At its Board Meeting in Copenhagen 8 May 2014, the Board reviewed the policy years for the Association and decided on Release Calls for the open years as well as a recommendation to close the 2011/12 Policy Year for the mutual classes Protection and Indemnity and Freight Demurrage and Defence.
Policy Year 2011/12
The Policy year 2011/12 has developed as per expectation and is in balance. The Board decided to propose to the Committee which will meet on 30 May 2014 to recommend to the Annual General Meeting to close the 2011/12 policy year without further calls.
Review of Open Policy years
Skuld will apply its internal risk model to calculate the risk of deterioration for each policy year. In contrast to Solvency II where the risk horizon is the next 12 months, the risk of deterioration is calculated for the full development of the individual policy year. The risk model takes into consideration:
- premium risk
- reserve risk
- market risk
- counterparty risk
- operational risk
Further, Skuld will apply the value at risk (VaR) with a confidence interval of 99.5% when assessing the risk of deterioration. For current policy years, all risk factors mentioned are relevant. For old policy years, only reserve risk, counterparty risk and operational risk are relevant.
Policy Year 2012/13
The Policy year is assessed according to the model described above and due to its maturity the relevant risks are reserve risk, counterparty risk and operational risk. The Board decided to reduce the release call to 0%.
Policy Year 2013/14
The Policy year is assessed according to the model described above and due to its medium maturity the relevant risks are reserve risk, counterparty risk and operational risk. The Board decided to reduce the release call to 0%.
Policy Year 2014/15
The Policy year is assessed according to the model described above and since this is the running Policy year all the risk factors above have been taken into consideration. The Board decided to set the release call to 15%.
Summary of Policy Years
2009/10: Closed
2010/11: Closed
2011/12: Proposed to be closed by the AGM 4 September 2014
2012/13: Release call reduced to 0%
2013/14: Release call reduced to 0%
2014/15: Release call set to 15%
Yours faithfully
Assuranceforeningen Skuld (Gjensidig)