22 October 2015 TO ALL MEMBERS Dear Sirs Class 5 (P&I) and Class 8 (FD&D) Open Policy Years & 2016/2017 Policy Year – Calls The Committee has reviewed the position in respect of open Policy Years as well as Call requirements for the 2016/2017 Policy Year and reached the following decisions: Class 5 (P&I) Open Policy Years 2012/2013: The year shall be closed without further Call. 2013/2014: The three instalments of the Annual Call have been debited. No further Call is anticipated. The year will be considered for closure by the Committee in October 2016, in the usual way. 2014/2015: The three instalments of the Annual Call have been debited. No further Call is anticipated. 2015/2016: Two of the three instalments of the Annual Call have been debited. The final instalment will come due on 30 November 2015, as previously advised. 2016/17 Policy Year – Calls The Association’s retained claims experience in the current Policy Year was favourable in H1. Moving into the second half of the year this experience has so far continued, with the incurred claims total being over 40% down on the prior year comparative at the eight month stage. Claims involving the International Group’s Pooling system are another component in the overall claims cost – and experience to date has been broadly in line with expectations. Also in the current Policy Year, volatility in the investment markets has impacted the Association’s portfolio. It recorded a negative return of 1.49% in H1; with that position having been largely reversed by the recent recovery in the markets. A cautious approach to planning for the part to be played by investment contributions continues to be required in the current environment. - 2 The Committee is unwavering in its belief in the value to Members of the Association’s focus on specialised P&I support and service, while operating from a position which, as now, maintains a level of financial strength and stability in line with current and prospective regulatory requirements. Against such a background, it has decided that Annual Call rates for the 2016/2017 Policy Year should increase by 5%. Additionally, it has determined that there should be a US$2,000 increase applied to all deductibles. The Committee has also emphasised the importance that Members contribute an equitable level of Call income over the medium term reflective of their record and / or exposure to risk; and to that end individual attention will be given to appropriate arrangements for the renewal of each Member. Any adjustment to the cost of the Association’s share of the International Group’s excess loss reinsurance programme, which has not yet been determined, will also be applied. The Release Call rate is set at 15% of the Annual Call. The Managers will be in further contact with Members and Brokers with regard to the 2016/2017 renewal, in due course. Class 8 (FD&D) Open Policy Years 2012/2013: The year shall be closed without further Call. 2013/2014: The three instalments of the Annual Call have been debited. No further Call is anticipated. The year will be considered for closure by the Committee in October 2016, in the usual way. 2014/2015: The three instalments of the Annual Call have been debited. No further Call is anticipated. 2015/2016: Two of the three instalments of the Annual Call have been debited. The final instalment will come due on 30 November 2015, as previously advised. 2016/2017 Policy Year - Calls The long-tail nature of FD&D claims means that experience i