A merican Club Circular No. 17/23 1 NOVEMBER 17, 2023 CIRCULAR NO. 17/23 TO MEMBERS OF THE ASSOCIATION Dear Member: THE 2024 AMERICAN CLUB RENEWAL. DEVELOPMENT OF CLOSED AND OPEN POLICY YEARS. LEVYING FINAL CALL AND CLOSING OF THE 2020 POLICY YEAR. LEVYING OF A SUPPLEMENTARY CALL FOR THE 2021 POLICY YEAR. RELEASE CALLS. REQUIREMENTS FOR THE 2024 POLICY YEAR. At its meeting held in New York yesterday, the Board reviewed the American Club’s present and prospective circumstances by reference to a variety of factors. This Circular describes the issues discussed by the Board, and the decisions consequently reached. Background to the 2024 American Club renewal Many of the issues identified twelve months ago as negative influences on the business landscape persisted through 2023. Geopolitical tensions, macroeconomic uncertainty, social inflation, and volatile investment and commodity markets, as well as a generally elevated claims value environment, have continued as major background themes. The better underwriting results reported by several clubs for the current year have been inhibited by continuingly anemic investment returns, market abnormalities resulting from increasingly complex and often conflicting sanctions regimes, the rising cost of reinsurance protection, and the deterioration of Pool claims for earlier years, notably 2021. Nevertheless, following a period of tonnage and premium growth over the past two renewals, the American Club has experienced significantly better operating results during 2023 than was the case in earlier years. The Board is cautiously optimistic that this will continue, always in the context of prudent pricing and careful risk selection. Eagle Ocean Marine (EOM), the Club’s fixed premium facility, while having experienced similar stresses as the mutual portfolio, in particular with respect to facility 2021-2022, continues to contribute to the mutuality, with improved underwriting results over the past twelve months. While the American Club approaches the 2024 renewal with greater premium and a relative leveling of claims, the current year combined ratio to date being about 95%, deficits on earlier years remain. These will be addressed over the months ahead to ensure financial strength. A merican Club Circular No. 17/23 2 Furthermore, while progress has been made to match rates of premium with the changing risk landscape over the past year, further adjustment is needed for even greater sustainability for the future. The Board has carefully considered all these factors in reaching its decisions on premium and related requirements for the upcoming policy year. Development of closed and open policy years Closed policy years The development of closed policy years has unfortunately shown deterioration since year-end 2022, caused mainly by unrealized losses on the Club’s investment portfolio over the period, exacerbated by an increase in both retained and Pool exposures on earlier years. Open policy years 2020 Despite some recent improvement in the development of this policy year, it remained in deficit, notwithstanding support from the additional call levied in June 2022. In order to close the year in balance, the Board has ordered that an additional and final call of 25% of originally estimated total premium be levied for the 2020 policy year for both P&I (Class I) and FD&D (Class II) of the Club’s mutual business. This final call, which will apply to all open entries of record as of September 30, 2023, will be du