Rule 23   CLOSING OF POLICY YEARS

A. The Directors shall with effect from such date after the end of each policy year as they think fit declare that such policy year shall be closed or that such policy year shall be closed save for the purpose of levying one or more Overspill Calls as provided in paragraph [C] of this Rule.

B. After any policy year shall have been closed no further Supplementary Calls or Overspill Calls may be levied in respect of that policy year, save as provided in paragraph [C] of this Rule and under Section 4 of Rule 16.

C.i. If at any time prior to the expiry of a period of 36 (thirty-six) months from the commencement of a policy year (the “relevant policy year”), the Association or any of the parties to the Pooling Agreement sends a notice (an “Overspill Notice”) in accordance with the Pooling Agreement that an event has occurred in the relevant policy year which has given or at any time may give rise to an Overspill Claim, the Directors shall as soon as practicable declare that the relevant policy year shall remain open for the purpose of levying an Overspill Call or Calls in respect of that claim and the relevant policy year shall not be closed for the purpose of making an Overspill Call or Calls in respect of that claim until such date as the Directors shall determine.

ii. If at the expiry of the period of 36 (thirty-six) months provided for in sub-paragraph [i] above, no Overspill Notice as therein provided for has been sent, the relevant policy year shall be closed automatically for the purpose of levying Overspill Calls only, whether or not closed for any other purposes.

iii. If at any time after a policy year has been closed in accordance with the provisions of sub-paragraphs [i] or [ii] above, it appears to the Directors that an event which occurred during such closed policy year may then or at any time in the future give rise to an Overspill Claim, the Directors shall as soon as practicable declare that the earliest subsequent open policy year (not being a policy year in respect of which the Directors have already made a declaration in accordance with paragraphs [C] [i] or [C] [iii] of this Rule) shall remain open for the purpose of levying an Overspill Call or Calls in respect of that claim and such open policy year shall not be closed for the purpose of making an Overspill Call or Calls in respect of that claim until such date as the Directors shall determine.

iv. If the Directors shall make a declaration as provided for in paragraphs [C] [i] or [C] [iii] of this Rule, the Managers shall inform the Members entered for the policy year in respect of which such declaration is made.

v. If at any time after the levying of an Overspill Call upon the Members entered in the Association in any policy year, it shall appear to the Directors that the whole of such Overspill Call is unlikely to be required to meet the Overspill Claim in respect of which such Overspill Call was levied, the Directors may decide to dispose of any excess which in their opinion is not so required in one or both of the following ways:

(i) by transferring the excess or any part thereof to the Catastrophe Reserve in accordance with Rule19; or

(ii) by returning the excess or any part thereof to those Members who have paid that Overspill Call in proportion to the payments made by them.

vi. A policy year shall not be closed for the purpose of levying Overspill Calls save in accordance with this Rule 23.

D. Save as provided in paragraph [C] of this Rule, the Directors may declare that any policy year is closed notwithstanding that it is known or anticipated that there are in existence or may in the future arise claims, expenses or outgoings in respect of such policy year which have not yet accrued or whose validity, extent or amount have yet to be established.

E. If upon the closing of any policy year it shall appear to the Directors that the whole of the Calls and other receipts in respect of such policy year (and of all transfers from reserves and provisions made for the credit of or in respect of such policy year) are unlikely to be required to meet the claims, expenses and outgoings arising in respect of that policy year (as referred to in paragraphs [A] [i] and [A] [ii] of Section 1 of Rule 16), then the Directors may decide to dispose of any excess which in their opinion is not so required in one or both of the following ways:

i. By transferring the excess or any part thereof to the reserves of the Association in accordance with Rule 19.

ii. By returning the excess or any part thereof to the Members entered for such policy year in accordance with paragraph [H] of this Rule.

F. If at any time or times after a policy year shall have been closed it shall appear to the Directors that the claims, expenses and outgoings arising in respect of that policy year (as referred to in paragraphs [A] [i] and [A] [ii] of Section 1 of Rule 16) exceed or are likely to exceed the totality of the Calls and other receipts in respect of such policy year (and of all transfers from reserves and provisions made for the credit of or in respect of such policy year) then the Directors may decide to provide for such deficiency in any one or more of the following ways:

i. By transferring funds from the reserves of the Association;

ii. By transferring funds standing to the credit of any different closed policy year;

iii. By charging a Supplementary Call in respect of an open policy year with the intention (as permitted by paragraph [A] [iv] of Section 1 of Rule 16) of applying a part thereof to meet any such deficiency.

If the Directors shall resolve as set out in sub-paragraph [iii] above, then the Managers shall inform the Members entered for such policy year on or before the time that payment is demanded.

G. At any time after any policy year shall have been closed the Directors may resolve to amalgamate the accounts of any two or more closed policy years and to pool the amounts standing to the credit of the same. If the Directors shall so resolve then the two or more closed policy years concerned shall for all purposes be treated as though they constituted a single closed policy year.

H. Any amount which the Directors may decide to return to the Members in accordance with paragraph [E] [ii] of this Rule shall be returned to the Members entered in respect of such policy year in proportion to the Calls paid by them in respect of such policy year (after taking into account any returns or rebates applicable thereto under their terms of entry or under any other provision of these Rules).

PROVIDED ALWAYS that:

a. No return shall be made to any Member whose liability for Release Calls has been assessed in accordance with the provisions of Rules 24, 25 or 26, and

b. Where the insurance of a Member has been cancelled in accordance with the provisions of Rule 26 any amounts due for any reason whatsoever (whether by way of Calls or otherwise and whether in respect of the policy year for which the return has been decided or in respect of any other policy year or years) from the Member to the Association shall be deducted from the return and only the balance (if any) refunded to the Member.

I. In deciding the matter relating to the closing of any policy year in respect of the cover under Rule 4 or Rule 5, the provisions of this Rule relating to Overspill Call or Calls shall not apply.