Circular No. 4/2003
TO THE MEMBERS OF
COMPOSITION OF THE COMMITTEES
REVIEW OF POLICY YEARS
PREMIUM RATING FOR THE 2004 POLICY YEAR
GARD P&I HALF YEAR STATUS REPORT AS AT 20 AUGUST 2003
This document highlights the decisions taken at the meeting of the Committee of Assuranceforeningen Gard -gjensidig- (the Association) held in Geneva on 25 and 27 October 2003. As to the developments of closed and open policy years a fuller report will be found on our website http://www.gard.no/.
At the Association's Annual General Meeting, which took place on 15 August 2003 in Arendal, the following new members were elected to the Committee:
Trond Eilertsen, Oslo
Sergio Machado, Petroleo Brasileiro S. A. (Petrobras), Rio de Janeiro
Jamal A Al-Rammah, Saudi Arabian Oil Company, Dhahran
Ola Lorentzon, Frontline Management AS, Oslo
Peter Swift, OSG Ship Management, Inc., Newcastle/New York
At the meeting held in Geneva on 25 and 27 October 2003 the Committee re-elected Leif Terje Løddesøl of Wilh. Wilhelmsen ASA, Oslo, as its Chairman and Stephen Pan of World-Wide Shipping Agency (S) Pte. Ltd., Singapore, as its Vice Chairman.
The Executive Committee
The Annual General Meeting held on 15 August 2003 elected
Bengt Hermelin, Saudi Maritime Holding Co., London
as a new member of the Association's Executive Committee.
At the meeting held on 17 September 2003, the Executive Committee re-elected John Hatleskog of Havinvest A/S, Oslo, as its Chairman. Dieter Ostendorf of Aug. Bolten Wm. Miller's Nachfolger, Hamburg, was re-elected as the Vice Chairman of the Executive Committee.
Closed years up to and including the 1999 policy year progress somewhat better than projected.
2000 policy year closed
The Committee decided to close the 2000 policy year without ordering a further Supplementary Call.
Open policy years
The 2001 and 2002 policy years are likely to be closed in October 2004 and 2005 respectively without further Supplementary Calls being levied.
The 2003 policy year, the first six months of the year have seen an increase in reported claims compared with the previous years. The increase must be seen against the increase in tonnage, the number of ships entered and a shift in the composition of the entered tonnage, all of which are reflected in a higher premium level.
Members should continue to budget with the full Deferred Call of 25 per cent being levied.
The Committee resolved that the Release Calls for open policy years be set as follows:
For the 2001 policy year: nil
For the 2002 policy year: 25 per cent
For the 2003 policy year: 50 per cent
Premium policy for the 2004 policy year
In light of the Association's financial strength, the Committee decided that the general increase for 2004 should be set no higher than necessary. Accordingly, the Committee resolved that there be a 7.5 per cent general increase in the Advance Calls for both P&I and FD&D in respect of mutual entries and in the fixed premiums for FD&D entries for charterers. The Deferred Call for mutual entries is set at 25 per cent of the Advance Call.
In addition, separate adjustment will be made in each Member's premium rating to reflect any changes in the cost of the International Group's reinsurance arrangements for the 2004 policy year. As is customary, in addition to the general increase, Members premium rating will be reviewed in the light of their individual loss records and other relevant factors. Further details about the International Group and the Associations reinsurances for the 2004 policy year will be published later.
There will also be a general increase of premiums for Charterers entries and other fixed premium products. The level of premium for these fixed premium products will depend on the individual Members loss record and market conditions, including the requirements of the Associations reinsurers.
Each Members premium will, as usual, be assessed individually in the light of his loss record and the cost of reinsurance. All Members will receive shortly the loss record for their respective fleets.
Members who have not heard from the Association by 20 January 2004 may assume that there will be no changes in the premium rating for next year, save for adjustments based on the general increase and variations in the reinsurance costs.
Total tonnage entered as at 20 August 2003 was 116 million GT of which owners mutual entries represented 67 million GT. Comparable figures as at 20 February 2003 were 112 million GT and 65 million GT respectively.
As at 20 August 2003 the balance available to meet outstanding and unreported claims amounted to USD 723 million, of which the general contingency reserve represented USD 276 million. Comparable figures as at 20 February 2003 were USD 674 million and USD 242 million respectively. The increase in the contingency reserve is mainly a result of an estimated surplus for the 2003 policy year at six months from inception and a reduction in the estimated liabilities of earlier years.
The net gain on the non-technical account (investment income) amounts to USD 39 million in the six-months period to 20 August 2003.
We urge you to view the full report on http://www.gard.no/. If you have any questions, please contact Senior Vice President Sven-Henrik Svensen.
As agent only for Assuranceforeningen Gard -gjensidig-
Chief Executive Officer