Election of Chairman and Vice-Chairman, Closing of the 1996 policy year, Open Years, Premium Rating for the 2000 policy year (October 1999)

Circular No. 15/99 October 1999

TO THE MEMBERS

Dear Sirs,

ELECTION OF CHAIRMAN AND VICE-CHAIRMAN CLOSING OF THE 1996 POLICY YEAR OPEN YEARS PREMIUM RATING FOR THE 2000 POLICY YEAR

At the Committee meeting held in Tokyo on 24 and 25 October 1999, the Committee re-elected Mr Leif Terje Løddesøl of Wilh. Wilhelmsen ASA, Oslo, as its Chairman and Mr Stephen Pan of World-Wide Shipping Agency (S) Pte. Ltd., Singapore, as its Vice-Chairman.

The Committee also considered the progress of all open policy years and set the premium rating for the policy year commencing on 20 February 2000. The Committee decided to:

CLOSING OF THE 1996 POLICY YEAR

The Committee closed the 1996 policy year with no supplementary call being ordered. The policy year can be described as an average claims year and is expected to end in a surplus.

OPEN YEARS

1997 Policy Year

The value of reported claims dropped approximately 15 per cent at 12 months from policy year inception compared to the year before and ended at a level similar to that of 1995. It is expected that the year will end in a surplus. Based on this favourable claims development and the very healthy contingency reserve of the Association one anticipates that the year can be closed in October 2000 with no supplementary call being ordered.

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

1998 Policy Year

Reported claims increased some 9 per cent at 12 months from policy year inception compared to the year before. Furthermore, claims reported between 12 and 18 months after inception showed a deterioration compared to any previous years, although the year is still progressing in line with earlier forecast and is expected to end in a surplus. For that reason no supplementary call has been levied against a forecast supplementary call of 30 per cent.

The release call for this year was set at 15 per cent.

1999 Policy Year

The first six months of the year have seen a drop in claims compared with 1998 figures. The aggregate value of reported P&I liabilities for owners and charteres is 17 per cent lower than the year before at six months from inception. There has been a drop in claims at all levels, but it is the lack of claims in the higher bands that most impacts the total result.

The release call for the year was set at 50 per cent, 25 per cent above the estimated supplementary call.

PREMIUM RATING FOR THE 2000 POLICY YEAR

Mutual Entries

The Association has had a more moderate general premium increase in recent years than most other Clubs within the International Group. This has been made possible as a result of the Association's financial strength and strong policy year results. However, the latter has been supported by healthy investment income combined with surpluses on fixed premium covers. Mutual entries have in later years shown an increasing deficit. For that reason the Committee decided that a small general premium increase for mutual entries would be prudent and ordered a general increase of 5 per cent in the advance premium for mutual entries for the 2000 policy year.

The forecast supplementary call for the 2000 policy year was set at 25 per cent of the advance premium and the release call for the year was set at 50 per cent, 25 per cent above estimated supplementary call.

Fixed Premium Entries

There will be no general increase in premiums for fixed premium entries which includes, inter alia, charterers and mobile offshore units' entries.

Individual Premium Rating

Each Member's ETC premium will, as usual, be assessed individually in the light of his loss record and the cost of reinsurance. All Members will receive shortly the loss record for their respective fleets.

Members who have not heard from the Association by 20 January 2000 may assume that there will be no changes in the premium rating for next year save for adjustments based on the general increase for mutual entries and variations in the reinsurance costs.

Advance premium, assessed according to the above criteria, will be debited in three instalments and falls due on 20 March, 5 July and 5 November 2000. However, P&I premiums not exceeding USD 5,000 per vessel and Defence premiums will be debited in one instalment falling due on 20 March 2000.

Deductibles

Standard deductibles for P&I and Defence risks applicable for the 2000 policy year will be unchanged from those for the 1999 policy year.

SUMMARY

To summarise, the following decisions were taken:

Yours faithfully, ASSURANCEFORENINGEN GARD -gjensidig-

John G. Bernander Managing Director