Circular No. 12/96
TO THE MEMBERS
CERTIFICATES OF FINANCIAL RESPONSIBILITY (COFRs)
Further to our Circular No. 10/96 concerning COFR facilities, we have the following information concerning a new facility, ARVAK Ltd., which was contained in a circular sent to brokers by ARVAK Ltd. on 19th December 1996.
ARVAK Ltd. is a new facility designed to enable shipowners to obtain COFRs. It is approved by the United States Coast Guard to act as guarantor and will issue COFR guarantees up to USD 395 million to shipowners who are members of a club within the International Group of P&I Clubs. It will provide COFRs on a fixed-premium basis.
The company is a Bermuda-based limited liability company licensed under the Bermuda Insurance Act. Its Board of Directors includes shipowner representatives. It is managed in Bermuda by Aon Risk Services (Bermuda) Ltd.
Further information concerning this facility can be obtained from Tracey Keill, Senior Vice President of Aon Risk Services, Telephone No. 1 441 295 2220.
ARVAK Ltd. will require the following documents from the applicant or his broker in order to process an application.
A signed COFR Facility Agreement.
A Letter of Undertaking and a Letter to Members from the Members? P&I Club.
A Power of Attorney completed by each applicant.
The Club has reviewed the letters described in B above. These letters differ from the format of the letters required by First Line, Sigco and Shoreline. The Club regrets that it is unable to provide letters in the form requested. It is understood that ARVAK Ltd. is reviewing the wording of these letters. The Club will consider any revised letters as soon as they are available.
The COFR guarantee provider Shoreline recently issued a circular describing changes to its scheme and terms offered. The circular states that all Shoreline Members will see a significant reduction in their COFR rates in 1997. There will be no published rates for the 1997 programme.
Shoreline states that it "has restructured its 1997 reinsurance programme: the improved Contingent Guarantor?s Liability reinsurance arrangement coupled with the ?No Claims Bonus? accumulated within the existing reinsurance programme to date has resulted in the removal of the deductible for 1997 and hence has eliminated any exposure to a supplementary call for Members".
The circular states that "there is no supplementary call exposure to Members during the balance of the unexpired coverage for vessels accepted in 1996" and that "Non-Tanker vessels that attach for a period longer than the one year will be free of any exposure to supplementary calls".
John G. Bernander