Outline

• Limit on Special War Risks P&I cover for 2005 policy year is increased to US$500 million.

• Members are recommended to review ship values for insurance purposes as the excess point for cover remains "proper value" of ship.

• "Bio-Chem" exclusion remains but a supplementary cover for "Bio-Chem" risks in respect of crew & legal costs limited at US$30 million is available.

• A portion of these covers is provided in accordance with the requirements of the US Terrorism Risk Insurance Act of 2002.

TO THE MEMBERS

Dear Sirs

SPECIAL WAR RISKS P&I AND BIO-CHEM COVERS & US TERRORISM RISK INSURANCE ACT 2002

War Risks P&I Cover

At their meeting on 27th January, 2005, the Directors reviewed the basis on which special war risks P&I cover could be made available to Members in accordance with the proviso to Rule 5E and determined that this cover should be made available to Members for the 2005 policy year in accordance with the terms of the attached Directors' Resolution of 27th January, 2005.

The terms on which the War Risks P&I cover is provided remain the same as for the 2004 policy year, with the exception of the following changes:

• the limit of cover has been increased from US$400 million to US$500 million

• the limit of US$50 million in respect of ships being used as accommodation ships during last year's Olympic Games in Athens has been removed

• the wording of the "Bio-Chem" exclusion has been slightly amended, by the insertion of the word "biological", with no effect on the scope of the exclusion.

As for the 2004 policy year, the cover will only respond to claims in excess of the proper value of the entered ship as defined in Rule 5D or whatever sum is recoverable from war risk underwriters, whichever is the greater. The attention of Members is drawn to the note to Rule 5D in relation to the proper value for which an entered ship should be insured or deemed to be insured for this purpose. This provides that the relevant policies of the Member concerned should have been the subject of periodic review as market conditions may require so that the total amount of liability coverage contained in these policies is maintained at levels approximating to the market value of the ship without commitment. Members are recommended to consult their brokers and/or ship valuers to assess periodically in the light of the above the proper amount for which insurance should be affected to cover P&I liabilities under their war risks policies. At a time of rapidly changing market values, the relevant values should be reviewed more frequently and the proper value assessed in the light of more frequent consultation with the Member's brokers and/or ship valuers.

Bio-Chem Cover

The Directors also decided to provide cover for "Bio-Chem" claims in respect of crew risks and legal costs relating to all P&I liabilities that are excluded from the War Risks P&I cover by virtue of the "Bio-Chem" exclusion, on the same terms as for the 2004 policy year, save that the limit of the cover is increased from US$20 million to US$30 million. Claims on this cover will again be pooled with the International Group clubs in excess of a club retention which will increased from US$5 million to US$6 million.

The detailed terms and conditions of the cover are set out in the attached Supplementary Directors' Resolution of 27th January, 2005. The principal provisions are that:

• Cover will be from the ground-up (in excess of a Member's usual deductible), but limited to US$30 million any one event or occurrence (or series of occurrences arising from the same event) each vessel.

• The limit of cover (US$30 million) will apply to all interests for each vessel in aggregate regardless of the number of interests and regardless of whether or not they are entered in different P&I Clubs (e.g. Owners, charterers and sub-charterers).

• To avoid excessive aggregation of risk, cover will have a cancellation provision (24 hours notice).

• No additional premium will be charged for the cover.

TRIA Notices of Coverage

A portion of the War Risks P&I cover and the "Bio-Chem" cover afforded to Members pursuant to the Directors' Resolutions are provided in accordance with the requirements of the US Terrorism Risk Insurance Act of 2002 ("the Act") (which will apply at least up to 31st December, 2005) and give coverage for losses arising out of "acts of terrorism," as defined in Section 102(1) of the Act. Cover for losses caused by certified "acts of terrorism" can be partially reimbursed by the United States under a formula established by Federal Law. Under the formula, the United States pays 90% of covered terrorism losses exceeding the statutory established deductible paid by the insurance company providing the cover. Although no additional premium is charged for coverage for "acts of terrorism", a premium of US cents 0.25 per entered ton is deemed to be attributable to the US risk in accordance with the terms of the Act.

Yours faithfully

THOMAS MILLER (BERMUDA) LTD.

WAR RISKS P&I COVER

SPECIAL COVER UNDER PROVISO TO RULE 5E

DIRECTORS' RESOLUTION of 27th JANUARY, 2005

WHEREAS, in accordance with Rule 5E of the Association's Rules coverage for certain war and similar risks, including acts of terrorism, is excluded under the general mutual indemnity undertaking. Special cover is nevertheless provided for these same certain risks under the proviso to Rule 5E and in accordance with each individual Owner's terms of entry; and

WHEREAS, the US Terrorism Risk Insurance Act of 2002 (Public Law 107-267) ("the Act" or "TRIA"), which was enacted on 26th November, 2002, provides for a three-year program of Federal quota share indemnification to participating insurers for insured losses resulting from certain acts of terrorism occurring through year-end 2005; and

WHEREAS, this Association, meeting the definition of "insurer", is required to make available coverage for "acts of terrorism" as defined in TRIA and is entitled under the TRIA program to an indemnification of 90% of losses resulting from certified acts of terrorism in excess of the insurer's deductible; and

WHEREAS, the Directors on behalf of the Association's membership have considered whether coverage of TRIA-defined acts of terrorism could be removed from the special cover and made subject to the general mutual indemnity undertaking but have concluded that acts of terrorism, as the other perils subject to the special cover, remain unsuitable for a general mutual indemnity undertaking; and

WHEREAS, no Owner responded affirmatively to the initial offer made by this Association to provide cover of TRIA-defined acts of terrorism on the basis of additional premium rates designed to fund the TRIA deductible and retention without mutual indemnity or the reinsurance available to the special cover; and

WHEREAS, the Directors have determined to provide the Special War Risks P&I cover including cover for terrorism risks as for the current Policy Year and that the estimated cost for TRIA-defined coverage remains US cents 0.25 per entered ton.

IT IS NOW THEREFORE RESOLVED, that in accordance with the proviso to Rule 5E of the Association's Rules, special cover be provided to the Members of the Association for the year commencing at 12 noon GMT on 20th February, 2005 against risks, including TRIA-defined acts of terrorism, which are excluded from cover solely by virtue of the provisions of Rule 5E. Unless otherwise agreed in writing, such cover shall be subject to all other terms and conditions of an Owner's entry in the Association and shall be provided upon and subject to the following terms and conditions:

The risks covered shall be those set out in Rule 2 of the Association's Rules in accordance with each individual

Owner's terms of entry as set out in the relevant Certificate of Entry and any Endorsement thereto

This special cover shall be subject to an excess of either:

the "proper value" of the entered ship as defined in Rule 5D (which, for the purpose of this resolution only, shall be deemed not to exceed US$100 million), or

the amount recoverable in respect of the claim under any other policy of insurance, whether of war risks or otherwise,

whichever shall be the greater, save that such excess shall not apply where the entry of the ship is solely in the name of or on behalf of a charterer other than a charterer by demise or bareboat charterer, provided that the Directors may authorise the payment, in whole or in part, of any claim or part of a claim which falls within such excess, if in their discretion and without having to give any reasons for their decision they decide that the Owner should recover from the Association.

The limit applying to this special cover shall be the lesser of

US$500 million each ship, any one accident or occurrence or series thereof arising from any one event, or

such limit as may be applicable to the claim under the Member's individual terms and conditions of entry,

PROVIDED ALWAYS that where a ship entered in the Association by or on behalf of any person is also separately insured in the name of or on behalf of the same or any other person by the Association or by any other insurer which is a party to the Pooling Agreement in respect of the losses, liabilities or the costs and expenses incidental thereto which are covered pursuant to the terms of this Resolution and/or the equivalent policy provisions of such other insurer, the aggregate recovery in respect of all such losses, liabilities and the costs and expenses incidentalthereto shall not exceed

US$500 million or, the limit applicable to the claim under that person's individual terms and conditions of entry if less, each ship, any one event, and the liability of the Association to each such person insured by the Association shall be limited to such proportion of US$500 million, or the limit applicable to the claim under that person's individual terms and conditions of entry if less, as the maximum claim otherwise recoverable by such person from the Association bears to the aggregate of all such claims otherwise recoverable from the Association and all such insurers.

All perils included in the special cover shall be subject to the following Chemical, Biological, Bio-chemical, Electromagnetic Weapons and Computer Virus Clause:

"This clause shall be paramount and shall override anything contained in this insurance inconsistent therewith:

1. In no case shall this insurance cover loss damage liability or expense directly or indirectly caused by or contributed to by or arising from<p>

1.1 any chemical, biological, bio-chemical or electromagnetic weapon.

.2 the use or operation, as a means for inflicting harm, of any computer virus".

At any time or times before, or at the commencement of, or during the currency of any Policy Year of the Association, the Directors may in their discretion determine that any ports, places, countries, zones or areas (whether of land or sea) be excluded from the insurance provided by this special cover. Save as otherwise provided by the Directors this special cover shall cease in respect of such ports, places, countries, zones or areas at midnight on the seventh day following the issue to the Members of notice of such determination in accordance with Rule 41 of the Association's Rules. Unless and to the extent that the Directors in their discretion otherwise decide there shall be no recovery from the Association under this special cover in respect of any claim howsoever arising out of any event, accident or occurrence within the said area after such date.

Whether or not notice has been given under Clause (5) above, this special cover shall terminate automatically:

upon the outbreak of war (whether there be a declaration of war or not) between any of the following countries: United Kingdom, United States of America, France, the Russian Federation, the People's Republic of China and this insurance excludes loss, damage, liability or expense arising from such outbreak of war;

in respect of any ship, in connection with which cover is granted hereunder, in the event of such

ship being requisitioned either for title or use and this insurance excludes loss, damage, liability or expense arising from such requisition.

Notwithstanding any other term or condition of this insurance, the Directors may in their discretion cancel this special cover giving 7 days' notice to the Members (such cancellation becoming effective on the expiry of 7 days from midnight of the day on which notice of cancellation is issued by the Association) and the Directors may at any time after the issue of notice of such cancellation resolve to reinstate special cover pursuant to the proviso to Rule 5E on such terms and conditions and subject to such limit as the Directors in their discretion may determine.

WAR RISKS P&I COVER

WHEREAS, in accordance with Rule 5E of the Association's Rules coverage for certain war and similar risks, including acts of terrorism, is excluded under the general mutual indemnity undertaking. Special cover is nevertheless provided for these same certain risks under the proviso to Rule 5E and the Directors' Resolution of 27th January, 2005; and

WHEREAS, the special War Risks P&I Cover provided to Members pursuant to the Directors' Resolution of 27th January 2005 contains in Clause 4 a Chemical, Biological, Bio-chemical, Electromagnetic Weapons and Computer Virus exclusion; and

WHEREAS, the Directors have decided that the Association should provide supplementary cover to Members in respect of certain liabilities costs, losses and expenses excluded by the operation of this clause or by equivalent clauses in other war risks P&I policies.

IT IS NOW RESOLVED, that supplementary cover be provided to the Members of the Association for the year commencing at 12 noon GMT on 20th February, 2005 at no additional premium on the terms and conditions and exclusions set out hereinafter:

The risks covered under this supplementary resolution are the Member's liability

to pay damages, compensation, costs or expenses in consequence of personal injury to or illness or death of any Seaman (including repatriation and substitute expense, shipwreck unemployment indemnity and diversion expenses) as set out in Rule 2, Sections 2, 3, 4, 5, 6, 7 of the Association's Rules

for legal costs and expenses as set out in Rule 2, Section 25(B) of the Association's Rules incurred solely for the purpose of avoiding or minimising any liability or risk insured by the Association other than liabilities, costs, expenses, risks recoverable at the discretion of the Directors under Rule 2, Section 24 of the Association's Rules to the extent that the such liabilities, damages, compensation, costs and expenses are not recoverable under the War Risk P&I Cover or any underlying war risks policies covering the same risks, solely by virtue of the operation of an exclusion of liabilities, costs, losses and expenses directly or indirectly caused by or contributed to by or arising from

any chemical, biological, biochemical or electromagnetic weapon

the use or operation, as a means for inflicting harm, of any computer, computer system, computer software programme, malicious code, computer virus or process or any other electronic system,

other than liabilities, costs, losses and expenses arising from

explosives or the methods of the detonation or attachment thereof

the use of the entered ship or its cargo as a means for inflicting harm, unless such cargo is a chemical or bio-chemical weapon

the use of any computer, computer system or computer software programme or any other electronic system in the launch and/or guidance system and/or firing mechanism of any weapon or missile

Cancellation

Cover hereunder may by notice to the Member be cancelled by the Directors from a date and time specified by the Directors, being not less than 24 hours from midnight on the day notice of cancellation is given.<p>

Limit of Liability

3.1. Subject to Clause 3.2 the limit of the liability of the Association under this supplementary cover in respect of all claims shall be in the aggregate US$ 30 million each ship any one accident or occurrence or series thereof arising from any one event.

3.2. In the event that there is more than one entry by any person for Bio-Chem cover as provided herein in respect of the same ship in the Association and/or any other insurer which participates in the Pooling Agreement, the aggregate recovery in respect of all liabilities, costs, losses and expenses arising under such entries shall not exceed the amount stipulated in Clause 3.1 and the liability of the Association under each such entry shall be limited to such proportion of that amount as the claims arising under the entry bear to the aggregate of all such claims recoverable from the Association and any such other insurer. <p>

Deductible

Notwithstanding Clause 2 of the Directors' Resolution of 27th January 2005, the deductible applying to this supplementary cover shall be the deductible applicable to the relevant risk as set out in the Rules and the Member's individual Certificate of Entry or Endorsement.

Law and Practice

This cover is subject to English law and practice.

SPECIAL COVER UNDER PROVISO TO RULE 5E

SUPPLEMENTARY DIRECTORS' RESOLUTION OF 27th JANUARY, 2005