Protection and indemnity insurance providers North P&I and Standard Club have announced plans to explore a potential merger of the two clubs.
The combination would create one of the largest providers of marine liability cover (protection and indemnity) to the maritime industry, with more than 300 years of combined P&I experience and cover for vessels equivalent to 400 million GT.
The clubs said a merger could help the new club navigate disruptive changes within the maritime sector and better anticipate challenges. In terms of P&I, larger and more complex claims have proved challenging for the sector, pushing up rates and putting capital under pressure. “Scale is becoming increasingly important – to maintain mutuality and develop the broader commercial offerings needed,” the Standard Club explained in a FAQ.
“Standard Club and North now have the opportunity to create one of the world’s leading and most influential P&I clubs, founded on exceptional service and innovation, a broader diversified product range, scale economies and global reach,“ said Jeremy Grose, CEO of the Standard Club.
A joint North and Standard Club working group has been appointed to objectively evaluate how a combined entity would maximise value for members.
“With stronger financial resilience, the newly created club would be well-positioned to thrive in all conditions”, commented James Tyrrell, Chairman at North. “In a changing and sometimes volatile maritime sector, North’s Board has long recognised the potential value arising from considered and balanced consolidation in P&I,” he said.
The proposed merger remains subject to the approval of the full mutual membership of both clubs and regulatory authorities. If approved by the membership, the formal merger is expected to complete by February 20, 2023. Global law firm Reed Smith has been hired to advise North P&I and Standard Club in their formal discussions.
Today’s announcement of the proposed merger follows the approval by the boards of both clubs and notification to principal regulatory authorities of their intention to merge.
As an example of one of the larger claims from recent years, North P&I in 2020 reported the gross claim figure for the Golden Ray wreck was likely to exceed $400 million, making it one of the biggest claims ever handled by the International Group of P&I Clubs. The International Group is made up of thirteen P&I Clubs providing marine liability cover for approximately 90% of the world’s ocean-going tonnage.