Underwriting

1. Entry

The policy year of 2001 was a prosperous underwriting year in which the Managers achieved a large increase in the entered tonnage without compromising on the underwriting quality. The Association has now 99 members and 584 entered vessels totally 7.5 millions of GT as of 20^th Feb. 2002, which is a 7.61% increase of 530,000 GT relative to the same period of last year.

The main reasons for the increase of entered tonnage are as follows:

(1) Great attention was paid and efforts were taken by the Managers to market the Club both at renewal time and on other occasions, which was the primary reason for the tonnage increase.

(2) The branch offices of the Association actively utilized their geographical proximity to expand the local market.

The branch offices established in all shipping centers are the windows of the Association to understand and broaden the market. They have made a great contribution to the Association’s marketing efforts and due to the close rapport with headquarters, they have implemented the goals approved by the Board of Directors in maintaining and developing the business of the Association during renewals.

(3) Hardening of the P&I market

In view of the hardening of the overseas P&I markets which saw significant premium increases, some Members withdrew their part of fleet from foreign market to enter with the Association.

2. Collection of calls

In accordance with the guidelines of the Board of Directors, the Managers continued to tighten on credit control of calls in 2001, which achieved a good result.

Up to 20^th February 2002, the premiums collected or recovered increased by 3.2% and outstanding premiums due to association decreased 11.2% compared with the same period of last year.

Premium collection in the 2001 policy year improved due to the following reasons:

(1) The Board of Director members acted as an example to the others, by paying in full to the Association the advance call before the 20^th February 2001. The particular efforts of the directors to expedite all members to pay their premium timely greatly helped and supported the credit control work of the Managers.

(2) The Managers tightened credit control and commenced legal proceedings against some irresponsible and unreliable members.

However, we acknowledge that the current amount of unpaid premium is still large and there is still a long way before satisfying the demands of the Board of Directors which the Association will endeavour to achieve by improvements in credit control.

3. International Reinsurance

It was difficult for the Association in negotiating reinsurance with cooperator P&I Clubs due to the bad loss record for the 2001 policy year. Through our efforts we have concluded renewal agreements with some P&I clubs, however reinsurance premiums increased by 37.70% compared with the same period of last year, which imposed great pressure on the commercial operation of the Managers.

The Association expects all members to pay particular attention to avoid the occurrence of large claims in order to decrease the cost for reinsurance.