A merican Club Circular No. 29/22 1 NOVEMBER 18, 2022 CIRCULAR NO. 29/22 TO MEMBERS OF THE ASSOCIATION Dear Member: BACKGROUND TO THE 2023 AMERICAN CLUB RENEWAL. DEVELOPMENT OF CLOSED AND OPEN POLICY YEARS. LEVYING OF A SUPPLEMENTARY CALL FOR 2021. RELEASE CALLS. PREMIUM AND RELATED REQUIREMENTS FOR THE 2023 POLICY YEAR. At its meeting held in New York yesterday, your Board reviewed the American Club’s present and prospective circumstances by reference to a variety of factors. This Circular describes the issues discussed by your Board, and the decisions it reached in consequence of those discussions. Background to the 2023 American Club renewal As foreshadowed twelve months ago, and despite a welcome improvement in results for 2022, losses on earlier years have remained at elevated levels over the recent past. The impact of “social inflation” continues to be evident across a broad spectrum of exposure, particularly in regard to people and environmental claims. Over the past ten years, the growth in the quantum of individual personal injury settlements and awards in the United States has exceeded that of general inflation by nearly 150%. The lingering effects of the COVID-19 pandemic have also continued to exert a negative influence on claims for the 2020 and 2021 policy years, the latter year having been unable to take the benefit of reinsurance protection for such claims following the withdrawal of cover by market underwriters at the 2021 renewal. The same constraints have applied in 2022, but to a lesser degree given the receding impact of the pandemic in general. Although claims falling within the International Group’s Pool have emerged in a very favorable direction so far in 2022, deterioration on certain earlier years, particularly 2019 and 2021, has also created a drag on aggregate results for retained and assumed claims over the past twelve months. These negative characteristics of the claims landscape have not, as in earlier years, been offset by robust investment returns providing subsidy to underwriting losses over recent months. As is well known, the slump in both the fixed income and equity markets has created very strong headwinds for all insurers in a manner not experienced for more than a decade. However, there have been many positive developments during the 2022 policy year. The increases in premium obtained at the last renewal have raised the Club’s overall income levels on its mutual P&I portfolio very substantially over the last nine months, a trend magnified by a healthy growth in tonnage both organically on existing accounts and by the addition of new business. This expansion of the Club’s topline revenue has generated much better underwriting results than was the case A merican Club Circular No. 29/22 2 twelve or twenty-four months ago. There are grounds for cautious optimism that this will continue, but only against a background of resolutely prudent pricing and careful risk selection. On a similarly positive note, Eagle Ocean Marine (EOM), the Club’s fixed premium facility, has continued to make a strong contribution to the mutuality, with steadily rising premium and continuingly favorable underwriting results. While the Club’s investment in American Hellenic Hull has struggled to achieve profitability, it has been able to consolidate its position in the market as part of the enlarged portfolio of the Club’s European subsidiary, the American Club (Europe), in Cyprus. In sum, the American Club approaches the 2023