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Press Article: Standard overtakes Britannia on P&I tonnage
News & Insights 25 July 2016
TradeWinds reports on The Standard Club overtaking The Britannia Club to become the fourth largest P&I club by tonnage, and the reasons for this increase in market share.
The Standard Club has moved up to become the fourth biggest of the protection-and-indemnity (P&I) clubs, edging ahead of the Britannia Club in terms of shipowners' mutual tonnage.
It is an achievement in what appeared to be an unpromising year, with the Standard Club losing four million gross tons (gt) as half the Carnival cruiseship fleet sailed away to Gard and the UK Club.
But the loss was more than compensated by other gains - owners' tonnage reached 116 million gt, with a further 22 million gt of charterers' business on top, to lift the total entry to 138 million gt and giving an overall net increase of three million gt.
Clubs traditionally argue that tonnage is not a significant performance indicator compared to other factors, such as underwriting profitability, premium income and free reserve - but it is still one of the benchmarks of the P&I market.
Standard Club chief executive Jeremy Grose says it is not the tonnage figure or place in the league table that is important but he is pleased as the growth in tonnage endorses a key strategy of the club.
"The reason we've been able to achieve that increased market share is because we're offering more to our existing members and also accessing new members in different markets and through different channels," Grose said.
"In the Singapore War Risk mutual [an offshoot of the Standard Club Asia], there are lots of members who aren't our traditional P&I club members. But we have had the opportunity to talk to them about their insurance requirements. It is the same for the Standard syndicate [the move into the Lloyd's of London market through syndicate 1884], where a lot of the insureds are members of the club but clearly a good proportion are not."
Although the Standard Club tonnage has increased, its contribution to the collective claims pool of the International Group of P&I clubs has come down.
The Standard Club was the claims leader for the huge wreck removal, loss of life and other P&I claims arising from the loss of Costa Concordia.
The lower layer of the pool, covering claims up to $45m, has increased to 11.7% from 10.2% - a rise of 1.5%. But this is more than compensated for by a reduction on the layer above $45m, which has come down to 8.5% from 10.9% - a drop of 2.4%.
Ratings agency Standard & Poor's (S&P) recently affirmed the "A" stable rating of the Standard Club but has edged up the scores that contribute to the overall outcome.
S&P notes that there has been a significant improvement in the combined ratio - a key measure of underwriting performance - over the past five years, with the ratio falling to 95% last year.
The ratings agency has lifted the Standard Club's enterprise risk management to adequate with strong risk controls, from a plain adequate, while moving up its assessment of management and governance from fair to satisfactory.
Gard is by far the biggest of the P&I clubs but would have dropped back to second place if the plan to merge Britannia and the UK clubs had gone ahead.
But, with the merger off, the UK Club keeps second place, followed by the North of England as the third biggest.