4 November 2013 TO ALL MEMBERS Dear Sirs Class 5 (P&I) and Class 8 (FD&D) Open Policy Years 2014/2015 Policy Year - Calls The Committee has recently reviewed the position in respect of open Policy Years as well as Call requirements for the forthcoming 2014/2015 Policy Year and reached the following decisions: Class 5 (P&I) 2010/2011: The year shall be closed without further Call. 2011/2012: 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 2014, in the usual way. 2012/2013: The three instalments of the Annual Call have been debited. No further Call is anticipated. 2013/2014: Two of the three instalments of the Annual Call have been debited. The final instalment will come due on 30 November 2013, as previously advised. With regard to Call requirements for the 2014/2015 Policy Year, the Committee is determined to maintain the Association’s financial strength and stability and to continue to move towards more balanced technical underwriting performance. The Association’s retained claims experience has shown some encouraging signs in recent years although, in the current Policy Year, there is evidence of increasing average claims cost within the attritional layer (up to US$100,000), which tends to suggest an upward trend more generally. Although volatility tends to mask trends in the higher bands, claims in the layer US$100,000 – US$1m are broadly developing in line with expectations, while there has been more activity in the highest band, excess of US$1m than at the same point in development of the favourable 2012/13 year; although such claims are running at more moderate levels than seen during some other recent Policy Years. The other element in the Association’s claims cost involves the International Group’s Pooling system where, even though the Association’s share of claims reported at the half year stage was lower than at the very expensive prior year comparative, the cost of the Pool remains high by historical standards. In regard to investments, the Association’s year to date return stood at 1.45% at 20 August. A cautious approach to planning for the part to be played by investment contributions continues to be required in the current environment. - 2 Against such a background, the Committee has authorised a general increase in Annual Call rates for the 2014/2015 Policy Year of 10%; and has emphasised that attention should be paid to the adjustment of rating for individual Members, where their record and/or exposure to risk requires it. 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 Committee also gave further consideration to deductible levels against the background referred to above and determined that there should be a US$2,000 increase applied to all deductibles currently below US$15,000. Class 8 (FD&D) 2010/2011: The year shall be closed without further Call. 2011/2012: 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 2014, in the usual way. The Release Call rate remains 15% of the Annual Call. 2012/2013: The three instalments of the Annual Call have been debited. No further Call is anticipated. The Release Call rate remains 1