The business of underwriting continued to steadily develop for the policy year of 2002. The entered tonnages increased to a new level without compromising on the underwriting quality. The Association had 149 vessels newly entered totaling 1.31 millions of GT for the policy year which was the year in which the entered tonnages reached it's highest level over the last 10 years. 122 vessels totaling 870,000 GT were withdrawn from the Association, of which most were withdrawn due to the sale of the vessels, while a few vessels were terminated due to the failure by their owners to pay calls on time. The Association has now 98 members and 611 entered vessels totaling 7.94 millions of GT as of 20th Feb, 2003. The GT of 2002 increased (440,000 GT) by 5.87% as compared with last year (GT 7.50 millions).

	Year of 2002	Year of 2001	Ratio
Members	98	99	-1%
Entered Vessels	611	584	4.6%
GT (in 10 thousands)	794	750	5.87%

　　The large increase of entered tonnages in the policy year of 2002 was achieved due to not only the great efforts by the Managers in the insurance market and underwriting, but as well due to the affirmation and the acceptance by the Members in respect of the rating policy of the Association and claim handling services provided by the Managers. In particular, the Sinotrans Shipping Co., Ltd. having had several years' observation entered into the Association 240,000 GT last year. Four tankers from China Shipping Co and One VLCC tanker from Cosco Dalian entered into the Association. The entry of these vessels is really an important support to the development of the Association and indicates that the Association has achieved rapid progress in underwriting tankers.

2.COLLECTION OF CALLS
　　In compliance with the decision of the Board of Directors, the Managers endeavored to take all necessary measures to tighten on collection of calls in 2002 and therefore, won an initial and considerable success.

　　The unpaid calls due from the Members to the Association for 2002 Policy year was USD2.046 millions, while for 2001 policy year and previous policy years it was USD4.483 millions (of which for 1998 policy year together with previous policy years was USD 3.25 millions.). Therefore, by 20th Feb of 2003, the unpaid calls totaled USD 6.529 millions which amounted to 5.18% of the whole assets (USD126.08 millions) of the Association. Comparing with those of the last year (USD 8.76 millions and 8.4%), the reduction is USD 2.23 millions in amount and 38.3% in percentage, which is considered relatively big.

　　We understand that in addition to the efforts made by the Managers the considerable success in collecting calls in 2002 policy was achieved due to the efforts made by the Directors of the Board. By the example of the Directors companies in paying calls with good faith, the other Members were prompted to pay calls timely, thus greatly helping and supporting the credit control of the Managers.

　　Though the situation of collection calls has been much improved, the Managers clearly realize that there is still someway to go before satisfying the demands of the standard management of the International P and I Group. Therefore, the Managers have made up the credit control as an important component part of the internationalization of the Association.

　　Taking this opportunity, the Managers once again invite the Members' special concerns and supports in this respect and timely payment of the calls.

3. INTERNATIONAL CO-OPERATION
　　The situation of reinsurance arrangement in the international market in 2002 policy year proved to be the most difficult in recent years. It was very difficult for the Managers to negotiate reinsurance arrangement because of the high loss ratio in the past and high general increase rate in the international reinsurance market. The Managers did their best to conclude renewal agreements with some international P and I clubs respectively and finally managed to control over the range of the increasing costs within the budget. Nevertheless, the costs in 2002 policy year still increased by 30.7% as compared with last year. This brought about the second substantial increase in costs since last year's increase (37.7% for last year).

　　The total Premiums paid by the Association for 2002 policy year make up 43% of the whole income of calls levied by the Association.

　　This proportion of premium reached the peak of the historical records of the Association (37.5% for 2001 policy year) which imposes great pressure on the commercial operation of the Managers.

　　The Managers, therefore, expects that all Members continue to take necessary prevention steps and pay close attention to the occurrences and the handling of large claims, so as to avoid catastrophic loss and decrease the costs for reinsurance. Meanwhile, the Managers hopes that through the efforts achieved we can have an important break-through in this respect and subsequently improve our position in reinsurance and speed up the pace of applying, in accordance with the decision of the Board of Directors, to become a member of the International Group of P and I Clubs.