Most of us say "thanks" without thinking.
For most of its 110-plus years of existence, Norwegian P&I Club Skuld focused on the Scandinavian market.
The Oslo-based mutual was founded in 1897 by Norwegian shipowners as a counterweight to British P&I clubs, said Executive Vice President Eric Jacobs. Over the past 15 to 20 years, Skuld has branched out to the point where about 75% of its markets now lie outside Scandinavia. These territories provide most of Skuld's growth, Jacobs added.
"We're truly an international P&I club," said Jacobs.
Now, Skuld is embarking on what Jacobs said may be its biggest change ever: It is entering the Lloyd's market. Skuld has signed a turnkey agreement with London-based insurance investor and nonlife runoff specialist Randall & Quilter Investment Holdings plc to form a new Lloyd's syndicate to write marine and offshore energy risks (BestWire, Nov. 9, 2010).
"The P&I world is changing, and we have to change with it," Jacobs said. "And we think that this is the right step forward for Skuld and for the members of Skuld."
The new vehicle will be called Skuld Syndicate 1897, after the year of Skuld's founding. Jacobs, who called the choice of name "a pretty good twist," said the shared maritime history of Skuld and Lloyd's is important. "We can't think of any better partner," he said of Lloyd's.
In addition to energy, the new syndicate will be covering "marine hull, cargo, loss of hire, war; the products that our members are seeking and that they're comfortable with," Jacobs said.
"The mutuality that the shipowners have created with these P&I clubs is the right product and the right way of doing this type of insurance for them," Jacobs said.
The syndicate will begin writing for 2011, with a capacity of 60 million pounds (70.4 million euros). Jacobs sees that possibly increasing to 80 million pounds in the second year and maybe as high as 100 million pounds in the third year.
Lloyd's "unique" platform fits with Skuld's existing goal of trying to improve its services and broaden its product offering, Jacobs said. "We want to merge the best from Lloyd's, the best from the P&I world and then give that to our customers and member base," he said.
Jacobs cited the elements of Lloyd's "three-tier capital base." These are the premium income of the syndicates, the capital pledged by market participants and the Lloyd's Central Fund.
Skuld, which has 169 employees, has offices in the United Kingdom, Denmark, Germany, Hong Kong, Russia, the United States and Greece. It had total 2009 premium income of $253.9 million (186.7 million euros).
Skuld sells its insurance to shipowners through brokers and on a direct basis. "For us to add on a new product range into this structure is just a plus," Jacobs said.
The agreement will allow Skuld to draw on its own global network. And the turnkey arrangement brings in the kind of specialized expertise that Skuld does not yet have, he said. Randall & Quilter "will run it for three years for us until we are up and standing with our own agency."
"It's a straightforward deal," said Jacobs, who declined to reveal the financial terms. "They charge us for the services they do and they also will help us to migrate this structure over to own platform when we're ready."
Jacobs himself has an international perspective. The son of an American father, he spent part of his childhood on Long Island and speaks perfect English. He confesses to being a New York Yankees fan. He was in London on his way to Bermuda.
"We're taking this slow," Jacobs said of the turnkey deal. "The most important thing is to get this right, not to grow too quickly."
Jacobs acknowledged the current international economic downturn. But as long as trade continues, he said, shipowners will need insurance.
Skuld, Jacobs said, meets its own internal slogan of "the new generation P&I club."
"We're catering for the needs of the new generation shipowner coming up," he said. "And I think that's our path."
Lloyd’s has a current Best’s Financial Strength Rating of A (Excellent).
To hear the full interview with Eric Jacobs, go to http://www.ambest.com/media/media.asp?RC=180225
(By Robert O'Connor, London editor: Robert.OConnor@ambest.com)