MARCH 23, 2000

CIRCULAR NO. 3/00

TO MEMBERS OF THE ASSOCIATION

Dear Member:

OVERSPILL CALL PROTECTION

As Members are no doubt aware, International Group Clubs have again agreed that for the 2000 policy year an overall limit on Club cover for non-oil pollution claims will be approximately $4.25 billion as calculated in accordance with Club Rule 4, Section 10.

Since the Group's excess of loss reinsurance program covers individual claims up to $2.03 billion per vessel per incident, there is a potential «overspill» exposure of about $2.22 billion for losses in excess of Group reinsurance. Members of the American Club are liable to contribute approximately $50 million (2.25%) of this amount per claim by way of an «overspill» call.

Although the risk of a catastrophic loss of this scale may be remote, it has been decided to purchase (at very modest cost) a reinsurance protection for the Club's share of the first $1 billion of such an overspill exposure for 2000. In effect this will protect all Members of the Club against an overspill call of up to $20 million in the aggregate. More particularly, and most importantly, it will protect the Club's reserves from erosion in the event of such an eventuality.

The cover will be applied automatically without additional premium to all mutual Members, and no endorsements will be issued. However, Members should feel free to contact the Managers in the usual way for further explanation or details.

Yours faithfully,

Joseph E.M. Hughes, Chairman & CEO
Shipowners Claims Bureau, Inc., Managers for
THE AMERICAN CLUB