Circular No. 5/2006


October 2006



To the Members of Assuranceforeningen Gard - gjensidig



Dear Sirs,

Composition of the Committees
Review of Policy Years
Premium Rating for the 2007 Policy year
Gard P&I Half year status report as at 20 August 2007

Introduction
This document highlights the decisions taken at the meeting of the Committee of Assuranceforeningen Gard -gjensidig- (the “Association”) held in Monte Carlo on 30 October 2006. As to the developments of closed and open policy years a fuller report will be found on our website www.gard.no.

Composition of the Committees
The Committee
At the Association’s Annual General Meeting, which took place on 18 August 2006 in Arendal, the following new members were elected to the Committee:

Ian Beveridge, Bernard Schulte, Hamburg
Robert E. Johnston, OSG Ship Management, New York/Newcastle
Tadeusz Niszczota, Polish Steamship, Szczecin
Basil A. Abul-hamayel, Saudi Arabian Oil Company, Dhahran
Craig H. Stevenson, OMI Corporation, Stamford, CT
Kazuya Uchida, Meiji Shipping Co., Ltd. Tokyo

At the meeting held in Monte Carlo on 30 October 2006 the Committee re-elected Stephen Pan of World-Wide Shipping Agency Limited, Hong Kong, as its Chairman. Alain Bernard representing Olympic Shipping and Management S.A. was elected as the new Deputy Chairman of the Committee.

The Executive Committee
At the Association’s Annual General Meeting Michael Say, representing Aug. Bolten Wm. Miller’s Nachfolger (GmbH & Co) of Hamburg was elected as a new member of the Executive Committee. At the meeting held on 29 September 2006, 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 Deputy Chairman.

The Supervisory Committee
At the Association’s Annual General Meeting Arne Falkanger Thorsen, representing Bergesen Worldwide Gas ASA, was elected as a new member of the Supervisory Committee. At its meeting held on 26 September 2006, the Supervisory Committee re-elected Stephen Knudtzon as its Chairman and Skule Adolfsen of Høegh Fleet Services AS, Oslo, as its Deputy Chairman.

Review of policy years
Closed years
Closed years up to and including the 2002 policy year have progressed as projected.

2003 policy year closed
The Committee decided to close the 2003 policy year without ordering a Supplementary Call.

Open policy years
The 2004 and 2005 policy years are likely to be closed in October 2007 and 2008, respectively, without further Deferred Calls and/or Supplementary Calls being levied.

The 2006 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 for the 2006 policy year.

Release Calls
The Committee resolved that the Release Calls for open policy years be set as follows:
For the 2004 policy year: nil
For the 2005 policy year: 10 per cent
For the 2006 policy year: 50 per cent
For the 2007 policy year: 50 per cent

Premium policy for the 2007 policy year
As a general principle, the level of premium for both mutual and fixed premium entries will depend on the individual Member’s loss record and market conditions. However, the Committee decided that for 2007 the premium policy for ordinary P&I business should be a technical result target expressed as a combined ratio net (“CRN”) rather than as a general premium increase across the board for all entries. The CRN expresses the estimated claims and administration costs for the year over estimated premiums earned.

Against this background the Committee decided that premium adjustments resulting in a CRN for Gard P&I, fixed premium business included, of 105 per cent for the 2007 policy year have to be made. This target approximates to a general increase of 5%. The Deferred Call for mutual entries was again set at 25 per cent of the Advance Call.

In addition, separate adjustment will be made in each Member’s premium rating to reflect changes in the cost of the International Group’s reinsurance arrangements for the 2007 policy year. Further details about the International Group and the Association’s reinsurances for the 2007 policy year will be published later.

Gard P&I - half year status report as at 20 August 2006
Tonnage (mutual)
Total tonnage entered on behalf of owners on a mutual basis as at 20 August 2006 amounted to 81.9 million GT consisting of 5,504 vessels. Comparable figures as at 20 February 2006 were 78.7 million GT and 5,208 vessels, respectively.

Balance available for outstanding and unreported claims – general contingency reserve
As at 20 August 2006 the balance available to meet outstanding and unreported claims amounted to USD 1,102 million, of which the general contingency reserve represented USD 445 million. Comparable figures as at 20 February 2006 were USD 966 million and USD 430 million, respectively.

On a Group basis* the total balance available to met outstanding and unreported claims amounted to USD 1,591 million of which the general contingency reserve totalled USD 457 million. Comparable figures as at 20 February 2006 were USD 1,430 million and USD 438 million, respectively.

Investment income
The net loss on the technical account amounted to a deficit of USD 7.7 million while the net gain on the non-technical account (investment income) amounted to a surplus of USD 23 million in the six-month period to 20 August 2006.

On a Group basis* the technical account showed a deficit of USD 13 million while the non-technical account posted a surplus of USD 32 million resulting in an overall surplus for the six months period to 20 August 2006 of USD 19 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.

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We urge you to view the full report on www.gard.no. If you have any questions, please contact Senior Vice President Sven-Henrik Svensen.

Yours faithfully
GARD AS
As agent only for Assuranceforeningen Gard -gjensidig-

Claes Isacson
Chief Executive Officer