Note 1-Purpose & Constitution
The
Association stands on a mutual basis and is to uphold prestige and safeguard
the interests of its Members, for which the Association affords insurance cover
and offers professional services. The liability of the Members is to pay Calls
and premiums to the Association, In the event of the termination of the
Association, any net assets of the Association are to be returned equitably to
the Members insured by it in the policy year during which the Association is
terminated in accordance with the Bye-Laws.
Note 2-Accounting Principle
a Accounting Convention
These Financial Statements have been prepared in
accordance with the material Accounting Principles based on applicable Chinese
accounting standards and Generally Accepted Accounting Principles.
b Accounting Year
These Financial Statements reflect the period from
January 1st 2008 to December 31st 2008.
c Annual Accounting and Policy Year Accounting
The Income And Expenditure Account is prepared on an
annual accounting basis and includes all the Calls and premiums levied in the
accounting year and the cost of claims and reinsurance for the current year and
any adjustments relating to previous years together with operating expenses,
financial expenses and investment income. All revenue transactions appear in
the Income and Expenditure Account are allocated to the relevant policy years
or to a reserve.
Calls and premiums, reinsurance premiums, claims and claim recoverable from reinsurers or third parties are allocated to the policy years to which they relate. Both the realised and unrealised investment income and operating expenses are allocated to the current policy year.
d Valuation basis
The Association adopts accrual basis in accounting
unless otherwise stipulated. The values of all assets, except the equity
investment of listed company which is stated at lower of its market value and
the net asset value per share at the balance sheet date, are to be recorded at
historical costs at the time of acquisition.
e Bookkeeping base currency
The United States Dollar is the bookkeeping base
currency of the Association. The Association adopts the principle of separate
accounting for similar accounts. Balances of RMB accounts at the end of the
year shall be translated into the US Dollar at the official exchange rate
prevailing on December 31st, 2008. The differences arising from the translation
are stated as gains or losses in the Income and Expenditure Account.
f Cash Balance
Cash in hand, bank deposits and other monetary assets
are listed separately for their different keeping place and certain purpose in
bookkeeping. Their total amount in the name of cash balance is showed as a
current asset in the Balance Sheet.
g Calls and Premiums Receivable
It refers to the accumulated amount of Calls and
premiums receivable due from Members. The Association conducts the direct
write-off method and the bad debts are charged to the reserves directly under
the Board decision when the Calls and premiums are discovered to be
uncollectible.
h Guarantee
It refers to cash balance held by domestic or
overseas Banks for issuing letters of guarantee.
i Long-term Investments
The equity method is used when the Association has
significant influence, control or co-control over the operation of the invested
listed company. In the equity method, the initial or supplementary investment
is firstly recorded at cost but later is adjusted each year for changes in the
equity in the invested company. The Association recognizes the balance from the
changes of the equity in the invested company as an investment income or loss.
The cost method is used for other long-term investments.
The investment income includes all the gains and losses. The investment income (or loss) less the investment management cost is stated in the Income and Expenditure Account.
Since the policy year of 1998 when the
Association afforded the cover against
j Liabilities Provision
Liabilities provisions and reinsurance recoveries
receivable for open and closed policy years are drawn based on the best
estimates of the Managers and consent of the chief underwriter to prepare for
the claims incurred in the relevant policy years and their difference is
charged to the Income and Expenditure Account. They are also stated in the
Balance Sheet separately.
k Reserves
The reserves are the net assets of the Association
and available to meet any deterioration in the open and closed policy years and
to contribute to actual or potential investment losses or other certain
purposes.
l Calls and Premiums
Calls and premiums include Advance Calls,
Supplementary Calls, Release Calls and other premiums, less return premiums.
These Calls and premiums are the total receivables for the whole period of cover
provided by the contracts incepting during the accounting period together with
any premium adjustments relating to prior accounting periods. The amount of
Calls and premiums less reinsurance premiums is credited to the Income and
Expenditure Account.
m Reinsurance Premiums
The liabilities of the Association are reinsured
above certain levels in the market. This item shows the amount of the
reinsurance premiums the Association paid for the reinsurance.
n Claims
The claims include all claims incurred during the
year, whether paid or estimated, and the adjustments for claims outstanding of
previous years. The estimates for outstanding claims are based on the best
estimates and judgement of the Managers of the likely final cost for individual
cases on current information. The recoveries from the reinsurers and the
recoveries from the third parties are both credited into the Income and
Expenditure Account as the anti-items to the claims.
o Claims Recoveries From the Third Party
It refers to the amount recovered from the third
party, which is credited into the Income and Expenditure Account as the
deduction of claims.
p Reinsured Recoveries
The liabilities of the Association are reinsured
above certain levels in the market.? It is the anti-item to the claims paid and
credited in the Income and Expenditure Account. Accordingly the reinsurance
recoveries receivable are listed as assets in the Balance Sheet.
q Operating Expenses
These include management costs and costs of the
Board. The management costs include the cost of the offices, staff,
communications, travel and administration. The costs of the Board include the
cost of annual General Meetings of Members and Board meetings, travels and
other costs. It has been drawn on the ratio in accordance with the Board's
instruction and is listed in the Income and Expenditure Account.
r Taxation
The Association enforces the relevant tax policies of
the People’s Republic of China.
s Related Party Disclosures
The Association has no share capital and is
controlled by the Members who are also the insureds. The subsequent insurance
transactions are consequently deemed to be the transactions between the related
parties, but they are the only transactions between the Association and the
Members.
Note 3-Reinsurance recoveries receivable(see Note 2p)
|
|
2008 |
2007 |
|
Reinsurance recoveries receivable |
2,356,417.86 |
302,862.20 |
|
Estimated reinsurance recoveries receivable |
16,532,633.40 |
15,684,845.69 |
|
Gross reinsurance recoveries receivable |
18,889,051.26 |
15,987,707.89 |
Note 4-Long-term investments & Investment income(see Note 2i)
Net investment income
|
|
2008 |
2007 |
|
Long-term investment income |
3,507,093.80 |
817,245.96 |
|
Other investment income |
76,370.42 |
(64,238.20) |
|
Investment income |
3,583,464.22 |
753,007.76 |
|
Less: Investment management cost |
286,677.14 |
60,240.62 |
|
Net investment income |
3,296,787.08 |
692,767.14 |
The balance amount with P&I current account at the balance sheet date which is credited in these Financial Statements as the Long-Term Investments is USD334,921.48.
Note 5-Liabilities provision (see Note 2j)
|
|
|
2008 |
2007 |
|
Policy year |
|
|
|
|
2008 |
|
2,889,643.69 |
|
|
2007 |
|
289,895.11 |
1,844,675.66 |
|
2006 |
|
(1,713,865.60) |
(964,178.87) |
|
2005 |
|
(46,655.54) |
282,426.67 |
|
2004 |
|
(299,890.61) |
(133,906.26) |
|
2003 |
|
(688,511.56) |
(945,719.21) |
|
2002 |
|
265,440.00 |
485,440.00 |
|
2001 |
|
30,000.00 |
30,000.00 |
|
2000 |
|
- |
- |
|
1999 |
|
50,000.00 |
- |
|
Total |
|
776,055.49 |
598,737.99 |
|
Gross liabilities provision |
17,308,688.89 |
16,283,583.68 |
|
|
Reinsurance recoveries receivable for outstanding claims |
(16,532,633.40) |
(15,684,845.69) |
|
|
Net liabilities provision |
776,055.49 |
598,737.99 |
|
Note 6-Reserves (see Note 2k)
|
|
|
2008 |
2007 |
|
Policy Year |
|
|
|
|
2008 |
|
5,826,607.40 |
|
|
2007 |
|
3,480,448.51 |
3,725,683.44 |
|
2006 |
|
5,142,025.66 |
5,441,821.78 |
|
2005 |
|
4,205,075.22 |
3,789,328.97 |
|
2004 |
|
2,820,770.53 |
2,520,155.44 |
|
2003 |
|
1,349,192.27 |
1,313,992.52 |
|
2002 |
|
(181,740.24) |
(123,599.33) |
|
2001 |
|
(336,401.51) |
(344,441.81) |
|
2000 |
|
1,196,804.33 |
1,194,403.74 |
|
1999 |
|
578,830.87 |
677,593.64 |
|
1998 |
|
1,224,388.27 |
1,171,930.62 |
|
Total |
|
25,306,001.31 |
19,366,869.01 |
Note 7-Calls & premiums (see Note
Net Calls & Premiums
|
|
|
2008 |
2007 |
|
Calls & premiums |
A |
16,665,228.27 |
12,026,594.18 |
|
Reinsurance premiums |
B |
10,352,505.33 |
6,061,588.12 |
|
Net calls & premiums |
A－B |
6,312,722.94 |
5,965,006.06 |
Calls & Premiums
|
|
|
2008 |
2007 |
|
Policy year |
|
|
|
|
2008 |
|
16,498,197.05 |
|
|
2007 |
|
- |
12,390,801.58 |
|
2006 |
|
- |
24,852.46 |
|
2005 |
|
- |
(283,173.18) |
|
2004 |
|
167,031.22 |
- |
|
2003 |
|
- |
(5,699.36) |
|
2002 |
|
- |
(100,187.32) |
|
Total |
|
16,665,228.27 |
12,026,594.18 |
Reinsurance Premiums
|
|
|
2008 |
2007 |
|
Policy year |
|
|
|
|
2008 |
|
10,335,664.10 |
|
|
2007 |
|
29,494.28 |
6,193,083.65 |
|
2006 |
|
(3,320.26) |
(131,495.53) |
|
2005 |
|
(6,216.06) |
- |
|
2004 |
|
(3,116.73) |
- |
|
Total |
|
10,352,505.33 |
6,061,588.12 |
Note 8-Claims (see Note 2n/o/p)
|
|
|
|
2008 |
2007 |
|
Gross claims paid |
A |
6,381,070.79 |
4,987,275.98 |
|
|
Less: Recoveries from 3rd party |
B |
- |
- |
|
|
Other P&I association |
C |
3,430,240.29 |
1,872,538.51 |
|
|
Net claims paid |
A-B-C=D |
2,950,830.50 |
3,114,737.47 |
|
|
Movement in provision for outstanding claims: |
|
|
||
|
Provision carried forward |
17,308,688.89 |
?16,283,583.68 |
||
|
Provision brought forward |
(16,283,583.68) |
(9,700,146.27) |
||
|
Transfers to liabilities provision |
E |
1,025,105.21 |
6,583,437.41 |
|
|
Less: Movement in provision for reinsurance recoveries |
|
|
|
|
|
Provision carried forward |
(16,532,633.40) |
(15,684,845.69) |
||
|
Provision brought forward |
15,684,845.69 |
7,396,585.20 |
||
|
Provision for reinsurance recoveries |
F |
(847,787.71) |
(8,288,260.49) |
|
|
Net changes in claims provision |
G=E+F |
177,317.50 |
(1,704,823.08) |
|
|
Net incurred claims |
D+G |
3,128,148.00 |
1,409,914.39 |
|
Gross Claims Paid
|
Policy year Items |
2008 |
2007 |
2006 |
2005 |
2004 |
2003 |
2002 |
Total |
|
Particular average |
97,948.53 |
3,612,605.14 |
457,483.60 |
152,918.01 |
65,276.51 |
- |
280,000.00 |
4,666,231.79 |
|
Collision liabilities |
- |
805,276.73 |
740,511.36 |
- |
- |
- |
- |
1,545,788.09 |
|
Survey fee |
35,434.15 |
50,792.85 |
10,478.44 |
1,890.05 |
2,923.80 |
- |
- |
101,519.29 |
|
Correspondents fee |
701.33 |
9,241.89 |
804.62 |
1,499.77 |
- |
450.64 |
- |
12,698.25 |
|
Lawyer's fee |
4,998.43 |
29,844.61 |
- |
9,835.40 |
- |
- |
- |
44,678.44 |
|
Others |
- |
10,154.93 |
- |
- |
- |
- |
- |
10,154.93 |
|
Total |
139,082.44 |
4,517,916.15 |
?1,209,278.02 |
166,143.23 |
?68,200.31 |
??? 450.64 |
280,000.00 |
6,381,070.79 |