Proposed NorthStandard P&I Mega-Merger Approved by Members
Members of two of the traditional, old-line UK P&I industry clubs cleared the way for potentially one of the most significant mergers in the history of the industry. In separate meetings on May 27, members of the North P&I and Standard Club each greenlighted the merger that would create a mega-insurance player better prepared to take on the future of the industry.
In what is a very traditional industry dominated by approximately a dozen large players, analysts point out this is one of the first voluntary combinations not brought about by immediate financial pressures. The protection and indemnity sector (P&I) has been challenged in recent years by ever-increasing large claims. Recent record claims have stained the finances of many of the clubs and as ships grow larger the prospects are for further growth in the size of the claims.
The mega-merger to create NorthStandard would create a market-leading global marine insurer and one of the largest providers of mutual cover in the maritime industries. Analysts have forecast that it could also be the beginning of an overdue consolidation in the sector.
Announcing the results of the two meetings today, the executives of each company said members “resoundingly” backed the plans to combine the two organizations. The companies disclosed their plans for the combination in March 2022 saying it was an opportunity to create one of the most influential P&I clubs which would be able to diversify its product range while benefitting from economies of scale and global reach.
The merger will create one of the largest providers of mutual cover in the maritime industries with consolidated annual premiums of around $750 million. They estimated that the combined club would provide cover for vessels totaling about 400 million GT while saying with 300 years of shared P&I heritage, NorthStandard will also bring together some of the most respected expert teams in maritime risk management. The new organization will be jointly led by Jeremy Grose, Standard Club CEO, and Paul Jennings, CEO at North.
“This is an excellent outcome and a huge moment for our industry,” said Grose. “NorthStandard will be a major new force in marine insurance, delivering the resilience members need from their P&I partners to meet the challenges and competitive landscape of a changing shipping world. We are delighted that our proposal has received such strong backing from the members of both clubs.”
The merger remains subject to the approval of all the appropriate regulatory authorities. The two companies believe they can complete the combination to establish NorthStandard as a unified club in time for February 20, 2023, next year’s renewal date.