[ TradeWinds 16 March 2012 ]
Cido shifts allegiance to Korea Club
Cido Shipping has moved part of its insurance cover from Japan to the growing Korea Shipowners’ Mutual Protection & Indemnity (P&I) Association.
The move involves about 20 large car carriers and bulkers of up to panamax size and is a boost for the Seoul-based independent P&I club.
Although Cido is South Korean-owned, the company has strong Japanese links and has previously focussed its P&I cover on the Japan Club.
The Japan Club has been going through a particularly tough time recently, including threatening a post-renewal cash call of up to 30%, although this turned out to be 10%.
At the same time, the 12-year-old Korea Club is gaining increased credibility as it grows and, following a new reinsurance deal with syndicates in the Lloyd’s of London market, has been able to raise its limit of cover from $300m to $1bn.
Also based in Seoul, the club has not sought a general increase from members for the second year running, so there were a number of reasons for Cido to sign up with the club. Cido was founded more than 20 years ago by Korean entrepreneur Hyuk Kwon when he was based in Japan. Finance and the initial business connections were Japanese.
He is a former Hyundai Motors executive and forging links with his homeland played a key role in his building up Cido into a company with a fleet of more than 130 vessels totalling over seven million dwt.
Cido, which has its owning operation in Hong Kong, management in Korea and agency in Japan, has recently run down its products-tanker fleet but still has a large number of car carriers of up to 7,800-vehicle capacity, bulkers up to 280,000 dwt, a tanker fleet that includes very large crude carriers (VLCCs) and feeder containerships.
The Korea Club gained more than one million gt of new entries at last month’s renewal of P&I cover to lift its insured fleet to 900 vessels of some 11.8 million gt.
Chief executive BS Park says of the decision not to seek an increase that while most of the International Group clubs were pressing for an extra 5%, it was made possible because the shipping market was under financial pressure and the club had a relatively good result.
The launch of freight, demurrage and defence (FDD) cover has also added to the attractions of the Korea Club.
The club has an ambitious target to be a 20-million-gt power within a decade under its “Vision 2020” strategy. This is seen as a realistic target given that the Korea Shipowners’ Association is aiming for the national fleet to reach 100 million dwt.
If both targets are achieved, the Korea Club would be insuring about one-third of Korean-controlled vessels.
The Korea Club is also receiving more interest from foreign shipping companies in countries such as Singapore, India and Indonesia.
Chaired by Youn Jae Lee of Heung-A Shipping, members of the club include Hanjin Shipping, Hyundai Merchant Marine, STX Pan Ocean, SK Shipping, Chang Myung, Korea Line Corp, Korea Maritime Transport, Sinokor, Pan Korea Line, Namsung Shipping, Shilla Trading, Taiyoung Shipping and Boyang.
Meanwhile, the first assessments of the overall outcome of the 2012 P&I renewal for the mainstream International Group mutuals are pegging the UK Club, Gard and the North of England as the main winners, at the expense of others including Skuld, Steamship Mutual and the Standard Club.
By Jim Mulrenan London