Circular No. 01/2009

May 2009

TO THE MEMBERS OF ASSURANCEFORENINGEN GARD -gjensidig-


Dear Sirs,

Re: REVIEW OF POLICY YEARS

At its recent meeting your Board received reports on matters of importance for the business activities of Assuranceforeningen Gard - gjensidig (the "Association").

To summarize,

  • The Board decided to levy a 25 per cent Deferred Call as forecasted for the 2008 policy year.
  • As at 20 February 2009 the combined contingency reserves of the Association  and its sister association, Gard P. & I. (Bermuda) Ltd., which provide security and stability for the joint membership, stood at USD 430 million (USD 580 million last year) based on a 25 per cent Deferred Call for the 2008 policy year.
  • No further Deferred Calls or Supplementary Calls are expected for the 2006, 2007 and 2008 policy years.

More detailed information will be provided in the Gard Management Report to be issued in July.

When discussing the policy years below, the term "Supplementary Call" is only used for a call exceeding the forecast "Deferred Call" for the year.

Closed years

Closed policy years are developing as previously forecast.

Open years

The 2006 policy year

In May 2007 it was decided to levy a Deferred Call of 20 per cent compared to the budgeted Deferred Call of 25 per cent due to the Association's sound financial position. The value of reported claims for the policy year 2006 has been stable through the financial year 2008 and the year is expected to produce a small surplus. The year can at the earliest be closed in October 2009. No further Deferred Calls or Supplementary Calls are expected.

The Release Call for the year was set at Nil.

The 2007 policy year

In May 2008 it was decided to levy a Deferred Call of 25 per cent as budgeted. The value of reported claims for the policy year 2007 has developed favorably through the financial year 2008 and the year is now expected to result in a substantial surplus. The year can at the earliest be closed in October 2010. No Supplementary Calls are expected.'

The Release Call for the year was set at 5 per cent.


The 2008 policy year

The value of reported claims for the policy year 2008 is slightly below the value of reported liabilities at the same time in the previous year. However, even if the technical performance has improved, the year is expected to produce a substantial deficit due to the poor non-technical results. Against this background the Board of Directors decided that the full Deferred Call of 25 per cent as originally forecasted to be levied and that it should fall due for payment on 1 September 2009. The 2008 policy year can at the earliest be closed in October 2011. No Supplementary Calls are expected.

The Release Call for the year was set at 50 per cent (to be reduced to 25 per cent when the Deferred Call has been paid).

The 2009 policy year

The Board of Directors confirmed that the Release Call for the year should be set at 50 per cent, which is 25 per cent above the budgeted Deferred Call for the year.

Summary

To summarize, the following decisions were taken:

 

 (i)The 2006 policy year: No Supplementary Call will be made for this policy year.
 (ii)The 2007 policy year:   No Supplementary Call is anticipated for this policy year.
 (iii)The 2008 policy year:    A Deferred Call of 25 per cent has been ordered for this policy year for payment on 1 September 2009. No Supplementary Calls are anticipated for this policy year
 (iv)Release Calls:   The 2006 policy year:  Nil
  The 2007 policy year:  5 per cent
  The 2008 policy year: 50 per cent*
  The 2009 policy year:50 per cent

*To be reduced to 25 per cent once the deferred call of 25 per cent has been paid.  
    
*****

If you have any questions, please contact the P&I underwriting department.

Yours faithfully,
GARD AS
As agent only for Assuranceforeningen Gard - gjensidig -
 
Claes Isacson
Chief Executive Officer