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ARM MERCHANT SHIPS?
Should merchant ships transiting high risk areas carry small arms for defense against pirates?

Selected crew should be trained and have guns available
Professional armed security teams should be hired
No guns on merchant ships, ever

May 25, 2009

Red ink at Gard

Norwegian marine insurer Gard booked an after-tax loss of $150 million in the year ending February 20, 2009, with strong underwriting results being pulled down by losses on investments.

Chairman of the Board Stephen Pan called 2008 "a year of contrasting trends" and said that while investment returns had been negatively affected by the general fall in asset prices, "the financial strength that we have built up over many years has prepared us to withstand this downturn."

Claes Isacson, CEO, commented: "While we had a loss on investments, all areas of our insurance business performed well--a trend which has continued in the first quarter of the current financial year. The technical result for the group was a surplus of $157 million driven by improved selection, a greater alignment of price to risk, strong support from our client base and a more favorable claims picture.

"In the last two years we have focussed on moving premiums to levels which reflect the underlying risk, and at the same time premium volume has continued to increase. In P&I we have seen a continued trend for owners to put 100% of their fleet with Gard, while in marine the share of vessels where we have the claims lead has increased from 46% of the portfolio to 54%. Both these trends demonstrate the ongoing appeal of our financial strength and high levels of service and expertise.

"Claims inflation slowed considerably during the year, particularly in the second half. There have also been fewer claims than normal above USD 2 million which has made a positive contribution to our technical results.

"The non-technical result for the year was a loss of $293 million. In an evolving risk landscape it is important to align the investment portfolio to reflect those changes, and we have been taking steps to do that. While the global financial crisis has had an adverse affect on our results, it has also demonstrated why Gard has focused so closely on the need to be strongly capitalized. We have been able to withstand a fall in assets prices without having to raise capital from the mutual members by levying an unbudgeted supplementary call."

Gard is a shipowner-controlled provider of P&I, marine and energy insurance products, with an annual premium income of $796 million and total assets of $1.7 billion. It employs over 390 people in ten offices around the world.

The P&I division has an entered tonnage in excess of 170 million gt, and gross written premium in the 2008 policy year of $460 million.

The marine division has over 6.400 entered vessels and a gross written premium income of $230 million in 2008.

The energy division's gross written premium for 2008 totalled USD 106 million.

All insurance operating entities within the Gard group; Assuranceforeningen Gard, Gard P&I (Bermuda) Limited and Gard Marine & Energy Limited are rated 'A+' (negative outlook) by Standard & Poor's.


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