The Standard Club, whose board believes the benefits of having The Strike Club join the specialist marine insurer outweigh the risks, has outlined the proposed merger.
In a circular to members of The Standard Club, chief executive Jeremy Grose said the mutual delay insurer coming onboard will reinforce The Standard Club’s existing strategy of providing a wide range of cover. In addition, approximately 200 new members will be introduced to The Standard Club.
Other benefits cited include further diversification of the club’s underwriting portfolio and risk profile, as well as strengthening The Standard Club’s finances and increasing capital efficiency.
Under the proposal, The Strike Club will operate under its existing brand – but within The Standard Club – offering the same mutual delay insurance and supervised by its current board, which is slated to become a Strike Club committee of The Standard Club.
Grose explained that The Standard Club will create a new Strike class in each of the Standard companies to facilitate the transfer of The Strike Club business. Any necessary changes to The Standard Club’s Byelaws, and to the Articles of the subsidiary companies, will need members’ approval.
Meanwhile, highlighting the possible downside, the CEO wrote in the circular: “There are potential risks to The Standard Club from this proposal, including underwriting losses (The Strike Club has suffered underwriting losses in some recent years, but the club has a strategy to restructure and improve underwriting, and this will be more easily achieved within The Standard Club)…
“…restructuring may reduce the scale of the business; historic claims reserves may prove to be insufficient (although claims are short-tail and there has been robust actuarial analysis); regulatory and tax issues may impact the transfer of funds from the existing Strike companies; cost savings may be less than expected; and there could be greater than expected transaction costs and complications.”
The Standard Club’s board, however, is “satisfied” that the risks can be managed and mitigated.
The transaction is expected to take place in February next year, with a subsequent transition period during which The Strike Club’s Luxembourg insurance company would continue to be the insurer, pending transfer of the policies to Standard Club entities at the following renewal.
Both The Standard Club and The Strike Club are managed by companies within Charles Taylor.
