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NorthStandard merger
ETA for NorthStandard set for February 2023
The approval of the merger of North P&I Club and Standard Club triggers the arrival of a new unified force in global marine insurance in 2023
North P&I Club and Standard Club approach the close of 2022 preparing for a new beginning, armed with regulatory approval to merge and unify as NorthStandard. The combined club will launch on 20th February 2023 - next year’s P&I policy renewal date - and will become one of the largest providers of mutual cover in the maritime industries with consolidated annual premiums of around $750m.
The formal approval will see NorthStandard headquartered (and regulated) in the UK with offices in Newcastle and London. Paul Jennings, CEO of North, and Standard Club CEO Jeremy Grose will lead the merged operation.
Reflecting on 2022 as a year of change, Grose and Jennings envisage NorthStandard as an organisation capable of offering members what they need from their P&I partners to meet pressing industry challenges.
COMPLEX CLAIMS
More complex claims are challenging performance across the entire P&I sector, pushing up combined ratios and putting capital under pressure, with scale becoming increasingly important to maintain mutuality and develop the broader commercial offerings needed, they say. Scale can also provide a better platform for exploiting the potential of data and automation to revolutionise the P&I market.
“Members voted overwhelmingly in favour of the proposal to merge because they recognised the benefits of greater financial and operational resilience, greater premium stability and predictability,” comments Jennings. “Many also said that they expected the new club would bring a more competitive edge to the market,” he continues. “Meaningful competition at this scale and prioritising the needs of shipowners in these turbulent times will drive operational efficiencies, enhance service delivery and innovation, while offerring even greater choice through
increased product development and diversification,” adds Grose.
“Approval showed that the regulator was content that the merger will have no negative impact on the range and quality of services our members receive,” he continues.
SCALE AND COVER
The merger unites two strong advocates of mutuality, each working within the International Group of P&I Clubs, whose complementary cultures, ambitions and approaches will combine to deliver added value for all members, adds Grose.
With the $750m of combined premium and 300 years of shared P&I heritage, NorthStandard’s scale and financial resilience are expected to smooth the volatility of market fluctuations and deliver predictability in results, in line with targets to maintain combined ratios at 100%.
Potential savings from removing duplication could achieve the equivalent of a 3% improvement to the combined ratio, say Jennings and Grose. Savings are also forecast on reinsurance premiums arising from the combined club’s increased purchasing power and the ability to take higher retention levels are expected to be at least a further 1% on
the combined ratio.
Both clubs have recent experience in running mergers and other change projects. For North, this includes the Sunderland Marine merger into North and the subsequent integration and setting up of Brexit-related subsidiaries. Standard Club’s experience includes its own Brexit arrangements, Strike Club integration and, more recently, transitioning management arrangements to an in-house model away from Charles Taylor.
Once merged, NorthStandard will have a range of products within the mutual business (P&I, FD&D, war risks, coastal & inland and strike & delay) and several nonmutual business lines.
Through the merger process and beyond, the emphasis is firmly on maintaining and enhancing levels of service, Grose comments.
FULL MERGER BENEFITS
The merger will also bring together some of the most respected expert teams in maritime risk management to focus on P&I challenges which range from geopolitics, digitalisation, regulation and decarbonisation, to recruitment, says Grose.
“We believe NorthStandard will be the P&I club of choice for our people and others – offering more career choices, more opportunities and more flexibility while retaining the long-established family ethos and culture of both clubs. This will make it easier to attract, develop and keep the people that are the foundation of the service-led approach, consistently valued and sought by members,” he continues.
Picking up the theme, Jennings adds: “Combined with faster innovation, NorthStandard will be better equipped to meet evolving market requirements more effectively and offer incisive guidance to navigate the continuing change affecting the global maritime sector and better anticipate future trends and challenges.”
MORE CHOICE
As the merger schedule progresses, conversations are also turning to the broader capabilities members of a combined club can access. “NorthStandard will automatically bring a wider choice of services for members,” says Grose.
Jennings concludes: “I’m incredibly proud of the way we at North have developed into one of the leading clubs and how we have maintained and developed strong relationships with members that last many years, and I want to ensure we protect and capitalise on this. I genuinely don’t believe that there has ever been an opportunity that provides such scope to deliver a step-change in our business strategy, our financial resilience and the range and calibre of the services we provide to our members.”
By acting now to bring NorthStandard into being from February 2023, Standard Club and North can exert greater influence over future developments, the joint CEOs believe. Given the pressures facing the P&I club sector, consolidation is logical and may be an inevitability for others.
Paul Jennings, North P&I Club
