Review of policy years (May 1997)

Circular No. 2/97 May 1997

TO THE MEMBERS

Dear Sirs,

REVIEW OF POLICY YEARS

At its meeting in Hamburg on 26 May 1997, your Committee reviewed the Association?s financial position in detail. A summary of its findings and its decisions are set out below.

CLOSED YEARS

The closing of the 1993 policy year in October 1996 in surplus has contributed to an increased contingency reserve.

OPEN YEARS

The 1994 policy year

A contribution of 35 per cent was levied in July 1995, five per cent below the initial forecast. The policy year has developed as forecast and is showing a surplus. The year is scheduled to be closed in October 1997 without further contribution. The release contribution has been set at nil.

The 1995 policy year

A contribution of 15 per cent was levied in July 1996, 15 per cent below the initial forecast. The policy year has developed better than forecast and is showing a surplus and is expected to be closed in October 1998 without further contribution. The release contribution for the 1995 policy year has been set at five per cent.

The 1996 policy year

The value of reported claims for owner?s and charterer?s entries has increased compared with both the 1995 and 1994 policy years at twelve months from inception. Although it is too early to derive any clear picture from the claims development, one may expect an eventual claims outcome somewhat worse than average. However, in deciding what contribution to be levied your Committee took into account that the Association?s overall contingency reserve exceeded the currently laid down strategical target even if no contribution were to be ordered. Against this background your

Committee decided that no contribution should be levied for the 1996 policy year. The release contribution for the year was set at ten per cent.

The 1997 policy year

The Committee decided that the release contribution for the year should be 55 per cent, which is 25 per cent above the forecast contribution of 30 per cent.

SUMMARY

To summarise, the following decisions were taken:

Yours faithfully, ASSURANCEFORENINGEN GARD - gjensidig -

John G. Bernander Managing Director