Circular No. 5/2005

October 2005

To the Members of
Assuranceforeningen Gard -gjensidig-


Dear Sirs

Composition of the Committees
Review of policy years
Premium rating for the 2006 policy year
Gard P&I half year status report as at 20th August 2005

This document highlights the decisions taken at the meeting of the Committee of Assuranceforeningen Gard -gjensidig- (the “Association”) held in Florence 31 October 2005. As to the developments of closed and open policy years a fuller report will be found on our website

Composition of the Committees
The Committee
At the Association’s Annual General Meeting, which took place on 19 August 2005 in Arendal, the following new members were elected to the Committee:

Robert Gerald Buchanan, Genco Shipping & Trading, Inc., New York
Peter Antturi, Teekay Shipping Norway AS, Stavanger
Michael Say, Aug. Bolten, Wm Miller’s Nachfolger (GmbH) KG, Hamburg

At the meeting held in Florence on 31 October 2005 the Committee re-elected Stephen Pan of World-Wide Shipping Agency Limited, Hong Kong, as its Chairman and Ricardo Claro Valdes of Compania Sud Americana de Vapores S.A. (CSAV), as its Vice Chairman.

The Executive Committee
There are no changes in the composition of the Executive Committee. At the meeting held on 29 September 2005, the Executive Committee re-elected John Hatleskog of Havinvest A/S, Oslo, as its Chairman and Bengt Hermelin of Saudi Maritime Holding Co., London, as its Vice Chairman.

The Supervisory Committee
At the Association’s Annual General Meeting Stephen Knudtzon, (partner in the law firm Thommessen in Oslo), was elected new member of the Supervisory Committee. At its meeting held on 30 September 2005, the Supervisory Committee elected Stephen Knudtzon as its Chairman. Skule Adolfsen of Høegh Fleet Services AS, Oslo, was re-elected as Vice Chairman of the Supervisory Committee.

Review of policy years
Closed years
Closed years up to and including the 2001 policy year have progressed as projected.

2002 policy year closed
The Committee decided to close the 2002 policy year without ordering a Supplementary Call.

Open policy years
The 2003 and 2004 policy years are likely to be closed in October 2006 and 2007, respectively, without Supplementary Calls being levied.

The 2005 policy year – the first six months of the year have seen a modest increase in reported claims compared with previous years both in volume and in number. 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. Members should continue to budget with the full Deferred Call of 25 per cent being levied with regard to the 2005 policy year.

Release Calls
The Committee resolved that the Release Calls for open policy years be set as follows:

For the 2003 policy year: nil
For the 2004 policy year: 10 per cent
For the 2005 policy year: 50 per cent
For the 2006 policy year: 50 per cent

Premium policy for the 2006 policy year
Mutual entries
In light of the Association’s financial strength, 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 2006 policy year. Further details about the International Group and the Association’s reinsurances for the 2006 policy year will be published later.

Fixed premium entries
The level of premium for the fixed premium products will depend on the individual Member’s loss record and market conditions, including the requirements of the Association’s reinsurers.

Individual premium rating
Each Member’s 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 2006 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.

Gard P&I - half year status report as at 20 August 2005
Total tonnage entered on behalf of owners as at 20 August 2005 was 81.3 million GT consisting of 5330 vessels. Comparable figures as at 20 February 2005 were 79.3 million GT and 5030 vessels, respectively.

Balance available for outstanding and unreported claims – general contingency reserve
As at 20 August 2005 the balance available to meet outstanding and unreported claims amounted to USD 964 million, of which the general contingency reserve represented USD 400 million. Comparable figures as at 20 February 2005 were USD 883 million and USD 386 million respectively. The increase in the contingency reserve is mainly a result of an improved performance of the 2003 policy year.

On a Group basis* the total balance available to met outstanding and unreported claims amounts to USD 1.4 billion of which the general contingency reserve represents USD 416 million.

Investment income
The net loss on the technical account amounted to a deficit of USD 4 million while the net gain on the non-technical account (investment income) amounted to a surplus of USD 19 million in the six-month period to 20 August 2005.

On a Group basis* the technical account show a surplus of USD 1 million while the non-technical account resulted in a surplus of USD 26 million resulting in an overall surplus for the six months period to 20 August 2005 of USD 27 million.

* For this purpose the term “Group basis” means the combined consolidated accounts for Assuranceforeningen Gard – gjensidig, Gard P&I (Bermuda) Limited and Gard Marine & Energy Limited.

We urge you to view the full report on If you have any questions, please contact Senior Vice President Sven-Henrik Svensen.

Yours faithfully
As agent only for Assuranceforeningen Gard -gjensidig-

Claes Isacson
Chief Executive Officer