2019/20 Pool and GXL Reinsurance contract structure

The structure of the Group’s claims-sharing arrangements (the “Pool”) and the commercial market and captive (Hydra) reinsurance arrangements for the 2019/20 policy year are depicted in the diagram below.

The Pool is structured in three layers from US $10 million to US $100 million. Excess of US $30 million, the Pool is reinsured by the Group captive reinsurance vehicle, Hydra Insurance Company Limited. Hydra is a Bermuda incorporated Segregated Accounts company in which each of the 13 Group Clubs has its own segregated account (or “cell”) ring fencing its assets and liabilities from those of the company or any of the other Club cells. Hydra reinsures each Club in respect of that Club's liabilities within the Pool and reinsurance layers in which it participates. Through the participation of Hydra, the Group Clubs can retain, within their Hydra cells, premium which would otherwise have been paid to the commercial reinsurance markets.

The annual Group General Excess of Loss (“GXL”) reinsurance programme attaches at the Pool ceiling of US $100 million, and provides up to US $2 billion of reinsurance cover in a three-layer structure (Layer 1 - US $650 million excess of US $100 million, Layer 2 - US $750 million in excess of US $750 million, and Layer 3 - US $600 million excess of US $1.5 billion). Hydra retains a US $100 million AAD within the 80% Market Share in Layer 1, and there are three multi-year private placements, one of 10% within layer 1, and two of 5% each within Layers 1 and 2.

A further US $1 billion of reinsurance cover (the “Collective Overspill”) is purchased annually by the Group to provide protection in respect of claims exceeding the upper GXL cover limit of US $2.1 billion.

International Group of P and I Associations General Excess of Loss Reinsurance Contract Structure - Owned and Chartered Entries 12 months at noon GMT 20th February, 2019 On the market share of the first GXL layer, a single AAD of $100m is applicable to all claims (owned or Chartered Entries, P&I and Oil Pollution) otherwise recoverable Collective Overspill Third GXL Layer Second GXL Layer Market Share First GXL Layer Market Share Excess of $100m combined single AAD Upper Pool Layer - Reinsured by Hydra Lower Pool Layer - Reinsured by Hydra Lower Pool Layer Individual Club Retention (ICR) Private Placement Private Placement Private Placement Second GXL Layer Market Share Private Placement Private Placement Private Placement 7.5% ICR First GXL Layer Market Share Excess of $100m combined single AAD First GXL Layer Market Share Excess of $100m combined single AAD P P P P P P Upper Pool Layer - R/I by Hydra Lower Pool Layer - R/I by Hydra Lower Pool Layer Individual Club Retention (ICR) 7.5% ICR P&I Oil Pollution P&I and Oil Pollution Single per vessel retention Owned Entries Chartered Entries 3.1bn 2.1bn 1.1bn 1.5bn 1.0bn 750m 100m 100m 50m 50m 30m 30m 10m 10m 350m

Value: $ - $

The Pool, the first and second layers of the GXL and the private placement participation structures for the separate oil pollution cover mirrors the main (P&I) placement up to the Oil Pollution cover limit (US $1 billion), as depicted above. For chartered entries, there is a single combined P&I and oil pollution cover limit of US$350 million. The Pool and Reinsurance layers structures for chartered entries are identical to those in place for owned entries up to the cover limit.

The Pool and Reinsurance structures are reviewed annually and any changes to the existing structures will be reported under the News section on the Group website.

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