists
④Change in unearned premium reserve consists of the following:
③ Operating expenses consist of the following:
⑥Interest and dividends income consist of the
⑦For the years ended 31 March 2023 and 2022 valuation gains of ¥8 million($60 thousand) and ¥241 million are included in "Gains (losses) on money  trusts", respectively.
4： Reconciliations between the effective statutory tax rate and the actual effective tax rate after application of deferred tax accounting for the year ended 31 March 2023 and 2022 are as follows:
5： Movement of unappropriated surplus (deficit) consists
out of ¥4,651 million ($34,832 thousand) will be transferred to special reserves. IYIS TYIONYNH 3HT 01 SELON / STNEMBTATS / IYIS TYIONYNIG 3HL 01 SELON / STNEMETATS TY 6: The standards for valuation of securities are as follows: ① Shares of subsidiaries are stated at cost pursuant to the moving average method. ② Securities held to maturity are stated at amortized cost (straight line method) pursuant to the moving average method. ③ Marketable securities held as available for sale are stated at market price as of the balance sheet date. The unrealized gains/losses on the marketable securities are recognized directly within "Net assets" and the cost of securities sold is pursuant to the moving average method. ④Non-marketable securities held as available for sale are stated at cost using the moving average method where the fair value is extremely difficult to determine. 7：Money trusts held for trading purposes are stated at the fair value. 8: Depreciation of property, plant and equipment is calculated using the declining-balance method. Fixtures attached to buildings and structures acquired on or after 1 April 2016 are calculated using the straight-line method. 9 : The Association records software for internal use as an intangible asset. Depreciation on such assets is calculated using the straight line method based on an estimated useful life of 5 years. 10 : The translation of foreign currencies to Japanese yen is carried out pursuant to the Accounting Standards for Foreign Currency Transactions. 11：A reserve for bad debts is estimated on the basis of past experience. 12：A reserve for bonuses is provided for at the amount estimated at the balance sheet date for future payments. 13: A reserve for retirement benefits is stated at the amount which would become liable to be paid should all of the staff employment contracts be voluntarily terminated at the balance sheet date after deduction of the fair value of the funded plan assets. At 31 March 2023 and 2022, prepaid pension cost of ¥105 million ($790 thousand) and ¥108 million are included in Other assets, respectively. 14： A reserve for directors' retirement benefit is stated at the amount which has been incurred at the balance sheet date based on the bylaws of the Association. 15：To provide for future losses arising from providing support to Hydra Insurance Company Ltd., which is a reinsurance company in Bermuda jointly established by the International Group of P&I Clubs, the reserve for losses of reinsurance is stated at the amount equivalent to cumulative losses of the reinsurance company attributable to the Association. 16： A catastrophe reserve is established to ensure the continued solvency of the insurer in case of catastrophic losses beyond the scope of the insurer's general reserve assumptions and is accumulated over time based on the premiums written for each year. If the gross claims paid for a year exceed 80 percent of net premiums written of the year, the insurer may reverse a portion of the catastrophe reserve equal to the excess amount. 17：Consumption taxes are accounted for under the "tax inclusive" method. 18：Items for which the amount was recorded in the financial statements for the current fiscal year due to accounting estimates, which may have a material impact on the financial statements for the following fiscal year, are as follows: 1. Deferred tax assets ① Amount recorded in the financial statements for the fiscal year See "B. Notes prescribed by the laws and regulations 22" ② Other information that contributes to the understanding of financial statement users regarding the content of accounting estimates

[1] Calculation method
The recognition of deferred tax assets is estimated by the timing and amount of taxable income based on future business plans.
[2] Key assumptions
Estimates of future taxable income are based on future business plans, where key assumptions are premiums and other revenues primarily generated from insurance contracts, including those expected to be earned in the future, as well as insurance and other payments that are projected to be made in the future from historical payment experience. [3]Impact on the financial statements for the following fiscal year The amount of deferred tax assets could be materially affected in the financial statements for the following fiscal year if the timing and amount of actual taxable income incurred differ from the estimates, which may be affected by changes in circumstances in the future of each event.
2. Reserves for outstanding claims
The Association estimates the amount of insurance claims incurred or deemed to have been incurred that have not yet been paid under insurance contracts and reserves for outstanding claims. The Reserve for Payment consists of the outstanding claims (the amount of insurance claims, etc. for which the obligation to pay has arisen under the insurance contract, but which have not yet been paid; hereinafter referred to as "Ordinary Reserve for Payment") and the outstanding claims for payment (the amount of claims for which the cause of payment has not yet been reported but for which the cause of payment is deemed to have arisen under the insurance contract; hereinafter referred to as "IBNR Reserve"). ①Amount recorded in the financial statements for the current fiscal year Reserves for outstanding claims ￥41,955,770,560 ②Other information that contributes to the understanding of financial statement users regarding the content of accounting estimates
[1]Calculation method
With respect to ordinary reserves for outstanding claims, future payments are estimated and recorded by means of assessments and other methods based on information available at the end of the fiscal year for insurance contracts for which payment obligations have been incurred. With respect to IBNR reserves, the Association estimates the reserve requirement by calculating the ultimate loss for policies that have not yet been reported, primarily using the statistical estimation method (such as the Chain ladder method), as it is deemed that a payment obligation has been incurred.
[2]Key assumptions
Ordinary reserves are estimated for future payments based on insurance contract coverage and the results of damage assessments. In assessing damages, the Association estimates the amount of future payments by considering historical payment trends, as well as legislative changes and historical case studies. Key assumptions for IBNR reserves include historical claims and other payment trends, forecasts of internal and external environmental changes, and the selection of estimation methods based on these assumptions. [3]Impact on the financial statements for the following fiscal year Future changes in the circumstances of each event may cause the amount of claims and reserve for outstanding claims to change from the original estimate. 19： Implementation Guidance on Accounting Standard for Fair Value Measurement (ASBJ Guidance No. 31, 17 2021, hereinafter referred to as June the "Implementaion Guidance on Accounting Standard for Fair Value Measurement") is applied from the beginning of the current fiscal year, and the new accounting policy prescribed by the Implementation Guidance on Accounting Standard for Fair Value Measurement is applied prospectively, in accordance with the interim treatment prescribed in Section 27-2 of the Implementation Guidance on Accounting Standard for Fair Value Measurement. This change has no impact on the Association's financial statements. 20： Conditions of financial instruments and fair values are as follows: ①Conditions of financial instruments The Association's investments policy is in accordance with its Plan of Business Operation, as approved by the Financial Services Agency, and gives higher priority to investments which are considered stable. Financial instruments the Association holds are mainly cash and deposits at banks, money trusts, Japanese government bonds, Japanese local government bonds, corporate bonds and foreign securities. Holding these financial instruments exposes the Association to credit risk, foreign currency exchange risk, liquidity risk and other market risk factors. As for exposure to credit risk, investments in corporate bonds (including foreign securities) are limited to those with ratings of "A" or higher in principle. If an investment's rating is downgraded below "A", the Association would likely sell the investment after timely research of the issuer's financial condition. The Association's exposure to foreign exchange risk exists mainly in holding foreign currency denominated bonds. Some foreign currency cash deposits are also held by the Association. Conversely, certain outstanding claim liabilities are denominated in foreign currencies which are also impacted  by foreign  currency exchange fluctuations. As such, the Association manages its exposure to fluctuations in foreign currency exchange rates by actively managing the proportion of the amounts of foreign assets and liabilities that it holds. As to liquidity risk, the Association considers its exposure to be low as most securities held would be expected to be readily sold in the open market when necessary. Regarding other market risk factors, as the Association mainly invests in bonds with high credit ratings and generally holds them until their maturity date, the Association considers the possibility that other market risks would have a significant impact on the Income and Expenditure Accounts to be remote. Regarding premiums receivables, although there is a risk of uncollectible accounts, the Association's Underwriting Department strives to collect outstanding premiums in a timely manner and the section in charge in the head office continuously monitors the status of outstanding premiums receivable. IYIS TYIONYNIG 3HL 01 SETON / STNEWELVIS T

②Fair value of financial instruments
The amounts recorded on the balance sheet, fair value and the difference as of 31 March 2023 and 2022 are as follows:
(Remark 1) Assets (a)Cash and deposits at banks, (d)Premiums receivables. Cash and deposits at banks and premiums receivables are stated at the carrying amount as these are settled in the short term and those fair values are approximately equal to the carrying amount. (b)Money trusts…The fair value of money trusts individually managed primarily for investments in securities are stated at the price provided by the trustee bank. (c)Securities..Bonds and investment funds are mainly stated at the price presented by the financial institution. Liabilities (a)Foreign reinsurance payables...Foreign reinsurance payables are stated at the carrying amount as these are settled in the short term and their fair values are approximately equal to the carrying amount. (Remark 2)   Unlisted stocks of ¥3,429 million ($25,683 thousand) are excluded from (c) "Marketable securities held as available for sale" as no market prices exist and futu cash flows are not estimable and therefore it is extremely difficult to determine the fair value. ③Breakdown of the fair value of financial instruments by appropriate classification The fair value of financial instruments is categorized into the following three levels, depending on the observability and significance of the inputs to the determination of fair value: Level  1 Fair Value :  Fair values measured using inputs for determining fair values that are determined by quoted prices for the assets or liabilities subject to such fair values that are formed in active markets that are observable Level 2 Fair Value : Fair values measured using inputs for determining fair value other than Level 1 inputs that are observable Level  3 Fair Value :  Fair values measured using inputs for determining fair values that are unobservable In case the Association uses multiple inputs that have significant impact on the determination of fair value, the Association categorizes fair value into the level with the lowest priority within the inputs used to determine fair value. Pursuant to paragraph 24-9 of ASBJ Guidance No. 31, "Implementation Guidance on Accounting Standard for Fair Value Measurement", investment trusts and stocks without market prices are not included in the table below (See Remark 2 and 3).
*Investment trusts that have applied the treatment in which base price is regarded as market value in accordance with paragraph 24-9 of the implementation Guidance for Fair Measurement are not included in the table above. The amount of such investment trusts on the balance sheet is ¥1,690 million ($12,656 thousand).
[2]Financial assets not measured at fair value on the balance sheet
Cash and deposits at banks are excluded because these are settled in the short term and those fair values are approximately equal to the carrying amount.
(Remark 1) Description of valuation techniques and inputs used to determine fair value The fair value of securities constituting trust assets is evaluated and classified using the same method as "Securities." Money trusts Securities Securities for which quoted prices in active markets are available are classified as Level 1 fair values. If quoted prices are used but the market is not active, they are classified as Level  2 fair values. When quoted prices are not available, the fair value is determined by valuation methods such as the discounted present value method. Inputs such as yield  curves  and credit spreads are used for valuation. If the Association does not use unobservable inputs or their impact is immaterial, they are classified as Level 2 fair values. (Remark 2) Balance Sheet Amount of Stocks, etc. without Market Prices The balance sheet amount of stocks, etc. without market price is ¥3,429 million ($25,683 thousand). Stocks without quoted market prices include unlisted stocks, etc. and are not subject to fair value disclosure in accordance with paragraph S of the "Guidance on Disclosures about Fair Value of Financial Instruments" (ASBJ Guidance No.19, 31 March, 2020). (Remark 3) Information on investment trusts which have applied the treatment in Paragraph 24-9 of the "Implementation Guidance on Accounting Standard for Fair Value Measurement "(ASBJ Guidance No. 31, June 17, 2021) BIYIS TYIONYNIG 3HL 01 SETON / S INEMETATS JA
21： Accumulated depreciation for property, plant and equipment amounts to ¥171 million ($1,282 thousand) and ¥378 million at 31 March 2023 and 2022, respectively. Advanced depreciation amounts to ¥0 million ($2 thousand) and ¥301 million at 31 March 2023 and 2022, respectively. 22： The total amounts of deferred tax assets and liabilities at 31 March 2023 and 2022 are as follows:
TATS JAIONANIA 3HT 01 SETON / STN3M3LATS JA YIS TYLONYNG 3HL 01 SELON / S INEMETATS JA 23: In addition to the property, plant and equipment recorded on the balance sheet, lease contracts are in place for copying machines. 24: Investment in subsidiaries amounts to ¥12 million ($86 thousand) and ¥12 million at 31 March 2023 and 2022, respectively. 25： ①Reserve for outstanding claims with respect to reinsurance stipulated in Article 51 of the Enforcement Regulations of the Ship Owners' Mutual Insurance Association Law of Japan (the "Regulations") which is referred in Article 53.2 of the Regulations amounts to ¥46,384 million ($347,370 thousand) and ¥47,972 million at 31 March 2023 and 2022, respectively. ②There is no unearned premium reserve with respect to reinsurance stipulated in Article 51 of the Regulations  at 31 March 2023 and 2022. ③There is no amount deducted relating to the distribution of surplus stipulated in Article 28 of the Regulations at 31 March 2023 and 2022. 26： Cash equivalents in the statement of cash flows are cash in hand, deposits at banks which can be withdrawn at any time and highly liquid short-term investments with an original maturity of three months or less, and are subject to insignificant risk of changes in value. The reconciliation of cash and cash equivalents on the statement of cash flows to cash and deposits at banks on the balance sheet is as follows:
There is no significant non-cash transaction entered into by the Association during the years ended 31 March 2023 and 2022. Cash flows from investing activities include cash flows arising from asset management relating to the insurance business during the years ended 31 March 2023 and 2022.
ETATS TAIONANIA 3HT 01 SETON / STREMETATS TMOR
NEIYIS TYIONYNIG 3HL 01 SETON / STNEWBLYIS JAI
BIATS JAICNANIA 3HT OT SETON / STNEMETATS JA
The "Sub-total" represents the reserves that have been built up out of surpluses in open and closed years. Please see the "Policy Year Statement" described in pages 36 and 37. 83S38 / STNEMETAL S JALON A SE/
as of 31 March 2023
1. The estimated outstanding claims includes provision for incurred but not reported claims (IBNR's). 2. Calls and premiums written, claims paid and estimated outstanding claims are allocated to the policy years to which they relate. All other amounts, such as "Investment income" and "Operating expenses" are allocated to policy years in a systematic and reasonable manner. 3. For the 2023/24 policy year which is covered the period from 20 February 2023 to 31 March 2023, calls and premiums are stated on an earned basis to 31 March 2023. 4. The translation rate in this Policy Year Statement is ¥133.53 = US$1, the middle rate  prevaling on the Tokyo foreign exchange market as of 31 March 2023.
WETATE RABY YOUTOB / STNENSTATE JAISNA

■ Directors
Chairman, Representing Director Hitoshi Nagasawa   Chairman Nippon Yusen Kabushiki Kaisha Deputy Chairman, Representing Director Yukikazu Myochin    President Kawasaki Kisen Kaisha, Ltd. Takeshi Hashimoto   President Mitsui O.S.K. Lines, Ltd.
■ In-House Directors
Director General, Representing Director Shizuo Takahashi Executive Directors, Representing Directors Keisuke Kobayashi Minoru Naito Directors Yuichi Tanaka Yukihiko Itagaki Ryoichi Oda Tetsu Morita Naoyuki Moriya
IGUAG NA SROLOB
Kazuma Yamanaka   President NS United Kaiun Kaisha, Ltd. Yoichiro Seno
(as of 19 July 2023)
(as of 19 July 2023) IALIATION
Underwriting Team Kobe Branch Claims Team Crew Claims Team Fukuoka Branch Underwriting Team Imabari Branch Underwriting Team Claims Team Underwriting Team Singapore Branch Claims Team ■ Subsidiaries Japan P&I Club(UK) Services Ltd. Pl Kogyo K.K. OTTASINA98
■ Principal Office
15th Floor, ARK Hills Front Tower, 2-23-1, Akasaka, Minato-ku, Tokyo 107-0052, JAPAN Phone : +81 3 6687 0505   Facsimile : +81 3 6871 0051
■ Kobe Branch
6th Floor, Shosen-Mitsui Building, 5, Kaigandori, Chuo-ku, Kobe, Hyogo 650-0024, JAPAN Phone : +81 78 321 6886    Facsimile : +81 78 332 6519    Email : kobe@piclub.or.jp
■ Fukuoka Branch
3rd Floor, Hakata-Ekimae Center Bldg., 1-14-16, Hakata Ekimae, Hakata-ku, Fukuoka, Fukuoka 812-0011, JAPAN Phone : +81 92 260 8945    Facsimile : +81 92 482 2500    Email : fukuoka@piclub.or.jp
■ Imabari Branch
5th Floor, Imabari-Kitahoraicho Building, 2-2-1, Kitahoraicho, Imabari, Ehime 794-0028, JAPAN Phone : +81 898 33 1117    Facsimile : +81 898 33 1251    Email : imabari@piclub.or.jp
■ Singapore Branch
80 Robinson Road #14-01, Singapore 068898 Phone : +65 6224 6451    Facsimile : +65 6224 1476    Email : singapore@piclub.or.jp
■ London Liaison Office
5th Floor, 38 Lombard Street, London, U.K., EC3V 9BS Phone : +44 20 7929 4844    Facsimile : +44 20 7929 7557    Email : llo@japia.co.uk ■ Japan P&I Club (UK) Services Ltd. (Claim contact point in UK) 5th Floor, 38 Lombard Street, London, U.K., EC3V 9BS Phone : +44 20 7929 3633    Facsimile : +44 20 7929 7557    Email : ukservices@jpiclub.com (as of 24 July 2023) Contact $301440 The Japan Ship Owners' Mutual Protection & Indemnity Association www.piclub.or.jp