3/2007 - Composition of committees and boards, review of policy years, premium rating for the 2008 policy year, half year status report as at 20 August 2007

Circular No. 3/2007 November 2007

TO THE MEMBERS OF ASSURANCEFORENINGEN GARD - gjensidig

Dear Sirs,

Composition of committees and boards, review of policy years, premium rating for the 2008 policy year, half year status report as at 20 August 2007

Introduction

This document highlights the decisions taken at the recent meetings of the Committee and the Executive Committee of Assuranceforeningen Gard -gjensidig- (the “Association”) and at the Extraordinary General Meeting held on 19 September 2007.

Composition of Committees and Boards

The Committee

At the Association’s Annual General Meeting, which took place on 24 August 2007 in Arendal, the following new members were elected to the Committee:

• Rafael Ferrada, Compañía Sud Americana de Vapores S.A (CSAV), Valparaíso

• Kenneth Hvid, Teekay Norway AS, Stavanger

• George Kynigos, Agelef Shipping Co (London) Ltd., London

• Magne Morken, Solvang ASA, Stavanger

• Ingar Skaug, Wilh. Wilhelmsen ASA, Oslo

At the meeting held in Arendal on 27 August 2007 the Committee re-elected Stephen Pan of World-Wide Shipping Agency Limited, Hong Kong, as its Chairman and Alain Bernard representing Olympic Shipping & Management S.A., Athens, as its Deputy Chairman.

The Executive Committee

At the Association’s Annual General Meeting Jan Lissow, representing Interorient   Navigation Co Ltd, Cyprus, was elected as a new member of the Executive Committee. At the meeting held on 24 August 2007 immediately after the Annual General Meeting, the Executive Committee elected Axel C. Eitzen of Camillo Eitzen & Co ASA, Oslo, as its Chairman and Bengt Hermelin of Saudi Maritime Holding Co. (SAMCO), London, as its Deputy Chairman.

The Supervisory Committee

At the Association’s Annual General Meeting Claus Mørch of Anders Wilhelmsen & Co AS, Oslo, was elected as a new member of the Supervisory Committee. At its meeting held on 2 November 2007, the Supervisory Committee re-elected Stephen Knudtzon as its Chairman and Skule Adolfsen of Høegh Autoliners AS, Oslo, as its Deputy Chairman.

Extraordinary General Meeting held on 19 September 2007

The Extraordinary General Meeting of the Association held on 19 September 2007 endorsed the recommendation of the Committee resulting in the new Statutes of the Association (as appended to the Notice of Extraordinary General Meeting dated 27 August 2007) being adopted. The new Statutes will enter into force at noon GMT on 20 February 2008. With effect from the same date the number of governing corporate bodies in the Association will be reduced to comprise, besides the General Meeting, only the Executive Committee (hereafter called the Board of Directors), the Supervisory Committee and the Election Committee.

The Board of Directors of the Association’s sister association in Bermuda and principal re-insurer, Gard P&I (Bermuda) Ltd, has been expanded. The Board of Directors of Gard P&I (Bermuda) Ltd comprises now also the individuals currently being members of the Committee and the Executive Committee of Assuranceforeningen Gard.

Further details about the changes in the Statutes will be included in the circular dealing with changes in the Statutes and Rules for 2008 which will be published later.

Review of policy years

Closed years

Closed years up to and including the 2004 policy year have progressed as projected.

2004 policy year closed

The Committee decided to close the 2004 policy year without ordering a Supplementary Call.

Open policy years

The 2005 policy year

A 20 per cent Deferred Call, 5 per cent less than forecast was levied in September 2006. The year is assumed to produce a surplus and is likely to be closed in October 2008 without further Deferred Calls and/or Supplementary Calls being levied.

The 2006 policy year

A 20 per cent Deferred call, 5 per cent less than forecast was levied in September 2007. The year is still assumed to produce a surplus but is negatively affected by the volume of claims reported under the International Group of P&I Clubs’ Pooling Agreement for this year. However, the year is likely to be closed in October 2009 without further Deferred Calls and/or Supplementary Calls being levied.

The 2007 policy year

The first six months of the year have developed as forecast. Even if the Club has experienced an increase in reported liabilities and number of claims, the claims expectations are in line with the budget for the year when adjusted for business volume growth.  Members should continue to budget with the full Deferred Call of 25 per cent being levied for the 2007 policy year.

Release Calls

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

For the 2005 policy year: nil

For the 2006 policy year: 10 per cent

For the 2007 policy year: 50 per cent

For the 2008 policy year: 50 per cent

Premium policy for the 2008 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. However, it has been decided that also for 2008 policy year, as for the current year, 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 forecast CRN for Gard P&I, fixed premium business included, of 107 per cent for the 2008 policy year have to be made. This target approximates to a general premium increase of 10 per cent. The Deferred Call for mutual entries was set at 25 per cent of the Advance Call.

In addition, separate adjustments will be made in each Member’s premium rating to reflect changes in the cost of the International Group’s reinsurance arrangements for the 2008 policy year. Further details about the International Group and the Association’s reinsurances for the 2008 policy year will be published later.

Half year status report as at 20 August 2007

Tonnage (P&I mutual)

Total tonnage entered on behalf of owners on a mutual basis as at 20 August 2007 amounted to 97.6 million GT. Comparable figures as at 20 February 2007 were 92.7 million GT.

Key figures from the consolidated accounts*

The total balance available to meet outstanding and unreported claims amounted to USD 1,760 million of which the general contingency reserve totalled USD 523 million. Comparable figures as at 20 February 2007 were USD 1,638 million and USD 512 million, respectively.

The technical account showed a deficit of USD 11 million while the non-technical account posted a surplus of USD 22 million resulting in an overall surplus for the six months period to 20 August 2007 of USD 11 million.

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

If you have any questions, please contact Senior Vice President Rolf Thore Roppestad.

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

Chief Executive Officer