2026/27 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 2026/27 policy year are depicted in the diagram below.

The Pool is structured in two 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 12 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 $2.25 billion of reinsurance cover in a three-layer structure (Layer 1 - US $650 million excess of US $100 million, Layer 2 - US $750 million excess of US $750 million,  Layer 3 - US $850 million excess of US $1.5 billion). Hydra retains a US $103.6 million AAD within the 72.5% Market Share in Layer 1, and there are four private placements in Layer 1, two of which are 10% and two are 3.75%.

A further US $1 billion of reinsurance cover (the “Collective Overspill”) is purchased by the Group to provide protection in respect of claims exceeding the upper GXL cover limit of US $2.35 billion.

At the 2022 renewal, annual aggregate limits were introduced for the excess layers in response to the market-wide coverage restrictions with respect to Malicious Cyber on the one hand and Covid-19 and other new Pandemic risks on the other hand (the “Risks”). Aggregate limits remain in place for the excess layers for the 2026/27 policy year, applying to losses with a value greater than US $750 million directly arising from these Risks.  For the 2026/27 policy year these aggregate limits continue to apply separately for Covid/Pandemic risks and Malicious Cyber risks. All other claims continue to be covered on a free and unlimited basis within all layers of the GXL. Losses below US $750 million are covered by the reinsurance on a free and unlimited basis, whether or not the loss is caused by one of the defined Risks.

The annual aggregate limits within the reinsurance for losses directly caused by these Risks apply to Layers 2 and 3 as follows:

• Annual aggregate limits have been agreed separately for each Layer, but with ‘drop-down’ features resulting in Layer 3 reinsurers agreeing to make their aggregate limit available for claims in the lower Layer if necessary.
• These aggregate limits total US$3.2 billion for the Risks across all Layers, with separate limits of US$1.6 billion for Malicious Cyber and US$1.6bn for Covid-19/Pandemic.

For any losses excess of these annual aggregate limits, Group Clubs have agreed to Pool losses that would otherwise be recoverable from the GXL, ensuring no change to the cover provided to Shipowners.

The Group’s war cover has been renewed with the same cover as expiry, with per vessel limits of US$500 million, sub limited to US$125 million for vessels trading in certain defined territories relating to the Russia, Ukraine and Belarus (RUB) conflict.