You are correct, much like the "Vie" series of spells, this will absorb 5% of each melee hit you take, for up to 100 damage.
Example; Badguy hits you for 153 damage! (Guard II absorbs 7.8 damage) (Guard II has 92 HP left)
Not a great effect i.m.o ~ Tank potentially loses an "anger effect" aug slot ~ Not going to make a huge difference in a group situation ~ Might be handy for a raid tank (does it stack with Bulwark of Vie?) ~ Vie spell buffs absorb 10% dmg and there's probably going to be a Cleric around in a raid, no? ~ Useful for soloing for melee classes