North East marine insurance giants create strategic alliance
Tuesday, 07 February 2012 | 00:00
The North East's two biggest marine insurance firms are joining forces to increase their business around the world.
Newcastle-based North of England Protecting and Indemnity Association (Nepia) and Durham-based Sunderland Marine Mutual Insurance (SMMI) are already among the biggest in their fields worldwide.
And now the firms, which have grown up to play a major part in different markets for more than a century, have signed a strategic alliance which will see them work together to bring in business for each other by using their contacts in scores of countries.
SMMI, founded 130 years ago, is a world leader in insurance of commercial fishing vessels, charter vessels and small commercial craft. It focuses on insuring boats against damage and shipowners against financial loss in more than 50 countries. It has 10 overseas offices, as far away as New Zealand and South Africa, and an income of more than £73m.
Nepia, founded 152 years ago, focuses on insuring large ships such as freighters, and now covers around 12% of the tonnage of shipping worldwide, and has offices in Hong Kong, Singapore and Greece, as well as its headquarters on Newcastle Quayside.
Geoff Parkinson, chief executive of Sunderland Marine, said: “Our two companies through their bases in the North East of England have enjoyed an open relationship for many years.
“Indeed, because of the diversity of interests between SMMI and North, a competitive situation has never existed. There are clear cultural and service synergies between North and SMMI and these will provide a strong foundation for this strategic alliance. It is an exciting opportunity for us both which will help facilitate greater market access and product diversification.
“The agreed business strategy between the two companies will result in teams from North and SMMI having access to the partnership’s respective areas of expertise and local expertise and knowledge across the globe.
“Here in the North East, where both companies are headquartered, the partnership will see the region’s position as a world leader in marine, liability and aquaculture insurance strengthened even further. It is an opportunity for us both to grow and reach further geographical areas.”
He said there would be no financial link and, although the alliance would bring them closer together, it is not leading up to a merger of the businesses.
Nepia joint managing director Paul Jennings said: “One of North’s strategic objectives is to diversify not only the product range we offer to members, but also to diversify and develop other sources of business income.
“The new reinsurance arrangement with SMMI forms part of our diversification policy and initiates a strategic alliance for us to collaborate in exploring and developing new business opportunities worldwide.”
Its other joint managing director, Alan Wilson, said: “The complementary nature of SMMI’s operations makes it an ideal partner. While we specialise in larger tonnage, which is not part of the SMMI portfolio, SMMI covers a wide spread of high-volume, small tonnage risks. An alliance will provide an opportunity to broaden and expand a combined liability portfolio.”
Nepia does not publish its accounts in terms of turnover and profit, but rather calculates a free reserve – equivalent to a bottom line profit – based on its underwriting surplus and available investment income. Last year, that increased by 30% to £190m.
Source: The Journal