• Overall cost of reinsurance to increase for 2008.
• Collective overspill reinsurance protection on behalf of each club in the Group purchased once again for the 2008 policy year.
• Club retention remains at US$7 million for 2008.
• Oil pollution claims remain subject to a special limit under Rule 5B(ii) of US$1,000 million for owned ships
• War risks P&I and US voyage surcharge premiums reported separately in Club circulars 2/08 and 3/08.

Dear Sirs

The International Group's general excess of loss contract has been renewed on the same terms and structure as the 2007 policy year.

The overall cost of the Group's reinsurance, including the layers insured by the Group's captive Hydra, has increased by around 10 per cent. As usual, the Group managers have assessed the contributions payable by different ship types to the overall cost of the Group's programme and, in adjusting the reinsurance rates for the different ship types, the Group managers have given consideration in particular to the claims record of those ships on the reinsurance programme over the years. The reinsurance rates are charged to the different ship categories on the same basis by all clubs in the Group.

For the 2008 policy year, the Club retention remains at US$7 million. The Group Pool continues to be structured in two layers:

US$7 million - US$30 million (the lower Pool) and US$30 million - US$50 million (the upper Pool). The upper Pool layer is pre-funded and premium allocated to this layer is paid into Hydra, the Group captive. Hydra also receives 25 per cent of the premium of the first layer of the Group excess of loss reinsurance contract.

If a claim were to exceed US$2,050 million i.e. the limit of the Group excess of loss contract, the excess or overspill will be pooled amongst the Group clubs. The overall Group Pool limit for such an overspill remains unchanged at 2.5 per cent of the property limitation funds under the 1976 Limitation Convention of all ships entered in the International Group Pool clubs. Members remain ultimately liable to pay an overspill call up to a maximum of this limit for each entered ship, in accordance with Rule 22 of the Rules of the Association. For the 2008 policy year, the Group has once again purchased reinsurance protection on behalf of each club for a claim of up to US$1,000 million in excess of the limit of the Group Pool's excess of loss reinsurance contract. This reinsurance will be available to all Group clubs to reduce the need to make an overspill call on their members.

The Board has determined in accordance with Rule 5B(ii) that with effect from 12 noon GMT on 20th February 2008 the limit of the Association's aggregate liability for claims in respect of oil pollution shall be: US$1,000 million each event in respect of each ship entered by or on behalf of an Owner not being a charterer other than a demise or bare boat charterer.

In accordance with Rule 5B(iii), with effect from 12 noon GMT on 20th February 2008, the Association's aggregate liability for any and all claims is limited to $2,000 million each event in respect of liability to Passengers and to $3,000 million each event in respect of liability to Passengers and Seamen, in respect of each ship entered by or on behalf of an Owner not being a charterer other than a demise or bare boat charterer.

Details of the Club's special war risks P&I excess cover for the 2008 policy year are set out in the Club's

.

Details of the additional premiums for 2008 are set out in the Club's

.

Yours faithfully

• Members requiring further information should contact their usual Club contact.