Review of policy year (30 May 2001)

Circular No. 3/2001 May 2001

TO THE MEMBERS OF ASSURANCEFORENINGEN GARD - gjensidig-   Dear Sirs

REVIEW OF POLICY YEARS

At its meeting in Amsterdam on 28 May 2001, your Committee took the decisions set out below.

The Committee decided to levy a 25 per cent supplementary call for the 2000 policy year. As at 20 February 2001 the Association's contingency reserves, which provide security and stability for the Membership, stood at USD 204 million.  No supplementary calls are expected for the 1998 policy year and no further supplementary call is anticipated for the 1999 policy year.  More detailed information will be provided in the Management Report to be issued in July.

CLOSED YEARS

Closed policy years continue to develop better than earlier forecasts.

OPEN YEARS

The 1998 policy year

No supplementary call has been levied for the 1998 policy year.  The initial forecast was for a 30 per cent supplementary call.  Higher claims are now forecast for this year than were expected when the decision to call no supplementary was made.  It is currently showing a deficit.  The year is scheduled to be closed in October 2001, but, in the light of the Association's overall strong financial position no supplementary call will be made. The release call for the year was set at nil.

The 1999 policy year

A supplementary call of 15 per cent was ordered for this year against an initial forecast of 25 per cent. The year continues to develop in line with forecast and is showing a surplus. The claims development during the period from 12 to 24 months from the year's inception has been favourable. Against the background of this positive claims development, no further supplementary call is likely for this policy year. The release call for the year was set at 5 per cent.

The 2000 policy year

The value of reported claims has increased considerably compared to the preceding year and is also significantly higher than the claims level of the 1998 policy year 12 months from that year's inception. The 2000 policy year will most likely end in a significant deficit. In the light of this, the Committee has decided to levy the forecast supplementary call of 25 per cent.  The Committee emphasised that should the policy year deteriorate significantly, then a further supplementary call might be levied. The release call for the year was set at 50 per cent (to be reduced to 25 per cent once the supplementary call of 25 per cent has be levied).

The 2001 policy year

The Committee decided that the release call for the year should be set at 50 per cent, which is 25 per cent above the forecast supplementary call of 25 per cent.

SUMMARY

To summarise, the following decisions were taken:

1. The 1998 policy year: No supplementary call will be made for this policy year.

2. The 1999 policy year: No further supplementary call is anticipated for this policy year.

3. The 2000 policy year: A supplementary call of 25 per cent has been levied for this policy year.  Members are advised that a further supplementary call for the year may be levied if the year should deteriorate significantly.

4. Release calls:

   1. The 1998 policy year:

      1. Nil

   2. The 1999 policy year:

      1. 5 per cent

   3. The 2000 policy year:

      1. 50 per cent*

   4. The 2001 policy year:

      1. 50 per cent  

*To be reduced to 25 per cent once the supplementary call of 25 per cent has been made.

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

John G. Bernander Chief Executive Officer