Published 17 May 2006
Circular No. 2/2006
May 2006
To the Members of Assuranceforeningen Gard -gjensidig-
Dear Sirs
Review of policy years
At its meeting in Stockholm on 29 May 2006, your Committee received reports on 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 summarize,
· the Committee decided to levy a 20 per cent deferred call for the 2005 policy year, five per cent below the forecast 25 per cent.
· as at 20 February 2006 the Association's contingency reserves, which provide security and stability for the Membership, stood at USD 438 million (USD 389 million last year) based on a 20 per cent deferred call.
· no supplementary calls are expected for the 2003 and 2004 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 2003 policy year
The forecast deferred call of 25 per cent was levied in May 2004. During the period from 24 to 36 months from inception, claims have progressed favorably and the estimated surplus has increased. No supplementary call is required, and it is expected that the year can be closed in October 2006.
The release call for the year was set at Nil.
The 2004 policy year
The value of reported claims in the 2004 policy year was higher than in the previous year and the forecast deferred call of 25 per cent was levied in May 2005. During the period from 12 to 24 months from inception, there has been a negative claims development and the estimated surplus has decreased slightly. However, 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 2007.
The release call for the year was set at 5 per cent.
The 2005 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.
Against the background of the Association's strong financial position, the Committee decided to levy a deferred call of 20 per cent, - five per cent below the forecast deferred call of 25 per cent - for payment on 1 September 2006. The year can at the earliest be closed in October 2008.
The release call for the year was set at 45 per cent, to be reduced to 25 per cent once the deferred call of 20 per cent has been paid.
The 2006 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 summarize, the following decisions were taken:
(i)
The 2003 policy year:
No supplementary call will be made for this policy year.
(ii)
The 2004 policy year:
No supplementary call is anticipated for this policy year.
(iii)
The 2005 policy year:
A deferred call of 20 per cent has been ordered for this policy year for payment on 1 September 2006.
(iv)
Release calls:
The 2003 policy year:
Nil
The 2004 policy year:
5 per cent
The 2005 policy year:
45 per cent*
The 2006 policy year:
50 per cent
*To be reduced to 25 per cent once the deferred call of 20 per cent has been paid.
If you have any questions, please contact the P&I underwriting department.
Yours faithfully,
GARD ASAs agent only for Assuranceforeningen Gard ? gjensidig -
Claes IsacsonChief Executive Officer
Gard is a member of
