ONE of the world's biggest marine insurance firms has opened an office in Japan which it hopes will open the way to winning up to £30m of extra business.
The North of England Protecting and Indemnity Association (Nepia) may only have taken on four staff at its fourth overseas outpost, but it says it is vital to its bid to break into the world’s biggest shipping market.
The 150-year-old Newcastle firm, which insures around 4,000 ships, does around £4m of business in Japan now but hopes it can grow that to £20m within five years and eventually up to £30m. It plans to increase the amount of business it does in the rapidly growing Asia-Pacific market from around a third to half.
Joint managing director Paul Jennings said: “This is a very significant move for us because of the huge proportion of the world’s shipping market which is owned by Japan and the growth of the Asia-Pacific market which is fuelled by the economic growth over there.”
The firm has spent more than seven years planning the move, winning contacts in the close-knit Japanese shipping community and three years winning its licence to operate.
“It has long been an ambition of ours to get in there and although it has taken a lot of time and effort it will be worth it. It is slow to build relationships with shipping firms but the good thing is those relationships tend to be enduring in Japan,” added Jennings.
Nepia is only the third overseas insurer to break into Japan and the first for more than a decade and it believes it has gone in at the right time. “There are two other UK companies over there and they are more interested in long-term ventures than winning new business and, coincidentally, one of our major competitors out there has been undergoing a period of financial turbulence which gives us an opportunity to grow,” he said.
The firm is well-placed to grow in Asia-Pacific and already has offices in Hong Kong and Singapore, as well as another in one of the world’s other largest shipping centres, Greece. Nepia has grown to be the second biggest insurer apart from Norwegian firm Gard, with Norway the world’s other biggest shipping centre.
Nepia currently insures around 170 million tonnes, which is around 12% of the world’s shipping tonnage. It has grown consistently in recent years and expects to report an increase of around 15% annual business next month.
As a mutual, the business does not publish its accounts in terms of turnover and profit, but rather calculates a free reserve, equivalent to a bottomline profit, based on its underwriting surplus and available investment income. That is expected to be what Jennings calls a “modest” £9.5m-£12.5m this year.
Nepia, which employs 192 people in Newcastle as well as 34 more in its overseas sites, says its business is being driven by a 5% annual increase in the world’s shipping and also by the work done as global trade rises despite the economic problems being suffered by many countries.
The firm recently agreed a deal with the North East’s second biggest marine insurer Durham-based Sunderland Marine Mutual Insurance (SMMI) to work together to increase their worldwide business by using each other’s contacts in difference markets.
The Durham firm focuses on the fishing industry.