NorthStandard – details published of merger proposals, 4% CR improvement promised

North of England Club and Standard Club have followed their circular of March 14th 2022, which announced that merger discussions between North and Standard Club were taking place, with the publication of a detailed merger proposal document for members to consider.

An Extraordinary General Meeting of the Members will be held at The Divani Apollon Palace & Thalasso in Athens, Greece on Friday May 27th 2022 where Members will be asked to vote on the proposed merger (and other ancillary actions required to implement the proposed merger).

Members with mutual entries will be entitled to attend, speak and vote at the EGM. Members with only fixed premium entries will be entitled to attend and speak at the EGM but do not have the right to vote at the EGM.

Key dates

  • May 27th 2022        Member EGM to vote on merger
  • Autumn 2022 Anticipated date for all financial, regulatory and merger control approvals to be received.
  • Autumn 2022 Operating model design and planning for 20 February 2023 renewal.
  • February 20th 2023 Formal corporate merger of the two clubs is completed, and the first policy year of combined clubs begins with a new corporate structure and brand identity in place.

The merger will create a club with 400m GT of covered vessels.

Combined premium income would have been $699m for the policy year 2020-21 (North, $406m, Standard, $293m).

Free Reserves would have been $810m (North, $450m; Standard, $360m).

James Tyrell, chair of North, said that NorthStandard would “deliver a compelling service proposition for members and clients and all those who rely upon us to provide first-class service. The outstanding claims expertise, tried and tested on the largest and most complex claims, will complement a broad portfolio of products and services. 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.”

North CEO Paul Jennings said that “since the proposed merger was first announced in mid-March, I’ve met with a large selection of North’s members to discuss the merger, and the feedback I have received has been overwhelmingly positive”. Jennings said that potential savings from removing duplication and reinsurance costs “could quickly and conservatively deliver a 4% improvement in the combined ratio of the merged club in the coming years”.

Insurance Arrangements

After completing the merger, expected on February 20th 2023, all insurance companies in the combined club will continue to write new business for at least one further year. In addition, the rules will remain unaltered to allow for the continuation of the Members Board and the intention to operate each class (i.e., P&I, FD&D, War, Coastal & Inland, Strike & Delay) as single classes across the combined club (i.e., calls are determined by reference to the requirements of the class as a whole). It is envisaged that, following completion, there will be a further process to rationalize the active insurance, reinsurance and management companies of the combined club and the implementation of a new operating model for NorthStandard.

There might also be further steps to close the insurance and reinsurance companies that go into run-off and the inactive management companies.

Supplementary Calls

To the extent there were to be any supplementary calls in the future, mutual members of both clubs will remain liable for supplementary calls regarding policy years ending on or before February 20th 2023 on the same basis as they are currently. For policy years commencing on or after this, members of both clubs will be liable for supplementary calls in respect of the combined classes of NorthStandard in which they are entered. Each of the combined classes of the combined club will operate as a single class of the combined club.

Key Data side-by-side

North (US$m) 2019 2020 2021 2022*
Gross premium** 319 320 376 394
Net premium 258 254 296 312
Poolable tonnage 142 147 160 160
Share of IG tonnage 11.8% 11.9% 12.5% 12.1%
Poolable premium 197 195 203 214
Share of IG premium 10.2% 10.0% 10.4% 10.7%
Combined ratio 105% 126% 114% <108%
Free reserves 463 444 450 tbc
Outstanding claims 622 628 668 tbc
Standard Club (US$ millions) 2019 2020 2021 2022*
Gross premium** 289 288 293 294
Net premium 225 213 228 229
Poolable tonnage 119 117 116 106
Share of IG tonnage 9.9% 9.5% 9.1% 8.0%
Poolable premium 174 174 166 167
Share of IG premium 9.0% 8.9% 8.5% 8.3%
Combined ratio 100% 131% 121% <106%
Free reserves 435 394 360 tbc
Outstanding claims 536 564 586 tbc

* draft figures for the financial year to February 2022

** premium figures shown net of brokerage