North P&I Club boss Paul Jennings has earned a reputation among his staff as being encouraging and keen to delegate responsibility.
Since his appointment as chief executive at the protection and indemnity mutual, which is based in Newcastle, north-eastern England, he has built up his own trusted team of key executives and given them the job of building up the business.
The appointments have begun to pay dividends as North P&I develops into a leading comprehensive marine insurance service provider.
Competitive advantage
Robust finances and financial ratings are increasingly seen as a key competitive advantage in the world of marine insurance, and the man with his hands on the club’s purse strings is chief financial officer Ed Davies.
North P&I has free reserves of $444m, giving it an AAA capital solvency rating. Its 6% investment gain, amounting to $64.5m, in the last policy year was one of the best returns among the International Group of P&I Clubs' members.
But Davies is equally pleased with the results of the new strategy to spread its investment portfolio more widely.
The change in direction came just in time to limit the possible damage caused by the collapse of the global equity markets at the start of the coronavirus pandemic.
According to Davies, North P&I’s investment funds were only 2% down at the end of April.
The firm financial base has allowed the club to develop its underwriting portfolio under Thya Kathiravel, who was appointed chief global underwriting officer last June, and Savraj Mehta, who became chief commercial officer at the same time.
The first move was into the marine fixed premium market through subsidiary Sunderland Marine, which had focused on the aquaculture industry.
Brian Davies was appointed to head the fixed premium team last summer from a new London office, and he has brought quick results.
“In the first eight months, it has exceeded expectations and found business beyond the traditional markets of Asia and North America,” Kathiravel said.
Taking up the challenge
North P&I’s next move is into the marine hull market, which has been running up losses for underwriters in recent years.
But Kathiravel said the club is well placed to take on the challenge. Improvements in hull rates have continued in recent months, he pointed out, despite the economic disruption caused by Covid-19.
By opting for the company market, where operating costs are lower than in the main Lloyd’s of London marine market, North P&I should have a cost advantage, he added.
However, Kathiravel bristled at the suggestion that the move is copying Scandinavian rivals Gard, Skuld and the Swedish Club, which have added a hull insurance facility to a P&I business.
He pointed out North P&I had a hull facility about a decade ago, before closing it, and it is now returning to the hull market rather than embarking on a completely new venture.
“This affords us the opportunity to provide a one-stop shop and value-added service to shipowners,” he said.
North P&I’s problem at the moment is that its diversification and investment gains are to some extent masking an underlying underwriting loss.
Over the past four policy years, it has recorded a total underwriting loss of $78.4m, made up mostly of a $68.3m deficit in the last policy year, when two major claims, the Golden Ray and Grande America, have been particularly costly.
The underwriting loss is largely attributable to an $82.9m total fall in premium income in the same four-year period due to a highly competitive P&I market.
Tide has turned
Jennings noted that the tide appears to have turned on falling premiums with the trend across the P&I industry to increase rates.
North P&I announced a 7.5% general increase in premiums for this policy year. In the last policy year, it managed a $1.6m rise in premium income as it increased the total owned and chartered insured fleet by 20m gt to 230m gt.
The club has other strengths in addition to the strong financial and underwriting growth.
The freight, defence and demurrage team of 41 lawyers is one of the biggest in the P&I business. Headed by Katherine Birchall, it handled 4,750 claims last year. Most of the lawyers are based in Newcastle, but the team also operates out of North P&I’s global network.
