Review of policy years (May 2002)

Circular No. 1/2002 May 2002

TO THE MEMBERS OF ASSURANCEFORENINGEN GARD -gjensidig-

Dear Sirs

Review of policy years 

At its meeting in Berlin on 27 May 2002, your Committee received reports on all matters of importance for the business activities of the Association and was pleased to note that the financial position of the Association continues to be strong. With regard to open policy years your Committee took the decisions set out below.

To summarise, the Committee decided to levy the forecast 25 per cent supplementary call for the 2001 policy year. As at 20 February 2002 the Association's contingency reserves, which provide security and stability for the Membership, stood at USD 195 million. No further supplementary calls are expected for the 1999 and 2000 policy years. 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 1999 policy year

A supplementary call of 15 per cent was ordered for this year against a forecast of 25 per cent. The result of the year continues to improve and is now showing a surplus of some USD 13 million. The claims development during the period from 24 to 36 months from the year's inception has been favourable. Against this background, no further supplementary call is recommended for this policy year. The year is expected to be closed in October 2002.

The release call for the year was set at Nil.

The 2000 policy year

The 2000 policy year, as previously reported showed a marked deterioration compared with earlier policy years. This negative development was the result of an increase in claims combined with virtually no investment returns. Accordingly the full forecast supplementary call of 25 percent was levied in May last year, combined with a warning that should the year deteriorate significantly, a further supplementary call might be required. However, since then the technical result of the year has improved and the year is anticipated to be closed in October 2003 without a further supplementary call being levied.

The release call for the year was set at 5 per cent.

The 2001 policy year

The value of reported claims for the 2001 policy year is some 15 percent lower than for the preceding year 12 months from inception, but above the level for the years prior to 2000. The claims situation, combined with negative investments return, results in a deficit even with a full supplementary call as forecast being levied. The result of this year must be seen in the context of the Association's overall strong financial position. In the light of this the Committee has decided that the forecast supplementary call of 25 percent shall be levied. The day of payment of the supplementary call is 5 September 2002.

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 percent once the supplementary call of 25 percent has been levied).

The 2002 policy year

The Committee confirmed that the release call for the year should be set at 50 percent, which is 25 percent above the forecast supplementary call for the year.

SUMMARY

To summarise, the following decisions were taken:

1. The 1999 policy year:

   1. No further supplementary call will be made for this policy year.

2. The 2000 policy year:

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

3. The 2001 policy year:

   1. A supplementary call of 25 per cent has been ordered for this policy year. Members are advised that a further supplementary call for the year may be levied should it deteriorates significantly.

4. Release calls:

   1. The 1999 policy year:

      1. Nil

   2. The 2000 policy year:

      1. 5 per cent

   3. The 2001 policy year:

      1. 50 per cent*

   4. The 2002 policy year:

      1. 50 per cent

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

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

Claes Isacson Chief Executive Officer