Review of policy years (June 1999)

Circular No. 4/99 June 1999

TO THE MEMBERS

Dear Sirs,

REVIEW OF POLICY YEARS

At its meeting in Stockholm on 31 May 1999, your Committee took the decisions set out below.

The Committee decided not to levy the forecast supplementary call of 30 per cent for the 1998 policy year. This represents a saving to the mutual Membership of 23.08 per cent of the estimated total call, a similar saving to that in the 1996 and 1997 policy years. The Association?s free reserves, which now stand at USD 263 million with investments stated at valuation and USD 223 million with investments stated at cost, provide further security and stability for the Membership. More detailed information will be provided in the Management Report to be issued in July.

CLOSED YEARS

Closed policy years, including the 1995 policy year closed in October 1998, continue to develop in line with forecasts.

OPEN YEARS

The 1996 policy year

No supplementary call has been levied for the 1996 policy year. The initial forecast was 30 per cent. The policy year has developed better than forecast. The year is showing a surplus and is scheduled to close in October 1999 without any supplementary call being required. The release call for the 1996 policy year was set at nil.

The 1997 policy year

No supplementary call has been levied for the 1997 policy year. The initial forecast was 30 percent. This policy year has also developed better than forecast and is currently showing a surplus. The year is scheduled to close in October 2000, and, in the light of the increase in surplus and the Association?s overall strong financial position, should do so without a supplementary call being required. The release call for the year was set at five per cent.

The 1998 policy year

The value of reported claims have increased by approximately 10 percent compared with the 1997 policy year at twelve months from inception. Although it is too early to derive a clear picture from the claims? development of the 1998 policy year there are indications that the policy year has potential for a higher than average claim?s exposure. However, the current estimate for the year shows a surplus and your Committee decided not to levy a supplementary call. The release call for the year was set at 25 per cent.

The 1999 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:

Yours faithfully, ASSURANCEFORENINGEN GARD -gjensidig-

John G. Bernander Managing Director