Insurance broker Gallagher has cooled on its prediction that the creation of NorthStandard will trigger consolation in the protection and indemnity market.
Shipping’s second-largest P&I mutual was formed through the merger of the North of England P&I Club and the Standard Club in February.
In a report on the merged club, Gallagher said: “The general consensus, as we see it, is that the clubs are monitoring the NorthStandard to see how they successfully integrate the businesses, and most of the other clubs feel that they are strong enough to stand on their own feet from both a financial and competition standpoint.
“Therefore, for the time being, we do not believe that another ‘Super Club’ event is on the horizon, although it is worth noting some club CEOs have been more public about their views on this subject.”
Gallagher said shipowners should be keeping a close eye on how the NorthStandard develops its underwriting strategy, as both clubs had different approaches before the merger.
“The North has always been known to be robust, technical and happy to stand their ground,” Gallagher said.
“The Standard Club, by contrast, had — or appeared to have — more underwriter autonomy — still technically robust, but the renewal process felt less arduous.”
The NorthStandard underwriting team is headed by chief underwriting officer Thya Kathiravel, with the Standard Club’s Mark Collins appointed global head of mutual P&I.
Gallagher believes the pair will be able to marry their contrasting approaches by the time NorthStandard goes through its first renewal on 20 February next year.
Legacy styles
“In the new NorthStandard, going forward, we expect to see a combination of the two legacy styles complementing each other,” the broker said.
Another underwriting issue NorthStandard will have to settle is how International Group of P&I Clubs pool claims and loss records are calculated in the shipowner’s premium.
Both clubs had different methods that gave different results. Gallagher said it will be important to get the balance right “to avoid potential but temporary frustrations on the net retained position of each member”.
Despite the uncertainties, Gallagher is upbeat about the prospects of the new club.
“We must not forget that at one point, the two clubs were fierce competitors and so to now see them embrace and complement each other in a short space of time seems surreal, but positive,” it said.
“The culture there is clearly one of ‘how can one do things better’ and how they can both learn and cultivate a new unique club for the future.”
NorthStandard announced an underwriting profit in its first combined annual results, while S&P Global Ratings has given it an A stable rating.
The club is also now offering more diverse insurance lines, including hull and machinery, and delay insurance, which generate around $200m of its $800m in annual income.
Its free reserves to premium ratio also indicate it is making capital work harder than most other P&I clubs, Gallagher said.
