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Gard News 202, May/July 2011

Dealing with the unpredictable

Claes Isacson,
Chief Executive Officer

As we go to press, it is too early for any meaningful indication of the full repercussions from the earthquake and tsunami in Japan. We would like to express our sympathy and condolences for all our Members and clients across the country, and our office in Tokyo will be doing whatever it can to offer help and support from across the Gard group.

These events are the culmination of an active first quarter in 2011. The unrest in a number of countries across the Middle East and North Africa region has undoubtedly created concern about trading in the area, although some potential issues - such as the possible closure of the Suez Canal - have not proved to be as serious as was feared.

The recent extension of the pirates' operating area across the Indian Ocean means that the number of possible routes that avoid the Somali pirate gangs, especially for tankers coming out of the Gulf, is reducing. Over 800 seafarers are currently being held to ransom on hijacked ships, and are being subjected to physical and psychological difficulties. We are working with our Members and clients, as well as the relevant agencies and authorities, to try to ensure that we provide helpful and timely advice on these issues, as well as to resolve both the specific and general issues and prevent hijacking.

Financial year end
We will as usual be reporting our financial results in May once the numbers are fully audited.  However, we expect to report a strong result for the year overall. Our insurance operations performed well and we enjoyed another year of good investment returns. As usual, the winter tends to see a rise in claims, and the last quarter of this policy year was no exception.

The strength of our financial and operational performance was commented on in a recent report from Standard & Poor's when it affirmed their A rating on the group and revised the outlook on the core operating entities of Gard to "positive". While we are comfortable with our A rating, it is a compliment to everyone in the organisation that Standard & Poor's  believe the rating could be raised if Gard maintains its operating performance and financial profile over the next several years.

The P&I renewal
The P&I renewal was completed successfully, with expectations being met in terms of premiums and tonnage. As always, the renewal was a real team effort by everyone at Gard and it was a good end to the year. We grew our overall portfolio, both from new and existing Members, and have maintained its high standard in terms of both technical standards and rating levels. We also have significant commitments for additional tonnage going forward. In terms of our geographic reach, Asia, the US and Greece saw good gains, illustrating our investment in these areas. Our traditional markets in Northern Europe also saw increases in tonnage.

Two areas of particular strength for Gard, Charterer's Liability and P&I for Mobile Offshore Units, also saw good renewals. This year the offshore sector has seen a difficult reinsurance market, with a lack of capacity that has affected all energy underwriters.

Putting our planning into action
I have talked previously about our claims initiative - a project in which we have reviewed what we believe constitutes ‘best practice' in claims handling. Our organisation has changed significantly in the last decade, as have the challenges faced by shipowners and operators, and we wanted to ensure that our processes and standards can deliver the highest quality service. The result is a structure that now reflects more accurately the type of claim with which we are dealing, rather than the type of policy: cargo and collision rather than hull or energy. By creating centres of excellence we will deliver better solutions more effectively for our Members and clients. However, we are not resting there and will turn to marine claims this spring. The claims initiative has been a good example of our ability to always ask ourselves how we can improve what we do - and we hope you, our Members and clients, will see the benefits of the investment.

Any comments to this article can be e-mailed to the Gard News Editorial Team.