JAPAN P&I CLUB
CONTENTS

We are delighted to present the Annual Report 2022. We would like to take this opportunity to express our sincere appreciation to all the Members for their support and cooperation. The business year 2021 was greatly affected by the continued COVID-19 pandemic and the situation in Ukraine. While the P&I industry saw some large accidents, the Association worked on to strengthen the financial base to achieve a stable surplus and to increase the reserve. In terms of premium income, we applied a 10% increase in the premiums for Naiko Class entries (Japanese coastal vessels) and ocean-going owners' entries, Charterers' entries, and FD&D (5% for Naiko Class harbour tugs) at the 2022 renewal. We also improved the contract terms and adjusted the premiums for individual Members according to their loss records. As a result, although the registered tonnage decreased, we succeeded in increasing premium income. The most of the lost contracts at renewal were the vessels having constantly bad loss records and they were not renewed because we asked for higher premiums. Therefore, we expect less claims payments from now on. On the other hand, we had an accident that caused the highest claims payments in the Association's Naiko Class history, and that also incurred additional payments towards reinsurance. As for ocean-going owners' entries, the claims payments related to the COVID-19 pandemic increased significantly, and the additional costs also considerably increased from the previous year because of the depreciation of the yen mainly caused by the widened interest rates gap between Japan and the United States. As a result, the increase in additional costs for claims payments exceeded the increase in premium income, and the deficit after income taxes of JPY410 million was recorded in the business year 2021. The reserve also decreased from the previous year to JPY22.11 billion as a result of a large withdrawal of the catastrophe reserve due to the deterioration in loss ratios. The credit rating of the Association has been downgraded to "BBB (Outlook: Stable)" by the S&P Global Ratings. Although the account settlement for 2021 recorded a deficit due to the influence of some large accidents and the increase of the claims related to COVID-19, we expect the claims payments in 2022 to return to the average level because the number of COVID-19-related claims reduced rapidly in the second half of 2021. We will continue to work on to achieve stable profitability in 2022 and to raise the credit rating by increasing the registered tonnage and enhancing the financial base as well as promoting the measures including digitalisation for the medium and long term growth of the Association. The Association shall "contribute to the protection of the interests of the Members and the sound development of the Association, as well as improving the management stability of the shipping and maritime industry through the provision of shipowners’ liability insurance" as declared in the management philosophy. Compliance and promotion of sustainable business operations with SDGs in mind are our important policies. We thank you for your continued support and cooperation, and sincerely wish our Members’ safety for their vessels and continued business prosperity. 21 July 2022 Shizuo Takahashi, Director General
BUSINESS REPORT
HIGHLIGHTS SUMMARY OF F NANCIAL STATEMENTS ENTERED TONNAGE REINSURANCE TREND OF CLAIMS TREND OF POOL CLAIMS INTERNATIONAL GROUP'S TOPICS LOSS PREVENTION INVESTMENTS SUSTAINABILITY INITIATIVES
Number of claims received (Policy Year) 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 2022. The Reserves, the Entered Tonnage/Vessels, the Number of claims received, and the Paid claims and reserve funds within our retention are as of 31 March 2022. Копног / ТЯОЧЭЯ S S EN

<Premium income>
The premium income for new vessels has been decreased due to the fierce market competition, and the International Group of P&I Clubs (IG) have had large claims more in recent years. For these reasons we had a 10% increase in insurance premiums for Naiko Class entries and ocean-going owners' entries, Charterers' entries, and FD&D (5% for Naiko Class harbour tugs) at the 2022 renewal. We also adjusted the premiums for each Member according to their loss records. As a result, "net premiums written" for the financial year 2021 increased by JPY1.84 billion from the previous year to JPY16.81 billion.
<Investment income>
As investment fund returns fell sharply under the influence of the situation in Ukraine, "the Gains on money trusts" decreased by JPY1.74 billion from the previous year. However, the depreciation of the yen increased a foreign exchange gain to JPY2.28 billion and overall investment income increased by JPY70 million from the previous year to JPY3.39 billion.
<Claims payments>
Since we had an accident that caused the highest claims payments in the Naiko Class history of the Association and the additional contribution to the reinsurance was incurred, JPY480 million was recorded as claims reserve for the fiscal year 2021. As for ocean-going owners' entries, the claims payments increased significantly due to the COVID-19 pandemic, and so did the loss reserves because of the depreciation of the yen. As a result, "net claims paid" in 2021 increased by JPY4.39 billion from the previous year to JPY17.64 billion. In addition, as the loss ratios deteriorated, the catastrophe reserve was significantly withdrawn, and "the reversal of underwriting reserve" of JPY2.31 billion was recorded.
<Result>
"Ordinary surplus" was JPY600 million in the 2021 settlement of accounts. Since we are not able to expect the recovery of a part of the deferred tax asset, the amount of deferred income taxes was JPY1.01 billion and the "deficit after income taxes" of JPY410 million was recorded. The reserve amount, which is an indicator of financial soundness, decreased by JPY4.87 billion from the previous year to JPY22.11 billion due to the large decrease in the catastrophe reserve. The combined ratio was 133.6% ignoring fluctuations in exchange rates within the claims reserve, and the five-year average from 2018 was 108.1%. Our average expense ratio for the five years ending 20th February 2022 was 8.29%. 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 IG and is consistent with the relevant Financial Statements. IVIS TAIONANIE BOYSAMMUS/ 180438
During the course of the 2021 policy year, the Association gained new entries of 4.7 million gt for ocean-going owners' entries, and 80,000 gt for Naiko Class entries (Japanese coastal vessels). The unfavourable claims trend of the 2020 policy year continued into 2021. The loss records for both ocean-going owners' entries and Naiko Class entries worsened significantly. This was due to the impact of the largest claim ever for Naiko Class entries, two large claims exceeding USD10 million for ocean-going owners' entries, and the increase in COVID-19 related claims. In addition, the adverse trend of International Group Pool claims of 2020 continued into 2021, and the estimated cost for these claims is at the highest level ever recorded. Given the claims trend as described above and having considered the various factors essential for the management of the Association, such as its Members' business environment, and ensuring the soundness of its income and expenditure, the Association asked both ocean-going owners' entries and Naiko Class Members for a 10% general increase in premiums (5% for Naiko Class harbour tugs) for the 2022 policy year. At the conclusion of the 2022 renewal, the Association's entered tonnage amounted to 90.4 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 2021 financial year (31 March 2022), there were 3,860 vessels entered, comprised of 2,076 for owners' entries and 1,784 for Naiko Class entries. The total amount of entered tonnage was 93.1 million gt, consisting of 90.5 million gt for owners' entries and 2.6 million gt for Naiko Class entries.
■■ Entered Tonnage by Type (as of commencement of the 2022 Policy Year) ■ Bulk Carriers -----------51.9% ■ Container Ships -------15.4% ■ Tankers--------------------13.9% ■ Car Carriers -----------------8.7% ■■ LPG, LNG Tankers ------6.4% ■■ General Cargo Ships — 2.2% ■■ Others … кот озязтиз / тяочзя
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 global pandemic of COVID-19 and several natural disasters, combined with deteriorating claim records across the IG, all affected commercial reinsurance market conditions, with P&I rates increasing by an average of 33% year-on-year at the latest renewal. The IG's reinsurance captive Hydra continues to support the IG clubs as a primary layer of the reinsurance structure. The trend of pool claims is on page 8.
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 ocean going owners' entries. The hardening of the reinsurance market due to the COVID-19 pandemic and the increasing natural disasters, as well as the impact of large claim losses, has led to a significant increase in reinsurance premiums across all lines for the 2022 policy year.
■■ 2022-2024 Multi-Year Private Placement * Losses arsing from Malicious Cyber, COVID-19 and other new Pandemics are subject to an annual aggregate limit totaling USD2,150 million. Reinsurance for oil pollution claims is purchased as a separate cover with a limit of USD1,000 million. Reinsurance for passenger and seafarer claims combined. VENIBS / TROGEN S SEN 2022 JAPAN P&I CLUB ANNUAL REPORT
The number of claims received has been decreasing in recent years, and 2,500 claims were received for combined ocean-going and Naiko Class in the 2021 policy year. However, paid and reserve funds within our retention (Paid and Reserve) indicate an increasing trend in recent years towards higher per case Paid and Reserve figures. The Paid and Reserve total amounted to USD93 million for ocean-going vessels and JPY1,300 million for Naiko Class. In the 2020 policy year, the Association had three incidents involving ocean-going vessels, including a large grounding case with pollution, which led to claims exceeding USD10 million and thus being shared with the Pool. There was, however, no large claim, meaning exceeding JPY300 million, for Naiko Class. On the other hand, for the 2021 policy year, there were two incidents exceeding USD10 million for ocean-going vessels. For Naiko Class, there was one incident exceeding JPY300 million.
Ocean-going vessels
The number of claims received has been decreasing over the past five years. Claims for cargo damage provided the highest proportion of the total number of claims during that period, accounting for 50% of claims, although recent years show a decreasing trend. The next most frequent category was crew claims, which accounted for 30% and the number is increasing. 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 26% of the total Paid and Reserve for the five years. Most of the claims exceeding USD10 million are related to casualty claims, a factor which significantly affected the loss record. Additionally, crew claims related to COVID-19 began to demonstrate an increasing trend from the 2020 policy year. The number of COVID-19 claims received and the linked Paid and Reserve increased in the 2021 policy year. *3: "Paid and Reserve" for ocean-going vessels means the total Paid and Reserve for owners' entries, charterers' entries and FD&D.
Naiko Class
Although there have been no significant differences in the number of Naiko Class claims received in recent years, the number of claims has decreased since the 2019 policy year. With respect to claims by category, pier claims were the most frequent, accounting for 43% of the total claims during the past five years. The annual average number of casualty claims was 19, or as low as 7% of the total claims of that period. However, these accounted for 27% of the total Paid and Reserve. Similar to the trend of ocean-going vessels, once such an incident occurs, it will significantly affect the whole loss record. TO HO ON3ST / TROSSS SS3
The number of pool claims of the International Group of P&I Clubs for the 2020 policy year shows no significant difference compared to the 2019 policy year. However, due to several significant incidents, the contribution to the pool by the Association in policy year 2020 was nearly USD34 million, which was the highest it has ever been. As for the 2021 policy year, although it did not see many pool claims, each claim amount tended to be larger, and 38% of the claims exceeded USD50 million. As a result, the contribution to the pool by the Association in 2021 policy year was nearly USD16 million, close to the average contribution for the same period from 2017 to 2020 policy years (USD15 million). The leading cause of significant incidents in the 2020 policy year was the stranding of bulk carriers with accompanying oil pollution. Other significant claims included damage to port facilities, and collapse of stow and containers lost overboard from mega container ships. As for the 2021 policy year, major cases included container ship casualties involving fire and stranding, and tanker casualties with oil pollution. TO TOOL HOON3ЯL / TROGER SSEN

Brand and Communications Committee
The International Group of P&I Clubs (IG) is made up of 13 not-for-profit mutual insurance associations from around the world, including us. IG Clubs provide liability cover for over 90% of world ocean-going tonnage. The claims sharing agreement between the 13 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. In recent years, the IG has increased its public relations activities in order to make its role known to as many people as possible. The Brand and Communications Committee is leading this process. As part of this process, videos highlighting different aspects of the IG’s work have been posted on the IG’s website. These include a 2021 conversation between Nick Shaw (IG CEO) and Paul Jennings (IG Chair) about pool claim trends, the role of P&I clubs, and future challenges, and, in 2022, a discussion between Ben Harris (Salvage Committee Chair) and Sam Kendall-Marsden (Large Casualty Committee Chair) on large casualty response, particularly salvage and wreck removal. The videos can be viewed at https://www.igpandi.org/. S.マーロルコTANOITANЯЗТИI \ ТЯОЯЗЯ
With the increase in the size of vessels in recent years, once a marine accident occurs, the impact on society and the environment can be huge and the damages incurred enormous. Through our loss prevention activities, we provide information in order to contribute to the reduction of such marine accidents.
Parametric Rolling
During the winter season of 2020-2021 there was a series of accidents involving exceptional container losses. In response to this, the International Group of P&I Clubs (IG) became a member of The Joint Industry Project TopTier run by Maritime Research Institute Netherlands (MARIN) to find measures to avoid similar accidents in the future. It has been reported that parametric rolling in following seas is especially dangerous indeed; we have provided information on this in our circular No.21-017 dated 7 February 2022 (https://www.piclub.or.jp/en/news/34873). The decrease in stability caused by parametric rolling occurs in head seas as well. In this case, however, because the wave encounter period is short, it does not cause a problem. In following seas on the other hand, the wave encounter period is longer, and so the risk increases. In our P&I Loss Prevention Bulletin vol. 45 "Marine Weather – Ship Handling in Rough Sea" issued in April 2019, we explained that parametric rolling phenomena can occur not only in rough weather but in calm oceanographic conditions as well, when a vessel may be approached by a huge swell from a stern and the wave encounter period is one half of the natural rolling period of vessel. We also introduced countermeasures against parametric rolling. In our online seminar "Ship Handling in Following Seas (Part 1 of 2)" - in Japanese title "追い波航法(前編) " - posted on our website, we explained ship handling in rough seas, once again including the phenomena of parametric rolling. P&I Loss Prevention Bulletin: https://www.piclub.or.jp/en/lossprevention/guide Video Seminars: https://www.piclub.or.jp/en/seminar/videos
Large Vessels – Things to know regarding maneuvering
We held a loss prevention online seminar, called "Large Vessels: Things to know regarding maneuvering" in June 2021. The seminar was held online to accommodate remote working patterns amid difficulties in organising in-person seminars due to COVID-19. Taking losses occurring during the year 2020-21, we looked at the causes of allisions between large container vessels and gantry cranes, and damage caused to port facilities, as well as countermeasures to take to try and avoid such accidents. We used illustrations and diagrams to clarify differences in maneuvering depending on the size of the vessel. With the cooperation of our Members, we asked Masters and officers of coastal vessels about maneuvering and other matters such as radar range and avoidance distance. We introduced the result of our enquiries during the web seminar, which we believe was beneficial for both our Members and for ourselves. Thankfully, more than 900 people participated in the seminar in two days. The response from participants was so great that the seminar was available on-demand for some time after the event. Since online seminars can be held regardless of time and place, we plan to continue holding them as part of our new and enhanced Loss Prevention activities. NEABAA SSOL / 190939 SS3R
■ Investments and Investment return
Investments
Investment income and profit received during the year decreased by JPY1,544 million to JPY1,117 million. Return on our overall investment portfolio also decreased by 2.79% to 1.93%. In particular, overall income decreased because of a drop in investment income from equity funds and bond funds, although both these had performed well in the previous year. Investment income from equity funds was JPY442 million, decreasing by JPY723 million from the previous year. The situation in Ukraine from February 2022 caused turmoil in financial markets, a rise in resource prices due to stagnant logistics, and inflation concerns. As a result, stock prices declined, which was a factor in the decrease in the equity funds income. Investment income from bond funds was JPY105 million, falling JPY790 million from the previous year. In March 2022, the Federal Reserve (Fed) decided 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. The total value of investments held by the Association decreased by JPY1,417 million to JPY64,014 million. Insurance claims payments during the year were higher than in previous years, leading to a decrease in assets under management. By category of assets, deposits decreased by JPY586 million and bonds decreased by JPY1,959 million because much of the redemption proceeds were used to replenish funds, which led to the decrease in total assets. By currency, dollar assets decreased by USD43.8 million, but the decrease in yen assets was limited to JPY1,654 BMTS3ANI / TROPER SS3N BNISBANI / TROGER SSENI
"(The same period last year)
"(The same period last year) million. Yen assets benefitted from foreign exchange fluctuations of JPY3,205 million, due to the change in the year-end exchange rate from JPY110.71/USD in the previous year to JPY122.39/USD. Our current mid-to long-term challenge, as set in our financial year 2018, is to adjust the asset allocation so 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 1.93% due to a series of decreasing factors, the expected rate of return has already reached 2.3%, which is almost equal to the target level. 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 minimisation 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.

1. Our 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 management of the shipping and related maritime industry by providing shipowners' liability insurance to our Members. In order to achieve our mission, we will ensure regulatory compliance and promote sustainable business operations which are in line with the Sustainable Development Goals (SDGs) developed by the United Nations (UN).
2. Our 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.
3. Prioritised Goals
All SDGs are inextricably linked and integrated: an action in one area will affect the outcome in others. It is therefore crucial to enhance all three elements of sustainability – environmental, economic, and social – in a balanced manner. We have discussed and considered the goals that we should especially work on, based on the short- and long-term impact of the ESG/SDGs agenda. All 17 SDGs are relevant to the global marine industry, but we have identified the following 10 SDGs as key goals that we will prioritise achieving. We value everyone at the Association. We care for not only our employees and their families, but also for every individual involved in the operation of vessels, such as our Members and crews. We will further promote diversity and inclusion with the goal of becoming an organisation where employees and executives from diverse backgrounds can prosper and take on active roles. Together with all the other members of the International Group of P&I Clubs (IG), we will work on more sustainable development for the whole shipping industry. We recognise that climate change is an urgent issue that we as a member of society are partly responsible for, and we support the efforts toward decarbonisation. INI YTUISANIALSUS / TROGEN ILINI YTUISANIATSUS / TROGEN SSE Our operations thrive on the marine environment, and we will do our best to prevent pollution by responding swiftly to marine accidents. We believe that protection of life on land and below water are equally essential, and we aspire to conserve the planet's environment from all dimensions. Legal compliance plays a critical role for a sustainable business operation, and we will thoroughly enforce reliable corporate governance, and operate with transparency and equity. As a member of the IG, we share many loss prevention and safety-related initiatives with the other Clubs, joining together for the common benefit under the banner of "Collectively Stronger".
4. Sustainable Actions
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 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.
Healthy Work Environment
We aim to create a comfortable working environment for all our employees. We operate mainly in Japan; however, the environment is culturally diverse, 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 that 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 enforce the whistleblowing system.
We regard sustainability as our responsibility and challenge, and as a member of the IG, we will contribute to sustainable operations with IG and promote various sustainable initiatives at the Association. VILINI YTLISANIATSUS / TROGESI SSING
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 IUX TNBONBABONI 3HT 30 180939 / STN3W31YIS TN

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 Sheets as at 31 March 2022 and 2021, and Income and Expenditure Accounts and Statements of Cash Flows for the fiscal years 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 inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. 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
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 these 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 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 NBONBABONI 3HT 40 190 9BS / 1 JUA TИЗОNЭ RЭЭNIЭHT FO 180939 / SINGMETYIS T 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 2022 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. Mostrito Nam F1FCD219S7FE410. Masahiko Nara Designated Engagement Partner Certified Public Accountant
19 July 2022
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.
tooy BRUTIONBAKE ON EMODNI / STNEMETATS JADN
The accompanying notes are an integral part of these financial statements. IS BONATVE / STNENETATIS JAIONA
for the years ended 31 March 2022 and 2021
The accompanying notes are an integral part of these financial statements. ISVO BO SLNEWBLVLS / SLNEWBLVLS JAI

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 required supplementary schedules 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 Consolidated Financial Statements, the etc. (Accounting Practice Committee No.8, 28 November 2014)".  For the convenience of readers outside of Japan, certain reclassifications have been made in the 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 2022 have been translated into U.S. Dollars at the rate of ¥122.39 = U.S.$1, the middle rate prevailing on the Tokyo foreign exchange market on 31 March  2022. 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 2022 and 2021, the aggregate revenue of business transacted with the subsidiary companies amounted to ¥49 million ($396 thousand) and ¥44 million, respectively, and the aggregate expenses amounted to ¥61 million ($498 thousand) and ¥56 million, respectively. 3 : ①Net premiums written consist of the following:
Policy Year 2020 in the amount of ¥4,740 million ($38,730 thousand). The year ended 31 March 2021 includes 40% Supplementary Call for Policy Year 2019 in the amount of ¥4,312 million. ②Net claims paid consist of the following:
③Change in reserve for outstanding claims consists of the following:
BIYIS TYIONYNIG 3HL 01 SETON / S INEMETATS JA
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 2022 and 2021 valuation gains of ¥241 million($1,970 thousand) and ¥1,975 million are included in "Gains on money trusts", respectively. 8 Retaining earnings consist of the following:
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 2022 and 2021 are as follows:
5： Movement of unappropriated surplus (deficit) consists of the following:
On July 21 2022, the amount of ¥410 million ($3,350 thousand) will be transferred from special reserves the amount compensate of to ending unappropriated deficit balance ¥404 million ($3,299 thousand). IYLS TYIONYNG 3HT 01 SELON / SINEWELYTS . IYIS TYIONYNIG 3HL 01 SELON / STNEMETATS JA 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. ④ Non-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 2022 and 2021, prepaid pension cost of ¥108 million ($886 thousand) and ¥163 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： 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. 16：Consumption taxes are accounted for under the "tax inclusive" method. 17: 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 21" 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 primarily premiums and other revenues 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  ¥37,531,985,592 ② Other 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. IYIS TYIONANIS SHI OT SETON / STNEMETATS JA 18： The Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, 4 July 2019, hereinafter referred to as the "Accounting Standard for Fair Value Measurement") and other standards has been applied from the beginning of the current fiscal year, and in accordance with the interim treatment stipulated in paragraph 19 of the Accounting Standard for Fair Value Measurement and paragraph 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, 4 July 2019),  the new accounting policy stipulated by the Accounting Standard for  Fair Value Measurement will be applied into the future. The adoption had no impact on the Association's financial statements. 19： Conditions of financial instruments and fair values are as follows: ① Conditions 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.

②Fair value of financial instruments
The amounts recorded on the balance sheet, fair value and the difference as of 31 March 2022 and 2021 are as follows:
(Remark 1) Assets ( à )Cash and deposits at banks. ( ♂ ) 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 ¥1,211 million ($9,898 thousand) are excluded from (c) "Marketable securities held as available for sale" as no market prices exist and futur 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 If the Association uses multiple inputs that are important  to 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 26 of ASBJ Guidance No. 31, "Implementation Guidance on Accounting Standard for Fair Value Measurement" (ASBJ Guidance No.31, 4 July  2019, hereinafter referred to as the "Implementation Guidance on Fair Value Measurement"), investment trusts and stocks without market prices are not included in the table below (See Remark 2).
*Investment trust for which transitional provisions have been applied in accordance with paragraph 26 of the Implementation Guidance on Fair Value Measurement are not included in the above table. The amount of the investment trust in question on the balance sheet is ¥4,884 million ($39,903 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
(Remark 1) Description of valuation techniques and inputs used to determine fair value Money trusts   The fair value of securities constituting trust assets is evaluated and classfied using the same method as "Securities." Securities Securities for which quoted prices in active markets are available are classfied as Level 1 fair values. If quoted prices are used but the market is not active, they are classfied 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 classfied as Level 2 fair values (Remark 2) Balance Sheet Amount of Stocks, etc. without Market Price The balance sheet amount of stocks, etc. without market price is ¥1,211 million ($9,898 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, 4 July, 2019). BIYIS TYIONYNIG 3HL 01 SETON / S INEMETATS JA
20： Accumulated depreciation for property, plant and equipment amounts to ¥378 million ($3,091 thousand) and ¥386 million at 31 March 2022 and 2021, respectively. Advanced depreciation amounts to ¥301 million ($2,466 thousand) and ¥302 million at 31 March 2022 and 2021, respectively. 21： The total amounts of deferred tax assets and liabilities at 31 March 2022 and 2021 are as follows:
22: In addition to the property, plant and equipment recorded on the balance sheet, lease contracts are in place for copying machines. 23: Investment in subsidiaries amounts to ¥12 million ($94 thousand) and ¥12 million at 31 March 2022 and 2021, respectively. 24 : 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 ¥47,972 million ($391,964 thousand) and ¥29,395 million at 31 March 2022 and 2021, respectively. ②There is no unearned premium reserve with respect to reinsurance stipulated in Article 51 of the Regulations  at 31 March 2022 and 2021. ③There is no amount deducted relating to the distribution of surplus stipulated in Article 28 of the Regulations at 31 March 2022 and 2021. ualonand ant ot seton / stugmetate 25 :  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 2022 and 2021. Cash flows from investing activities include cash flows arising from asset management relating to the insurance business during the years ended 31 March 2022 and 2021. IBIYIS TYIONYNIG 3HT OT SETON / S INEMETATS JA
ETATS TAIONANIA 3HT 01 SETON / STREMETATS TMOR
NEIYIS TYIONYNIG 3HL OL SETON / STNEMETYIS JAN
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 37 and 38. 83S38 / STNEMETAL S JALON A SE/
as of 31 March 2022
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 2022/23 policy year which is covered the period from 20 February 2022 to 31 March 2022, calls and premiums are stated on an earned basis to 31 March 2022. 4. The translation rate in this Policy Year Statement is ¥122.39 = US$1, the middle rate  prevailing on the Tokyo foreign exchange market as of 31 March 2022.
WETATE RABY YOUTOB / STNENSTATE JAISNA

■ Directors
Chairman, Representing Director Chairman Tadaaki Naito Nippon Yusen Kabushiki Kaisha Deputy Chairman, Representing Director Yukikazu Myochin President Deputy Chairman, Representing Director Takeshi Hashimoto   President Kawasaki Kisen Kaisha, Ltd. Mitsui O.S.K. Lines, Ltd.
■ In-House Directors
Director General, Representing Director Shizuo Takahashi Executive Directors, Representing Directors Hiroaki Sawabe Takaaki Irikiin Keisuke Kobayashi Directors Shunsei Miyake Minoru Naito Hiroshi Kikegawa Yuichi Tanaka
IGUAGNA SIOLOG (as of 21 July 2022)
(as of 21  July 2022) IALIATION
■ Subsidiaries Japan P&I Club (UK) Services Ltd. PI Kogyo K.K. OITASINA98
■■ Principal Office   2-15-14, Nihonbashi-Ningyocho, Chuo-ku, Tokyo 103-0013, Japan ■ Kobe Branch 6th Floor Shosen-Mitsui Building, 5, Kaigandori Chuoh-ku, Kobe, Hyogo 650-0024, Japan Phone +81 78 321 6886
■ Fukuoka Branch   3rd Floor Hakata-Ekimae Center Bldg., 1-14-16, Hakata Ekimae, Hakata-ku, Fukuoka Fukuoka, 812-0011, Japan
■ Imabari Branch    Sth Floor Imabari-Kitahoraicho Building, 2-2-1, Kitahoraicho, Imabari, Ehime 794-0028, Japan
■ Singapore Branch   80 Robinson Road #14-01, Singapore 068898 Phone +65 6224 6451
■ London Liaison Office   5th Floor, 38 Lombard Street, London, U.K., EC3V 9BS Phone Facsimile +44 20 7929 4844 +44 20 7929 7557 ■ Japan P&I Club (UK) Services Ltd. (Claim contact point in UK)   5th Floor, 38 Lombard Street, London, U.K., EC3V 9BS Phone Facsimile +44 20 7929 3633 +44 20 7929 7557
$301440 The Japan Ship Owners' Mutual Protection & Indemnity Association www.piclub.or.jp