Two of the longest-established marine insurance businesses in the North East are in talks to merge as they strive to dominate their chosen niche market.
Newcastle’s North of England P&I Association (North) and Durham’s Sunderland Marine Mutual Insurance (SMMI) Company Limited, which have both been trading since the 19th century, believe combining could bring financial stability as well as increase competitiveness by creating one of the biggest global businesses of their kind.
North is the world’s second largest mutual liability insurer for ship-owners, while SMMI is a one of the world’s leading insurers of fishing vessels and the aquaculture industry, and both insurance ‘clubs’ have offices throughout the world, generating a combined premium income of more than ï¿½350m with more than two-thirds of their 400-strong workforce based in the North East.
Merger discussions are subject to satisfactory due diligence from both parties, the agreement of relevant legal documentation as well as regulatory approvals and membership approval, and further announcements will be made in October.
North’s joint managing director Alan Wilson said: “As a result of the business similarities between North and SMMI and their complementary global activities, we have now agreed in principle to investigate the practicalities of a merger.
“It will result in one of the largest global marine insurance providers, which we believe will provide considerable financial stability and significantly enhance our competitive position.’
SMMI’s chief executive Geoff Parkinson said: “SMMI and North are two of the longest established and most successful marine insurance businesses in North East England and have long worked together, culminating in a strategic alliance in January 2012.
“A combined group will be a major force in the global marine insurance markets by virtue of our diversification and capacity.”
Founded in 1860, North provides liability insurance to 3,500 ships and employs 233 people. Based in Newcastle, the 233-strong firm has regional offices in Greece, Hong Kong, Japan and Singapore, and has an ‘A’ financial strength rating from Standard & Poor’s.
SMMI, meanwhile, has gone on to become a leading insurer of fishing vessels, small craft and aquaculture risks since establishing in 1882 and now has more than 13,500 policies in 50 countries.
The club is based in Durham with 13 other offices in Australia, Canada, the Netherlands, New Zealand, South Africa and the USA, and employs 171 people.
The talks come as SMMI looks to return to profitability after incurring a loss of £1.4m in 2012, a huge turnaround from the £8m loss it made a year earlier.
North’s joint managing director Paul Jennings added: “This is a very exciting possibility for both companies, combining North’s international portfolio of high-quality, larger ships with SMMI’s wide spread of smaller vessel and aquaculture risks.
“Together, we can offer our members a more diverse product range and develop new sources of business income to provide greater security and opportunities for all staff and suppliers.”