Review of policy years - Release contributions (June 1996)

Circular No. 1/96 June 1996

TO THE MEMBERS

Dear Sirs,

REVIEW OF POLICY YEARS

RELEASE CONTRIBUTIONS

At their meeting in Arendal on 27 May 1996, your Committee reviewed the Association?s financial position in detail. A summary of its findings and its decision on the initial contribution for the 1995 policy year are set out below.

CLOSED YEARS

The closing of the 1992 policy year last October in surplus has contributed to a significantly increased contingency reserve.

1993 policy year: A contribution of 30 per cent was levied for the year in July 1994 against an original forecast of 40 per cent. The policy year has developed better than forecast and is showing a surplus. The year is scheduled to be closed in October 1996 without further contribution. Reflecting this strong position, the release contribution has been set at nil.

1994 policy year: A contribution of 35 per cent was levied in July 1995, five per cent below the initial forecast. The current estimates show a surplus also for this policy year and it is expected to be closed in the autumn of 1997 without further contribution. The release contribution for the 1994 policy year has been set at five per cent.

1995 policy year: Reported claims for both owners and charterers are slightly down compared with the levels in the 1993 and 1994 policy years at twelve months from inception. Although, it would have taken only two Pool claims to have turned this reduction into an increase, the picture is encouraging taking into account also the increase in tonnage entered. A growth in tonnage, paired with decreasing liabilities, gives room for cautious optimism for the final outcome of the policy year. At twelve months from inception, however, it is too early for a clear picture to have emerged.

Against this background the Committee decided that an initial contribution of 15 per cent, half the original forecast, should be levied. The contribution of 15 per cent is payable on 20 July 1996. The Committee set the release contribution for the year at 25 per cent. This will be reduced to 10 per cent once the contribution of 15 per cent has been levied.

1996 policy year: The Committee decided that the release contribution for the year should be 55 per cent, which is 25 per cent above the originally forecast contribution of 30 per cent.

Summary

To summarise, the following decisions were taken:

Yours faithfully, ASSURANCEFORENINGEN GARD - gjensidig -

John G. Bernander Managing Director