JANUARY 29, 1998

CIRCULAR NO. 4/98

TO MEMBERS OF THE ASSOCIATION

Dear Member:

OBOs AND CLEAN TANKERS - 1998 POLICY YEAR

At the moment, in the case of OBOs or clean tankers, the terms of entry must either contain a warranty that the ship is trading dry (in the case of an OBO) or with clean products (in the case of a tanker). In the absence of such a warranty the ship will attract the full annual dirty tanker reinsurance cost. If an OBO or a tanker trades with dirty products at any time during a policy year, the full annual dirty tanker reinsurance cost is payable.

For the forthcoming policy year, it has been decided to assess such ships on a quarterly rather than annual basis. This means that the full dirty tanker reinsurance cost will apply in any quarter unless the Member accepts a warranty that, for that quarter, the ship will trade dry (in the case of an OBO) or clean (in the case of a tanker). If at any time during any quarter the ship trades with dirty products, then the full dirty tanker reinsurance cost applies for that quarter. The applicable quarters are February 20 to May 20, May 20 to August 20, August 20 to November 20, and November 20 to February 20.

If any Member would like to discuss this matter further, the Managers will be pleased to respond.

Yours faithfully,

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