TO THE MEMBERS

REVIEW OF OPEN POLICY YEARS

2002 POLICY YEAR GENERAL INCREASE

At the meeting held on 11th October, 2001 the Board reviewed the development of the Association's funds and claims. The position is as follows:

OPEN POLICY YEARS

1999 Policy Year

In October, 2000 the Board ordered a 30 per cent supplementary call in place of the originally planned 40 per cent. No further call is estimated, and the Board expects to close the year in April, 2002.

2000 Policy Year

The fourth instalment of the Mutual Premium for this year is due for payment not later than 1st December, 2001. The estimate of Supplementary Premium remains nil.

2001 Policy Year

The estimate of Supplementary Premium remains nil.

2002 POLICY YEAR - GENERAL INCREASE

The Board has decided to order a general increase in premium rating of 20 per cent plus the relevant increase in cost of the International Group's reinsurance programme for 2002. This is a significant increase designed to maintain the Association's strong financial standing going forward, and attached to this circular is a message from the Chairman of the Board giving the background to this decision.

As is customary, after application of the general increase, Members' premium rating will be reviewed in the light of individual loss record and other relevant factors and a further increase or reduction will be applied as appropriate.

Mutual Premiums for 2002 will be payable in four equal instalments, three during the policy year by 20th March, 1st June and 1st September, and the final instalment to be paid by 1st December in the following year (2003). The estimate of Supplementary Premium is nil.

Yours faithfully

Dear Sirs