2/2005 - Review of policy years

Circular No. 2/2005 May 2005

TO THE MEMBERS OF ASSURANCEFORENINGEN GARD -gjensidig-

Dear Sirs

Review of policy years

At its meeting in Copenhagen on 28 and 30 May 2005, your Committee received reports on all matters of importance for the business activities of the Association and was pleased to note that the financial position of the Association had strengthened further.

To summarise,

• the Committee decided to levy the forecast 25 per cent deferred call for the 2004 policy year.• as at 20 February 2005 the Association’s contingency reserves, which provide security and stability for the Membership, stood at USD 389 million (USD 328 million last year).• no supplementary calls are expected for the 2002 and 2003 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 “deferred call” is used, although, strictly, this terminology is not correct since the new term only applies to the 2003 policy year and onwards. The term “supplementary call” is now 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 2002 policy year

• The forecast deferred call of 25 per cent was levied in May 2003. During the period from 24 to 36 months from inception, claims have progressed favourably and the estimated surplus has increased. No supplementary call is required, and it is expected that the year can be closed in October 2005.

The release call for the year was set at Nil.

The 2003 policy year

The forecast deferred call of 25 per cent was levied in May 2004. During the period from 12 to 24 months from inception, claims have progressed favourably and reduced the technical operating deficit. As a result of a substantial investment return, the year is expected to yield an overall surplus and no supplementary call is expected for this year. It is anticipated that the policy year can be closed in October 2006.

The release call for the year was set at 5 per cent.

The 2004 policy year

The claim cost per entered GT is slightly higher than for the previous years. The policy year shows a technical operating deficit, even with the budgeted deferred call included, but is expected to yield an overall surplus as a result of a substantial investment return.

For the purpose of maintaining the Association’s strong financial position, the Committee decided to levy the deferred call of 25 per cent for payment on 1 September 2005. The year can at the earliest be closed in October 2007.

The release call for the year was set at 50 per cent, to be reduced to 25 per cent once the deferred call of 25 per cent has been paid.

The 2005 policy year

• The Committee confirmed that the release call for the year should be set at 50 per cent, which is 25 per cent above the deferred call for the year.

Summary

To summarise, the following decisions were taken:

*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