Review of policy years (May 2000)

Circular No. 3/2000 May 2000

TO THE MEMBERS

Dear Sirs,

REVIEW OF POLICY YEARS

At its meeting in Arendal on 29 May 2000, your Committee took the decisions set out below.

The Committee decided to levy a 15 per cent supplementary call for the 1999 policy year. As at 20 February 2000 the Association?s contingency reserves, which provide security and stability for the Membership, stood at USD 248 million. No supplementary calls are expected for the 1997 and 1998 policy years. More detailed information will be provided in the Management Report to be issued in July.

CLOSED YEARS

Closed policy years, including the 1996 policy year, closed in October 1999, continue to develop close to earlier forecasts.

OPEN YEARS The 1997 policy year

No supplementary call has been levied for the 1997 policy year. The initial forecast was 30 per cent. The year is showing a surplus and is scheduled to close in October 2000 without any supplementary call being required. The release call for the 1997 policy year was set at nil.

The 1998 policy year

No supplementary call has been levied for the 1998 policy year. The initial forecast was 30 per cent. This policy year has shown a claims increase and is currently showing a deficit. The year is scheduled to close in October 2001, but, in the light of the Association?s overall strong financial position no supplementary calls are likely to be required. The release call for the year was set at five per cent.

The 1999 policy year

The value of reported claims dropped by approximately 6 percent compared with the 1998 policy year at twelve months from inception. Provided the year?s claims continue to develop in line with forecasts, a 15 per cent supplementary call will be sufficient to enable the year to be closed in due course at close to break-even. Your Committee has decided to levy such a supplementary call since, in its view, it would be imprudent to reduce further the Club?s contingency reserves at this time.

The Committee emphasised that, should the 1999 year deteriorate significantly, then a further supplementary call of up to 10 per cent might yet be required. Such an additional call would bring the actual calls for the year into line with the forecast. Accordingly, Members are recommended to continue to budget for such a call.

The release call for the year was set at 35 per cent which will be reduced to 20 per cent once the 15 per cent supplementary call has been made.

The 2000 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 1997 policy year:

   1. No supplementary call is anticipated for this policy year.

2. The 1998 policy year:

   1. No supplementary call is anticipated for this policy year.

3. The 1999 policy year:

   1. A supplementary call of 15 per cent has been levied for this policy year. Members are advised to continue to budget for the full supplementary call for this year, namely a further call of 10 per cent.

Release calls:

1. The 1997 policy year:

   1. Nil

2. The 1998 policy year:

   1. 5 per cent

3. The 1999 policy year:

   1. 35 per cent*

4. The 2000 policy year:

   1. 50 per cent

*To be reduced to 20 per cent once the supplementary call of 15 per cent has been made.

Yours faithfully, ASSURANCEFORENINGEN GARD -gjensidig-

John G. Bernander Managing Director