An initial frenzy of informal merger talks among P&I clubs that followed last year’s marriage of the North P&I Club and Standard Club have not yet resulted in further consolidation.
The creation of NorthStandard in February last year triggered a series of discussions between clubs anxious not to be left behind.
But, while most clubs remain open to the concept of a merger, the general view is to observe the trajectory of NorthStandard’s development before making any firm commitments.
“Everyone has done their speed dating, and everyone has spoken to each other, but for now people seem to feel, ‘We’re OK with doing what we are doing’,” said broker Gallagher’s head of protection and indemnity, Alex Vullo.
West of England chief executive Tom Bowsher said his club had been approached over a possible merger but explained, that while the idea appeals, it has not developed into a more serious discussion.
There are different management structures and business cultures involved, which in many cases would be difficult to overcome, while the benefit of a merger is not always immediately obvious, he pointed out.
“Conversations over coffee take place, but I think it is a lot more difficult to merge two clubs than people realise. It involves merging two managers and two boards,” he said.
“It [merger] is about trying to find synergy because you are trying to add value. What is the purpose of merging just for critical mass and size, that does not necessarily bring benefits? So it should be about trying to determine if it is in members’ interest or not.”
The lack of concrete merger talks has not stopped the gossip mill from going into overdrive, with most P&I club executives saying their door is always open for merger discussions.
The UK P&I Club has been one of the clubs open to merger and went as far as opening talks with Britannia P&I several years ago. Those talks never materialised into anything and UK P&I chief executive Andrew Taylor said there is still nothing on the horizon.
“For a long time, the UK Club has been pro-merger and I still see the benefits, but I don’t see one happening any time soon,” he said.
Waiting and watching
“My take is that at the moment the NorthStandard merger is still relatively fresh and that people will want to see how that merger progresses and whether it brings the benefits,” he said.
The initial indications are that the merger has been a success.
NorthStandard, which now ranks as the second-largest P&I club, is about to go through its first renewal as a merged entity, and there is a lot of interest in how it might perform or affect the market.
There has been no loss of senior staff and generally positive early financial reports.
NorthStandard has lost some tonnage as shipowner members with large tonnage in both clubs felt they needed to spread their cover more widely once the merger took place.
Ahead of the upcoming renewal, brokers perceive NorthStandard’s steadfast commitment to a 5% premium increase, indicating a lack of urgency to reclaim lost tonnage.